Female & Diverse Entrepreneurs: Key Challenges

women-entrepreneursWomen comprise about 20 per cent of the UK’s 4.8 million enterprises and about 30 per cent of the UK’s self employed population. Collectively, women led businesses annually contribute an estimated
£70 billion to the British economy.  Gendered employment patterns are a key explanation of differences in self employment. Nearly 40 per cent of male self  employment is in the construction sector. Increases in female self employment have occurred as a consequence of the growth of the personal and other services and the expansion of private practice among the liberal professions. According to the Enterprise Research Centre
The main challenges confronting women entrepreneurs are similar to those faced by ethnic minority entrepreneurs, and relate to: access to finance, access to markets; and the effects of the initial
resource constraints on business growth.

Access to finance:

Women led businesses perceive higher financial barriers, start with lower levels of overall capitalization, use lower ratios of debt finance, are much less likely to use private equity or venture capital, and are more likely to be discouraged borrowers. There is almost no evidence of supply side discrimination, but substantial concerns that demand side debt aversion is more pronounced among women.

Access to markets:

Women led businesses are typically smaller and often located within services sectors, so access to markets may be constrained than is observed among male led enterprises.

Access to management:

Studies demonstrate that, given the same starting resources, business performance by gender does not differ. However, women owned enterprises typically start with lower levels of resources.

Four tensions characterize debates on policy and diverse SMEs.

  • First, to what extent are the outcomes of diverse enterprises a product of discrimination or a reflection of complex social, economic and institutional factors?
  • Second, successive governments have tried to boost self employment among women and ethnic minority groups; but should greater emphasis be accorded to qualitative business development?
  • Third, there is continuing debate on the desirability of mainstream approaches to business support versus more specialist interventions for diverse enterprises.
  • Finally, the extent to which there is market failure in the support provided to diverse enterprises is still a matter of debate.

 

This report is taken from the DIVERSITY AND SMES:EXISTING EVIDENCE AND POLICY TENSIONS  White paper by the Enterprise Research Centre

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