In the start-up scene, it has been evident for years that more and more women are founding companies, but in an international comparison, If you are wondering why women are less likely to start a business than men, you will find the answer mainly in the circumstances of our society. The structures in the economic sector also play a major role. All too often they still prevent women from starting a business without major problems.
The Role Of Women In Society
Even if our society has changed significantly in recent decades, becoming more open and liberal, one thing is still extremely firmly anchored in us: the Christian-influenced understanding of the role of man and woman. It therefore also appears in the economic sector and is one of the main reasons why women set up companies less often than men. The idea that the man earns the money and that the woman belongs at the stove – and above all should take care of the household and the children – still haunts many people’s minds. However, the popular division into pink and blue is outdated.
If you want to start a business as a woman, then you have to break through these outdated role models and appear self-confident. This is especially true if you are running a business in non-traditional female areas such as B. and want to start beauty or fashion. In particular, women are less likely to start their own business in the following sectors:
- technology and IT industry,
- Personal protection and security service,
The reason for the weaker affinity for these economic sectors seems to lie in their school days. The completely untrue view that women have no connection to natural sciences is still incomprehensibly accepted by many today. The woman was and still is attested to an almost “congenital, technical inadequacy”. This is expressed, for example, in the percentage of female computer science students, which was just 23 percent across Germany (as of 2016). I encourage you to read more about this blog here: Small Business Regulation: Save Sales Tax Through §19 UStG – Here’s How
Equity Before Debt
It can often be observed that women act a little more cautiously when dealing with capital than men do. Especially when using outside capital, women carefully weigh up whether it is worth taking the high risk of outside financing for their start-up. Of course, taking out a loan or raising capital using crowdfunding means more dependence on investors or banks. When founding a company, women are simply much more safety-oriented than many of their male colleagues. Quite a few female founders, therefore, try to put their projects on a sound footing, primarily by raising equity.
Unfortunately, even when trying to get a bank loan to start a business, gender plays a significant role in why women are less likely to start a business than men. Financial institutions are giving their money to men to a greater extent. Especially if you are a single woman applying for a loan for a start-up or new business, you will face more difficulties than a male applicant.
Another reason why women are less likely to start a business than men is that investors still prefer to give their money to men. In addition, according to scientific surveys, only about four percent of all investors are women. Admittedly, more and more so-called venture capital companies are advising on how to achieve a fairer distribution of capital. Nevertheless, the principle still applies, at least in the medium term, that you, unfortunately, have to prove yourself to men in particular and break down the role cliché in their heads, i.e. if you are a woman looking for investors for your company start-up.
Use Of Networks
If you want to find a company, you not only need capital but above all good and numerous contacts. If you, as a woman, want to launch a start-up or set up a company, you need a network that is as extensive as possible.
One reason women are less likely to be founders is that they network differently than their male competitors. They have different requirements, ask different questions due to the different ways in which they founded their company, set different standards concerning possible cooperation partners, and fundamentally use different types of communication.
Another problem for women is that many networks that already exist are completely closed systems to which, as ‘newcomers’, they rarely have access. The so-called boys’ clubs don’t like to have their business cards looked at. As a result, networks especially for women have increasingly been set up in recent years. Platforms like SheTrades are networks that connect you with female entrepreneurs who want to invest in interesting projects.
Confidence In Your Abilities
It seems that many women shy away from founding a company because they still assume that they do not have the skills and knowledge to take such a step. Once again, the long outdated image of women, which is still firmly anchored in many minds, plays an important role. According to this picture, you are only suitable for starting a family – which is absolute nonsense. Many successful businesswomen prove the opposite. Take women like Beate Uhse, Estée Lauder, or Melitta Bentz as role models, who created large companies out of nothing in even more difficult times.
Don’t be influenced by such views. Be confident that you have all the skills and know-how to start a successful business. If you don’t have certain knowledge, acquire it through further training. If you don’t have specific skills, get help from experts who can support you in the relevant areas. As a founder, you don’t have to be able to do everything. All you have to do is know where to find the help you need.
More Women Business Are A Benefit To Society
Diversity among entrepreneurs is about getting as much talent and skills as possible into play.
Several analyzes point to the fact that women contribute to problem-solving in a different way than men, and that they contribute with an understanding of profit that includes societal aspects to a greater extent while keeping an eye on the bottom line. In addition, women are more likely to share their successes.
This indicates that it will be a big gain to strengthen the proportion of female entrepreneurs and budding entrepreneurs.
Currently, there is ample room for improvement. Looking at US numbers, less than 5% of invested dollars go to women entrepreneurs. The trend is even more pronounced; only 1% of the investment for startups goes to women entrepreneurs.
You often hear the gender imbalance among entrepreneurs explained by pointing to individual differences between women and men, e.g. that men may be more risk-averse than women.
However, it is easy to overlook that the difference is also due to framework conditions, which can be changed through concrete initiatives – for example, establishing better education in female entrepreneurship. On that point, can learn from the USA – and we try to help with that from the innovation centers’ side.
An Innovation Environment That Supports Female Entrepreneurs
Babson College, just outside of Boston, is a small business school that specializes in teaching entrepreneurship. For the past 12 years, it has topped the list of the best engineering universities in the USA.
Babson has taken their focus on developing the prerequisites for entrepreneurship a step further by establishing a Center for Women’s Entrepreneurial Leadership (CWEL) and the Women Innovating Laboratory (WIN Lab).
WIN Lab is an accelerator program at the university for 30 early-stage women-owned companies with high growth potential. Executive Director Susan Duffy leads Babson College’s activities to engage women entrepreneurs.
She places particular emphasis on the concept of self-efficacy (which in Danish can best be translated as self-reliance or expectation of mastery) and the importance of facilitating self-efficacy in a society that promotes entrepreneurship:
“By actively building environments that create conditions for self-efficacy, you can foster the potential for entrepreneurs to throw themselves into starting their own business,” says Susan Duffy.
WIN Lab was established in 2013 and was originally aimed at the students at Babson. Since then, WIN Lab entered into a collaboration with the city of Boston to expand the program to include all female entrepreneurs in Boston.
More Diversity Means Better Performance
Another significant profile in the Boston area is Shereen Shermak, who is herself an experienced female entrepreneur and investor. She invests exclusively in female entrepreneurs – a so-called femtech investor.
Shermak sees his focus on inclusion in his investments as the source of his success. “If you make everyone feel welcome, you get a better and more investment opportunity as an investor”.
Shermak’s conclusion is supported by Emilie Normann, head of research, analysis, and higher education at the Danish Foundation for Entrepreneurship, who says:
“We can see from the research that diversity is valuable in entrepreneurship. Compared to homogeneous teams, teams characterized by diversity have a higher potential when it comes to problem-solving, and they perform better when they encounter complex issues.”
Frequently Asked Questions (FAQ)
Why Is It Harder For Women To Start A Business?
For women, starting and managing a thriving business can present exceptional hurdles due to family obligations, ingrained prejudices, and changing gender dynamics. Additionally, the absence of sufficient external assistance and guidance can result in an unsustainable operational climate.
What Is The Disadvantage Of Being A Business Woman?
It is crucial to acknowledge that gender discrimination and bias continue to persist in numerous workplaces, thereby assembling additional obstacles for women to thrive in the business world. Women often encounter various challenges such as managing work and household responsibilities, limited access to funding and capital, and fewer networking possibilities compared to men. Moreover, women may also face heightened scrutiny and criticism for their supervision style and decisions.
These challenges can impede women’s career advancement and hinder their ability to achieve comparable success to their male counterparts in the business hall.
Why Does A Woman/Man Start A Business?
Is there a difference between women and men when it comes to motivation for starting a business? The most common reason for starting your own business is the same for both sexes: dissatisfaction at work and the dream of starting your own business. Finally, be your boss. Get out of the same hamster wheel of annoying conversations with superiors, always the same activities, trouble about holiday distribution, overtime, etc.
Are Women Not Willing To Take Risks Enough?
Female founders and entrepreneurs are often accused of not being “by nature” as willing to take risks as male founders and entrepreneurs. However, studies show that this is not true, but always depends on the type of risk. In addition, a certain amount of caution can also be an advantage and protect against major financial damage. So anyone who thinks he or she has to be a daredevil to become self-employed is wrong. Of course, becoming self-employed always involves a great deal of courage, but men and women alike have it.
Although society and the economy are still making women less likely to be founders, you shouldn’t let that put you off. Don’t be tempted to bend yourself just to please others. You have a certain method of planning and implementing your start-up and this method is the right one. If you are 100 percent convinced of what you are going to do, then you will ultimately get rid of all problems. You will convince the industry, banks, investors, and critics of your project. Look for networks that were created especially for women, and make contact with people who don’t think in terms of role models that have long been outdated, but are open to new things.
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