Originally Published: May 23rd, 2015
2015 was a good year for women in British public life. After a close fought election, voters returned 191 female MPs to the House of Commons, representing 29% percent of the total. Not enough, certainly, but a definite improvement on the previous figure of 147. Progress is being made in an institution that is often seen as a bastion of social conservatism ( with a small “c”)
So how does that rise in representation compare with the business world? Well some progress is being made there too, albeit very slowly and from a low base. In the rarefied world of FTSE-100, the UK’s top companies are close to hitting a target that calls for 25% of directorships to be held by women. In March of this year, Lord Mervyn Davis – the Labour Peer charged with leading a government review of female representation on boards – told Parliament that the figure had reached 23.5, almost double the percentage recorded in 2011. However – and this is a very big however – women account for only 8.6% of executive roles.
Meanwhile in the world of small entrepreneurial companies, figures published by the Women’s Business Council show that only 19% of SMEs are “majority run” by female owners and managers. What’s more, women are half as likely as men to start a business. As the council points out “If women were setting up and running companies at the same rate as men, there could be a million more female entrepreneurs.” And that would translate into a more dynamic economy and more jobs.
Few would argue with the council’s assertion that it essential to encourage more women to go into business as part of the wider drive to create a dynamic, entrepreneurial economy. But that raises questions – namely why do fewer women go into business? What hurdles do they face? And how can those hurdles be addressed.
Earlier this week I had a chance to put those questions to Lopa Patel, a digital entrepreneur and the first woman to win the Queens Award for Enterprise. A passionate campaigner for gender and ethnic diversity in the workplace and boardroom, she is also CEO of think tank Diversity UK.
Fallout From the Earnings Gap
According to Patel the earnings gap between men and women that is still apparent in the workplace has implications when female employees consider starting a business for the first time. “If women have been working, they have been earning less than their male counterparts and they have fewer savings to invest in the business,” she says. “Or they may have a weaker credit history than their make counterparts, which makes it more difficult to get credit terms from male suppliers.”
Less obviously, Patel says women find it harder to find mentors and people to not only advise and encourage them.
The Funding Conundrum
And as Patel sees it, women have traditionally struggled to gain credibility in the eyes of VCs and Angels She cites the fashion and beauty sector as an example. “It wasn’t until Natalie Massenet sold Net-A-Porter to Richemont for $50 million in 2010 that venture capital firms and investors started taking online fashion and beauty business models seriously,” she says. “Today, companies like SnapFashion and FarFetch have billion dollar valuations. Prior that, women-led businesses in the fashion and beauty lacked credibility in the eyes of investors.”
But that raises another question. The success stories of female entrepreneurs are writ large so why would at least some VCs and angels still, consciously or unconsciously, tend to favour men. Patel says that there is still a language barrier – or to be more precise women tend use a different vocabulary when describing their plans.
“One difference I’ve personally encountered is that men always talk about their business model and the scale they’re going to achieve with it, whereas women mostly talk in real numbers i.e. customers, transactions and profit rather than about scalability. This gap between perception and reality may be the reason that makes women led businesses less attractive to potential investors,” she says
Patel also points to a difference in approach, with women preferring to prove their business model rather than rushing to scale up. She argues this can give a false impression of women being more risk averse.
Changing the Script.
Patel says concrete measures can be taken to encourage women to go into business and to make it easier for them to do so. “I think a women-only Business Fund and a Women’s Business Bank would help as would an increase in the quality of support provided by Local Enterprise Partnerships (LEPs), Chambers of Commerce, Trade Bodies and business networks,” she says “ At the moment, most of these organisations are led by men for other men! A change in diversity within the supporting organisations themselves would be a great start.”
Perhaps more fundamentally, Patel sees the need for change of emphasis within the education system. For instance, the UK has become the tech hub of Europe and much of the entrepreneurial activity has been led by graduate and school leavers with strong computer science skills. “ Women are under represented,” she says. “It starts at school with fewer girls choosing to take up STEM subjects (other than medicine and dentistry) which results in about 18% of the intake for the Computer Science and related degree subjects being female. For engineering subjects, it is even lower so we start with a weak pipeline and end up with the tech end of the technology workforce being 13% female and an engineering workforce that is 6% female.”
So what’s needed is more encouragement to take STEM subjects within the school system and also a commitment to re-skilling the female workforce.”
Clearly there is still a lot to do. From qthe structural differences in the workplace and corporate finance markets through expectations engendered in the schools systems to the fact that women often approach entrepreneurship differently from make counterparts, there are many issues that must be addressed to level the playing field. The prize is a healthier and more dynamic UK economy.
Read the original article from Forbes here: