A revealing study shows that a need for financial stability and a low tolerance for risk-taking and failure, are among the most significant factors holding back female entrepreneurship.
A research conducted by Livingfacts, commissioned by Sage Foundation, reveals that more than 50 per cent of women believe corporate jobs are ‘a safer option’. And, only 20 per cent of those who don’t own a business felt they have the necessary network to support their family responsibilities.
Undertaken in partnership with the International Women’s Forum South Africa (IWFSA), the research highlights the obstacles that women face, including a lack of exposure to entrepreneurial role models in their families and communities; poor access to funding; and the challenge of juggling personal and work responsibilities.
Nonetheless, the research also shows that women admire entrepreneurs and increasingly see entrepreneurship as a viable pathway to personal growth and wealth creation. Sage Foundation and IWFSA conducted the research to fill the gap for data about the motivations and aspirations of South African women in the formal business sector. The foundation has made a global commitment to women as part of its effort to build sustainable social, economic and entrepreneurial opportunities in Sage’s local communities around the world.
But helping starts with having the right information at hand. The study therefore, provides fresh insight into what drives South African (and African women in general) to establish businesses of their own, why they succeed and why they fail. It also highlights how critical it is for NGOs, government policymakers and other stakeholders to position entrepreneurship as a viable career path for young women and to provide them with mentoring and support as they build their businesses.
Family role models needed to
Only 20 per cent of women in the survey and a mere 16 per cent of respondents who do not have their own business agreed that having your own business was seen as a viable career choice when they were growing up. Most women saw corporate jobs as a safer option, with more than half (51 per cent) saying “it is definitely important to me to have financial security and a stable salary”.
Nearly a quarter of women saw losing these benefits as a deterrent to starting their own businesses. The research indicates that few women get exposure to entrepreneurial role models in their formative years, with only 15 per cent saying that they definitely had family and friends who often talked about business when they were young and only 29 per cent who said that there definitely was a successful business owner in the family and extended family.
The lack of a role model carries through into women’s careers and later lives, too: only 14 per cent of women reported that they have a business mentor or role model.
“Young women need to be exposed to the possibilities and the benefits of having their own business at home, in their communities and schools, and in the media”, says Joanne van der Walt, Sage Foundation programme manager for Africa.
The flexibility paradox
Some 59 per cent of respondents who quit corporate jobs to set up a business said a key reason for doing so was that they wanted flexibility around how they managed family and work commitments. Yet 19 per cent who gave up their entrepreneurial ventures to return to the corporate world cited a need for flexibility as the reason they went back to full-time employment.
Only 20 per cent of those who currently don’t have a business felt they definitely had the necessary network of family and friends that can support their family responsibilities. What’s more, a higher percentage (70 per cent) of women running their own businesses were married or living with someone who provides support, financially and in other ways.
Says Van der Walt: “Starting and running a business is far more time intensive than many women realise. Often, for women, a nine-to-five corporate job allows for more time with one’s family, and would-be entrepreneurs struggle to maintain balance between work and their personal lives – especially in the first few critical years of building a business. Changing gender stereotypes of who does what in a family and women overcoming their own reluctance to ask for help are key changes that could encourage female entrepreneurship.”
Female entrepreneurs show more appetite for risk than women who have not gone into business. The research found that 26 per cent of women who did not have a business said they were not afraid to take risks, compared to 43 per cent who had their own business.
Meanwhile, 37 per cent of those that never had a business thought it was scary to be in business for yourself.”Many families encourage young women to look for government or corporate employment, seeing this as a lower risk route for their future careers,” comments Van der Walt. “Yet with youth joblessness at above 50 per cent, many of our young women may never have a corporate job. We need to help young women see the risks and potential failures of entrepreneurship as learning experiences on the road to growth and prosperity.”
Capital and funding remains a primary necessity
Female entrepreneurs are finding access to capital and funding to be as much of an obstacle to starting their own businesses as their male counterparts in South Africa – if not more. Most (84 per cent) women started a business using their own savings to do so; very few obtained funding from traditional banks and even fewer knew about venture capital, angel or seed funding, grants, or crowdsourcing. Some 61 per cent of women who have never had a business cited not having access to money or capital to start their own business as a barrier, while 33 per cent of those who went back to corporate jobs after starting a business said it was a key stumbling block.
The rewards of being your own boss
The study confirmed that women are attracted to the benefits of being rewarded for their own efforts and the freedom to be their own boss when it comes to entrepreneurship. They also saw entrepreneurship as a way to find personal growth and meaning, make a difference, achieve financial independence, give women a voice and control of their own futures, and create and innovate. Among those that do not own a business 58 per cent admire entrepreneurs, 42 want to work for themselves rather than someone else,
36 per cent envisage having their own business (even higher among young black women) and 36 per cent believe you can make a significant amount of money.
“The emergence of a growing community of female entrepreneurs is one of the most significant economic and social developments in the world. It is not merely redefining women’s economic roles, it is reshaping the modern global economy,” states Van der Walt. “Our research shows that this trend is also unfolding in South Africa – but it also highlights how much more we need to do to unleash the full potential of our country’s female entrepreneurs.”
Mpho Letlape, deputy president at IWFSA adds: “Research is vital for understanding how women are moving forward in the South African business world. With more insight into the challenges facing businesswomen and female entrepreneurs, we can focus on the areas where intervention is most needed. Right now, women leaders have an opportunity to make a difference in society, and help heal our nation.”
The findings of this research will be used to engage with policymakers and social NGOs about ways to encourage and support female entrepreneurs, starting from their school years, to help remove some of the barriers that women face when they go into business for themselves.