Role of Female Entrepreneurs in the UK - Research Paper Example

Introduction What do famous individuals like Bill Gates, Steve Jobs and Oprah Winfrey have in common? The answer is simple – they are all entrepreneurs. An entrepreneur is a person who practices entrepreneurship. There is no clear answer to the question about what exactly is entrepreneurship. This concept of entrepreneurship was first developed in the 1700s and since then its meaning has evolved. To some, it is simply starting ones own business. To others, entrepreneurship is much more than that. Some economists consider an entrepreneur to be a person who is willing to take the risk of starting a new venture if there is a significant chance for profit. Some attribute an entrepreneur to be an innovator who markets his innovation. Others define him as a person who develops new goods or processes that people demand and are not currently being supplied in the market. Famous economist Joseph Schumpeter (Schumpeter, 1942), in the 20th century, focused on the entrepreneurs drive for innovation and improvement and how he creates upheaval and change. According to Schumpeter, entrepreneurship is a force of "creative destruction." The entrepreneur tries out "new combinations" and renders old industries obsolete. The new and better methods of business replaced the old and obsolete ones. Peter Drucker (Drucker, 1985), a business expert, describes entrepreneur as a ‘person who actually searches for change, responds to it, and exploits change as an opportunity’ (). An example of this is the changes in mode of communication from typewriters to personal computers to the Internet. Entrepreneurship is a necessary component for creating economic growth and employment opportunities in a society. Successful small businesses are the primary modes of job creation, income, growth and poverty reduction, especially in the developing world. For effective economic development, the government needs to support and promote the culture of entrepreneurship. Policies to support and foster entrepreneurship lead to job creation and economic growth. Governments provide support to entrepreneurs and encourage them take risks and attempting new ventures. These include laws for enforcing property rights and encouraging a competitive market system. A community’s culture plays an important role in promoting entrepreneurship. In some communities entrepreneurs have a very high status and reputation. These are cultures where the “self-made” attribute is considered a great dignity. In such societies, entrepreneurial growth and development is very high. The secret being an entrepreneur’s success is to focus on a market niche which is too small or has not been noticed by established businesses. To assist potential entrepreneurs in their ventures, many universities establish business incubators. These are centers which assist the entrepreneurs and help them their research and development into marketable products and services (America.gov, 2007). Entrepreneurs have distinctive qualities which separate them from rest of the people. Some of the characteristics of an entrepreneur include spontaneous creativity, ability to make timely decisions, and a having a risk-taking personality. An entrepreneur generally has good interpersonal and networking skills. He is able to adjust well in a crowd of people and is able to create and maintain contacts with people. According to most experts, these characteristics in an entrepreneur exist by birth or are developed at a young age owing to the circumstances around the person. These characteristics, coupled with the need and desire to be independent, self-sufficient and successful prompt an entrepreneur to start his own business venture. Role of Female Entrepreneurs in UK Having defined what entrepreneurship is, we shall now focus on the actual question. In this section, we will study and analyze the role women play in the entrepreneurial environment of UK. The following statistics have all been taken from the Women Enterprise Task Force website (Womens Enterprise Task Force) Female entrepreneurs account for 6.8% of UK’s total working population. 27% of self-employed people in the UK are women with around 620,000 women owned businesses. These businesses generate over £130 billion in turnover. The chances of a woman starting up an independent business activity are half as that of a man. This is because start-up activity amongst women is 3.1%, whereas for males it is 6%. Most of the female entrepreneurs fall between the age bracket of 35-44. These statistics clearly show that women are much less dominant when it comes to becoming entrepreneurs. They have a much lesser share than men amongst the total entrepreneurs in the UK as well as chances of them starting their own entrepreneurial venture are 50% lesser than men. This shows that even in the future the current trend is likely to prevail and the percentage of female entrepreneurs compared with men will be much lesser. When it comes to motivation and attitudes towards starting one’s own business, 54% of the women start their business to have freedom of choice related to work. This rate is 35% amongst men. Moreover, 21% of the women become self employed because of family commitments whereas only 2% of men have this reason. From the above figures, we can extract an important conclusion. We know that female entrepreneurs account for a very small percentage amongst UK’s working population. One of the reason for this could be the fact that most women are not under much pressure to become entrepreneurs. As seen above, a clear majority of them chooses to enter this profession to have choice of work and to have the freedom of managing family with work. Men, as opposed to this, are under much severe pressure to have a well paying source of income and to become independent. Hence, there are more male entrepreneurs than female entrepreneurs only because the latter are more motivated. Another factor which limits entrepreneurship amongst females is the fear of debt. The fear of failing in their entrepreneurial ventures is much higher for females as opposed to males. In UK, around 80% of women are responsible for caring for their children or arranging childcare facilities. This percentage is just 17% amongst men. Given the high cost of providing daycare or nursery facilities for kids and the shortage of such centers in UK, this is one of the reasons why females do not choose to work or consider entering into an entrepreneurial activity. As far as the nature of entrepreneurial ventures is concerned, in UK, more women (5.8%) are likely to start a socially oriented as compared to men (4.9%). Female entrepreneurs are also more likely to offer a product of service which is unfamiliar to the market and has fewer competitors. They are more likely to be using technology in their products or services than their male counterparts. Females are more interested towards offering services with 48% of female entrepreneurs operating in the service sector. For male entrepreneurs, this is 36%. There are differences amongst levels of female entrepreneurship even at the regional level. Usually the level is high in regions or countries where strong emphasis is placed on female participation and support is provided by government or other organizations. In the South East region in UK, there are currently 165,000 female entrepreneurs. Compared to male entrepreneurial activity, female entrepreneurial activity is higher in certain regions. These include the Midlands, East of England, the North East and the South West. However, the percentage of female entrepreneurs is much lesser in regions like London and the West Midlands. The South West region has the highest level of female entrepreneurship (5.6%) while the West Midlands have the lowest (2.5%). These regional differences could be attributed to a number of factors. Education plays an important role in inspiring and motivating individuals to step into entrepreneurship. Besides this, comes the role of the environment and the opportunities available to assist the individuals. This could be in the form of organizations which support startups, financial support by banks, or support provided by university entrepreneurship centers. Culture is also very important when it comes to motivating the people to become independent by starting their own business ventures. In some cultures, being self employed in an entrepreneurial venture is considered to be a great reward, whereas, in some others having a good job is preferred over one’s own business. Comparison of Male v/s Female Entrepreneurs Most people tend to differentiate in between male and female entrepreneurs while most female entrepreneurs do not want to be differentiated from men entrepreneurs. They tend to compete against men without any biases or being treated differently because of their gender (The Entrepreneurial Mind). Although gender does not play a differentiating role in terms of entrepreneurial business as both the sexes are faced with the same problems and issues while trying to run their businesses effectively. What actually differentiates in between women and men entrepreneurs is the fact that both the sexes are faced with different situations and have different needs. Therefore, differences occur because of differing expectations, reasons for starting a business, motivations, opportunities sought and types of businesses between men and women entrepreneurs. A comparison of men and women entrepreneurs is done below on the basis of these factors. Men usually have a prior exposure to business before they begin their own ventures and hence often expect high return from the venture. For this reason men research and look for business opportunities, they seize one as soon as they are confident that it will give them a high yield. Therefore, men spend more time looking for the right time and right product to start their own business. Hence, motivation for most male entrepreneurs comes from the financial aspect of the venture. Motivation is therefore tied with the returns, the higher the returns of the venture the greater is the motivation for starting the business. Male entrepreneurs are also or more likely to start up technologically intensive businesses, such businesses loose their competitive edge early and have a less geographically localized business but give high returns. They are less likely to ask for help from someone else regarding their business, it may be because of pride or because of not admitting to a mistake (What Makes Women Entrepreneurs Different from Men?). Hence, male entrepreneurs want to be the centre of the business themselves and do not want the business to function without their own involvement. Women entrepreneurs on the other hand are generally involved in low risk ventures which are not technologically intensive. Women usually prefer to deal with the service industry with a special focus on health care. They are less likely than men to buy their businesses but are more likely to get positive revenues from their ventures (Kepler, 2007). Women entrepreneurs focus more on making sure the work environment is comfortable so that they can obtain the best performance from their employees. Therefore, unlike men they put in a lot of work to manage the workplace and tend to focus on building a business so strong that it could function completely and successfully without them. Motivation for women entrepreneurs is not tied only to finances but it is also dependent upon other personal and family issues. They are also more open to ask for help and admitting that they do not know if they have no clue how something is done. Hence, ego and pride does not play an important role in the life of female entrepreneurs. Before we can compare two different entrepreneurial setups it is vital to define what success and failure mean in terms of entrepreneurial businesses. Since, both the terms are relative to some other entities, let us first explore the basis by which we can judge the success of an entrepreneurial venture. The success of an entrepreneurial venture is not only dependent upon the revenues and the financial strength of the venture. It is also dependent upon other operational factors such as workplace environment, power and authority, roles and responsibilities, long term orientation of the venture, human capital and organizational professionalism. Examples of Successful Female Entrepreneurs in UK Although statistically female entrepreneurs in UK, when compared with their male counterparts, are much less in number as well as in percentage, there are a few outstanding personalities which have risen and have proved their merits and abilities. In this section we look at a few famous female entrepreneurs in UK in the recent years. One name that truly stands out is of Dame Anita Roddick. She is a very famous Britsh entrepreneur and the owner of The Body Shop, a cosmetics company known for its beauty products. Anita was born in 1942 in a Littlehampton, Sussex and had a very humble childhood. After leaving school, Roddick trained as a teacher and travelled extensively before getting married in 1970. While her husband was away, Roddick started The Body Shop. As a start, she experimented with different ingredients to make her own cosmetics. The first outlet was opened in Brighton, England, with only fifteen products. Her unique selling point was the idea of providing quality skin care products in refillable containers and convenient sizes, and marketing them with truth rather than hype (Anita Roddick). With the strong environmental appeal and popular demand of her products, Roddick had already opened a second shop within 10 months. Since the customers wanted to sell the products, in 1984 the company went public and established franchises all over England. Today The Body Shop has over 1,980 stores with more than 77 million customers in 50 different markets and serves customers in over 25 different languages. The Body Shop was considered the second most trusted brand in the UK, and 28th top brand in the world. In March 2006, L’Oreal purchased The Body Shop for £652 million (About.com). Roddick has a strong reputation for supporting social and environmental causes. She was also a member of the Demos think tanks advisory council and founded the charity organization Children On The Edge (COTE). Rodick is a role model for many aspiring entrepreneurs and her success reaffirms the belief that women can also be successful entrepreneurs. Examples of individuals like her contradict the statement that women are worse than men when it comes to being successful entrepreneurs. Another such individual who has become a great name because of unique writing style, mastery of story-telling and creativity, is the famous British author J.K Rowling. Having very humble beginnings and very moderate education, Rowling has become a millionaire in no time. She had no great achievements and was barely surviving on a moderate income. In 1990, she got the idea of writing “Harry Potter” and immediately set about working on it. In 1995, she presented her manuscript to twelve publishers and was rejected. It was not until an year that she was accepted by a small publisher and her first book of the Harry Potter series was published. Success followed her unprecedentedly as the book was a tremendous success. Rowling went on and published six more books in a period of 11 years. Her last book sold 11 million copies on the first day of its launch. The estimated brand value of Harry Potter is $15 billion and the last four books have set the records as the fastest selling books in history. Not it’s the money; the books have restarted the book-reading trend and have once again brought back children’s interest in books (Scholastic). J. K. Rowling is another inspirational figure who has proved that females can prove to be successful entrepreneurs and become even more successful than men. In her case, it was a combination of creative skills and the need to be financially stable which got the best out of her. There are several other examples of female British entrepreneurs who have established a name for themselves by initiating innovative projects at a very young age. Some of these include (The British Library Board , 2008): Sam Roddick, the daughter of Body Shop legend Dame Anita Roddick and founder of the Coco De Mer, an ethical sex store. Lorraine Heggessey, the first ever female controller of BBC1 and a true pioneer in the television industry Sian Sutherland, managing director of skincare company Mama Mio and achiever of British Female Innovator of the Year 2006. Jessica Huie, founder of the fast growing ethnic greeting cards company ColorBlind Cards Debbie Reynolds who set up the thriving School of Sign Language The brilliant ideas, hard work and perseverance of the personalities discussed above have been critical in building their successful businesses. Their impressive achievements serve as an inspiration to others who are hoping to flourish in the world of business. These women stand out to prove that female entrepreneurs are no less successful than males. Although the success greatly viewed in terms of fame and reputation, but in the cases like Rowling and Roddick, this has taken them to millionaire positions. What Constitutes Entrepreneurial success In order to term an entrepreneurial venture as a success it must be able to function as a professional organization where there are standards for doing work and there are no discrepancies in records and working documents. Another important success factor is the power and authority that is ascertained by the owner of the entrepreneurial venture. If the owner implies authority and manages work well, there are bound to be fewer errors and hence the organization will have greater efficiency and productivity. Similarly, if we are to determine the success of the venture we must also take into account the long term planning for the efficient running of the venture. Long term planning documents must be made, which should resolve issues such as succession and transfer of authority. Hence, success of a venture does not necessarily mean that it is making money, but it means that the entire entity is working as a whole like a professional organization that has the potential to grow further. Now let’s compare the factors of success with the attitudes and practices of men and women entrepreneurs to gain an understanding of which sex is better in terms of organizing entrepreneurial businesses. As mentioned earlier as compared to women men often put in more time to their business ideas than women and hence men ponder over the work and the issues that they might face while executing their plan. Therefore, men usually have an execution plan to the business venture but it may not necessarily always work. Men imply authority and manage work by delegating responsibilities and by ensuring checks and balances. They are also more likely to lay off people who do not perform consistently while women are more sensitive and are less likely to lay off people to improve efficiency. Similarly, men will also try and do things in a manner where their personal authority and responsibility is evident this causes a strong chain of command and authorities can be delegated easily. So the entrepreneurial firms that are founded by women may not be able to do this as efficiently. Men also work out issues of succession and