An article published by the Boston Consulting Group (BCG) states that, if there were an equal number of women and men entrepreneurs, global GDP could grow by approximately 3% to 6%, which would represent between 2500 and 5000 billion dollars to the international economy. However, women entrepreneurs still need the support of various groups to realise their power, e.g. venture capital firms, non-profit organisations and large companies. In addition, a difficulty that is sometimes overlooked needs to be addressed: the lack of networks to guide and provide real support to women entrepreneurs.
THE GENDER GAP IN ENTREPRENEURSHIP
To better understand the gender gap in entrepreneurship and how much progress is being made towards equality, BCG analysed Global Entrepreneurship Monitor (GEM) data on female entrepreneurship at both the regional and country levels. This analysis yielded the following results:
- In all regions, the percentage of working-age men starting a business exceeds the corresponding percentage of working-age women by 4-6 percentage points.
- Four countries (Vietnam, Mexico, Indonesia and the Philippines) are the exception to the above rule: more women than men started new businesses in 2016.
- In 50% of the 100 countries surveyed, the gender gap in entrepreneurship is narrowing, with Turkey, South Korea and Slovakia leading the way.
- However, in the 40% countries, the gender gap is widening, particularly in Switzerland, Uruguay and South Africa.
Although inequalities in entrepreneurial activity occur in a fairly homogeneous pattern in most countries, differences in the rate of long-term business success are more pronounced. For example, in the Middle East and North Africa, a company founded by a woman is 50% less likely to be still running after three and a half years compared to a company started by a man. Meanwhile, in Latin America, the "survival" rate of businesses founded by women is 11 percentage points lower. In all regions except North America, women-led businesses have lower "survival" rates than male-owned companies.
THE POWER OF NETWORKS
What can countries do to ensure that women-led businesses survive and thrive?
Inequalities in access to financial support are a major determinant of the gender gap, especially for women starting new businesses. According to a analysis by BCG based on 2018 data from MassChallenge (a global network of US-based accelerators).The average investment in companies founded or co-founded by women was $935,000, less than half the $2.1 million that was invested on average in companies founded by men. This disparity exists despite the fact that start-ups founded or co-founded by women actually performed better over time and generated 10% more cumulative revenue over a five-year period: $730,000 versus $662,000.
Obviously, access to start-up capital is not the only problem. Women entrepreneurs must also correct the deficit in the "survival" and growth rates of their businesses, i.e. counteract the tendency to stagnate over time.
The study shows that while there are many reasons for these deficits (including differences in access to human and social capital and to ongoing economic resources), a key factor is women's relatively limited access to strong support networks. In low- and middle-income countries, for example, the greater availability and use of entrepreneurial networks is associated with a narrowing of the gender gap in the "survival" rate of enterprises. Being able to be in contact with other entrepreneurs encourages women to set higher expectations for their businesses, pursue growth and integrate innovation.
In Nigeria, the Cherie Blair Foundation for Womensupported by the ExxonMobil Foundation, piloted Road to Women's Business Growth, an enterprise that helped women business owners improve their business skills and access financial institutions and new markets. An independent evaluation of this programme revealed that some of the greatest benefits came from the professional networks it facilitated. As one entrepreneur explained, "if you have difficulties and need contacts, just say the word and your 'sisters' will come to your aid. That's why we are like a 'sisterhood' of entrepreneurs". The financial performance of women-led businesses also improved, with the average profit growing by 31%.
In BCG's experience, the best networks are based on three principles: intention, inclusion and interaction.
- Intention. Start by defining the purpose of the network. Networks should be much more than an address book. What can women gain from joining the network? Will they gain access to human, economic and social capital? How can the network help women achieve tangible goals?
- Inclusion. The next step is to choose participants carefully. The best networks have a founder who devotes a lot of time to them, an intense participatory activity and a diverse participant base, with new entrepreneurs and other business owners who are already established in the market. Ideally, participants should have different cultural backgrounds.
- Interaction. Finally, the network needs to be structured to facilitate both formal and informal interactions. Formal training and capacity building sessions should be organised, but informal interactions between participants are also crucial to build trust and ensure that the network remains meaningful over time. The platforms online can be essential for success in this area.
It is no exaggeration to say that female entrepreneurship has the power to change the world. And the benefits go far beyond increasing global GDP. Addressing gender inequalities in entrepreneurship and boosting the growth of women-led businesses will bring new ideas, services and products to markets. And ultimately, these forces can redefine the future.
The phenomenon of women entrepreneurs are a growing force around the world and Spain is one of the countries in Europe with the highest rate of female entrepreneurship. María López, Partner at Boston Consulting Group who leads the Women@BCG initiative in Iberia, points out that "in Spain the number of women entrepreneurs has grown and they are no longer limited to creating their own start-ups but are also investing in new businesses in all sectors, breaking gender stereotypes in that sense as well" "new projects and initiatives led by women are transforming not only the entrepreneurial ecosystem and the corporate environment but also the way of working".
Access the press release published by Boston Consulting Group through this link link