WMU News

Small business ownership an equalizer for women

July 25, 2001

by Dr. Trudy Verser

Over the past 30 years, American women have plunged into the work force in record numbers. While the glass ceiling certainly still exists, women have made great strides in the corporate world. But today, a growing number of companies are losing their best female employees not to the competition, but to entrepreneurship.

According to the National Foundation for Women Business Owners, the number of businesses owned by women more than doubled between 1987 and 1999, reaching slightly more than 9 million. Experts estimate that by 2005 there will be almost as many self-employed women as self-employed men in the labor force. Michigan is doing quite well in this arena, with the nation's eighth highest number of women-owned businesses, according to results from the 1997 U.S. Commerce Department's Census Bureau.

Working women, particularly mothers, are often lured by the flexibility of self-employment. While flex time has gained some popularity, many organizations are still reluctant to allow employees to work outside the traditional hours. A recent study asked employees which job perk they would most like to have; they overwhelmingly said they wanted flex time. When the researchers asked the corporate human resources people whether flex time was important, they answered with a resounding "no." When researchers further probed the HR execs, it was found that they were mostly upper-income men who either had wives at home with their children or in-home daycare. No wonder they didn't think flex time was important.

More and more women are trying their hands at entrepreneurship. They are willing to sacrifice the stability and monetary rewards of 8-to-5 jobs for the control to decide for themselves when, where and how much they work.

The start-up cost for a woman-owned business is generally lower than for a company founded by a man. For example, female entrepreneurs open more service-based businesses, which require less initial capital than product-based organizations. Another factor is that some women have trouble securing money through traditional lending channels. Lenders, especially bank lenders, look for certain language, knowledge and experience in an entrepreneur's proposal--language, knowledge and experience women may not have. Women planning to open a business tighten their belts, borrow money from family and friends, and invest more of their own capital than do men.

As their businesses grow, women manage differently than men. Their organizations tend to start small and stay small by design, much like the family unit. Research shows that female entrepreneurs have a sense for how things should be organized, and they excel at communicating and sharing their vision with employees. They have a way of counseling, cajoling and coaching workers that serves them well in today's economy.

However, there are some small-business pitfalls women must be careful to avoid. In my research, I've found that female business owners can go overboard with the nurturing. The very same trait that makes their employees feel valued can make workers feel stifled, and may harm the company. Studies have shown that a woman who feels nurturing, or motherly, toward her employees can also be blinded to their faults. She may spend far too much time and effort trying to bring a few slackers up to speed, when it would be best for the business to simply let them go.

Despite those pitfalls, women entrepreneurs are doing well. One study shows that women-owned businesses are more likely to succeed than are those owned by men. Nearly 75 percent of women-owned businesses in existence in 1991 were still in operation three years later, compared to a 67 percent survival rate for all U.S. companies. That's impressive. Entrepreneurship just may turn out to be the first facet of business where women reach parity with men. I'll be watching with interest.

Dr. Trudy Verser is associate dean for external affairs in the Haworth College of Business. This column was originally published in the July 4 issue of MiBizSouthwest and is reprinted in WMU News with their permission. The article is part of a monthly MiBiz series featuring professors from the WMU Haworth College of Business.

Media contact: Jessica English, 616 387-8400, jessica.english@wmich.edu

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