authority in the early stages of the business, and this is because of their exposure to the market. Reasons for Lack of Success for Female Entrepreneurs Similarly, we must also define failure or weakness of an entrepreneurial business. The failure of an entrepreneurial venture can be due to numerous reasons. The most important reasons are identified and explained. The most important reason of failure is the poor execution of the business plan. The execution is vital to the success of the business, an individual may have the most brilliant idea lying with him but if it is implemented in a haphazard manner, in which execution is faulty the venture is bound to fail. Failing to identify a viable market for the products will also lead to failure. Too many startups bud up before realizing the potential for selling the product and hence when they start to produce they are not able to sell it efficiently. Hence, most startups come and go without being noticed by the consumers. In order to ensure the survival of the venture it is necessary to identify a viable market for the product that will be developed. Another critical reason for failure is taking too much financial leverage. For a budding business it is very difficult to predict accurately the exact amount of revenue or expenses that they will incur. In such situations it is critical to moderate the level of financing the organization intends to take. Sometimes, firms are led to believe very highly about their future returns and they often finance (debt) their operations. Therefore financial leverages should be dealt with carefully and using modest estimates. Yet another reason for failure that is related to finances is the underestimation of the amount and capital necessary to reach the cash flow breakeven. Thus entrepreneurs need to conservative while making their financial projections and should also plan on having adequate funds in the initial stages of the venture when the company is incurring losses. Competing inefficiently with market leaders is also an important reason for failure. This may occurs because an entrepreneur plans to bootstrap his new business while competing directly against entrenched market leaders. While the large businesses have enormous resources, they can use it to deter the new fish in the market. Some common examples of increasing the barriers of entry for new ventures that are used by big companies are undercutting prices to attract even more customers, increase the advertising budget and leave little room for advertisements of smaller businesses and choke off the access to suppliers and distributors. Therefore, before one starts an entrepreneurial venture it is necessary to formulate a plan to deal with the big businesses operating in the same market segment. Ventures may also fail if the entrepreneurs pick a wrong pricing strategy. Price is the core of selling a product to customers. Startups should focus on their pricing strategy and choose one that suits well to the description of their product and is justifiable to the consumers. Similarly, businesses people need to select their markets very carefully. A phenomenal product in a non suitable market segment is bound to fail irrespective of the products features or benefits. After defining the reasons for the failure of entrepreneurial ventures we need to analyze how these factors are related to men and women entrepreneurs and which sex is more likely to be affected by what factor. Men as mentioned earlier spend more time studying their venture than women; therefore they are more likely to come up with a perfect business plan. Execution of the plan is very critical to the success of the venture. The plan already has a marketing plan and an advertisement strategy to create an appeal of the product. If all these factors in the plan are carefully planned and discusses with team members many critical mistakes can be avoided. Therefore, men as compared to women are better when it comes to analyze the business perspective of the venture. They are also better in looking at small details because of their exposure to the market. Although there are higher chances of failure because men often deal with risky ventures while women entrepreneurs like to go with non risky ventures. Most women entrepreneurs find it difficult to cope up with the financial aspects of the business. Women find it challenging to determine what financial leverage will be required. This can be reflected by the fact the most venture capitalist are men. Men are more likely to go to venture capitalist and banks while women will mostly rely on their personal savings or angel investors. Hence, it may be difficult for women entrepreneurs to gather adequate amount of funds that will be required in the early phases of the business. Furthermore, men are more likely to face the tough competition given by the large businesses while women will generally select a niche with which they are comfortable. Selecting a niche may sometimes be the primary cause of failure, especially in cases where there is high anticipation about the products success in the minds of the entrepreneurs. The anticipation leads to the selection of a niche catering to which may not be profitable at all. Conclusion In this essay, I first described what entrepreneurship is and defined some of the factors that encourage it. Focusing on the question, I researched and described the role female entrepreneurs play in the UK. To reflect the success of female entrepreneurs, I gave a brief account of the lives and achievements of some of the most famous women entrepreneurs in the UK. I researched on some of the factors that constitute entrepreneurial success and investigated on the reasons which are behind lack of entrepreneurial success for women in UK. Based on the statistics and the factors that affect entrepreneurial success and failure, we can conclude that men are more likely to succeed as compared to women if they start a new venture. Although this does not necessarily mean that female entrepreneurs can never achieve success and there are individuals, like the ones mentioned, who started very meagerly but have become highly successful entrepreneurs. Bibliography About.com. (n.d.). Anita Roddick - Redefining Business As We Know It. Retrieved December 12, 2009, from http://entrepreneurs.about.com/od/famousentrepreneurs/p/anitaroddick.htm America.gov. (2007, November 09). What Is Entrepreneurship? 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