Women Entrepreneurs

Debate between Seema Malhotra and David Simpson

Wednesday 18th March 2015 Westminster Hall

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I am delighted to open this debate on the important topic of women and entrepreneurship. I grew up above my parents’ shop in Osterley, just half a mile from my constituency, and I have spent time self-employed and running my own business. I have visited women’s business centres in America and the UK and I passionately believe in the need for an ambitious strategy to support women-led enterprise. I would like to acknowledge the work Hounslow chamber of commerce does in my constituency and across Hounslow to support women-led enterprise. A number of women have set up and started their own businesses in the community, making a huge difference to the local economy.

Women’s entrepreneurship has great potential for growth, creating jobs and wealth while reducing gender inequality. Women-led small and medium-sized enterprises already add £70 billion to the UK economy, yet women are only half as likely as men to start their own business. According to the findings of the Women’s Business Council, chaired by Ruby McGregor-Smith, CEO of Mitie, it is estimated that if women were concentrated in entrepreneurial activity at the same rate as men, there could be an extra 1 million female entrepreneurs. Indeed, according to the most recent OECD data, there is a gender gap of almost 50% in entrepreneurship in the UK: total entrepreneurial activity, defined as the percentage of the working-age population either in the process of starting a business or running a new business, among working-age women was 7.5% in 2014, lagging behind the rate for men, which was 13.5%. In the US, the rate is 11.2% for women, compared with 16.5% for men.

There are real challenges, therefore, in realising the economic benefits that can come from women-led enterprise, but that should not be the case. Research published last week by the business software group Xero, for example, found that women-led start-ups tend on average to lose less money and to have more success in winning new contracts. Emerging findings from research being undertaken by the Centre for Entrepreneurs suggest that, although women have entrepreneurial and growth ambitions, men seem to be better than women at realising those ambitions. Continuing to understand and to deal with the barriers to women’s entrepreneurship needs to remain a core part of our economic policy.

A review of that policy area in the UK shows a growing focus on women entrepreneurs since 1997. The then Department of Trade and Industry formed a women’s enterprise policy team in its Small Business Service, and in 2003, the then Labour Government published “A Strategic Framework for Women’s Enterprise”, which was the first policy response of any kind from a UK Government on the potential for economic growth if women were encouraged to start their own businesses in a similar way to men. The report set out targets, and the women’s enterprise panel was formed to advise the Government.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Lady on bringing this debate to Westminster Hall. If I did not speak in it, my wife would be very angry, because she has been an entrepreneur for many years and has been very successful. Does the hon. Lady agree that to encourage young women to start up businesses or whatever, we need to start at the very root, in further education colleges, schools and universities, to encourage them to come out and use their skills?

[Seema Malhotra]

I thank the hon. Gentleman for his intervention. He is absolutely right. Although the Government have made some progress on increasing enterprise education, we have a long way to go. One finding from research that I undertook last summer was that women who were starting their businesses later in life wished that they had had that education earlier. Women never know at which stage in their life they will be starting a business. It is increasingly common for both very young women and those who may have taken time out of the workplace to have children to become returners to start enterprises and suddenly find that they do not have the support or knowledge they need. I therefore thank the hon. Gentleman for his wise comment.

The Women’s Enterprise Task Force, established in 2006, took forward some of the work. Although not a delivery body, the WETF provided input to Government on key policy areas that affected women’s entrepreneurial uptake. The WETF produced several recommendations and directed and implemented Aspire, a £12.5 million women’s co-investment fund to support high-growth, women-owned enterprises. In 2008, policy developments taken forward included Government provision of enterprise support focused on women through the regional development agencies and Business Link.

In recent years, there has been a slow-down in support for women-led enterprise. Although the Women’s Business Council, formed in 2010, has done very important work, Prowess, the UK advocacy network for women in enterprise, has been scaled back to, in effect, a newsletter service, and the regional women’s ambassador programmes have been disbanded. For the recently published Burt report, a survey was done of local enterprise partnerships. The author wrote to ask all 39 local enterprise partnerships about their current engagement with women entrepreneurs, but only seven responded; of those, none had more than one female director for every three male directors and none had a strategy for promoting women in enterprise.

I remain extremely concerned that activity is being scaled back instead of pushed forward in the way the Government have reallocated resources for development programmes across the regions. The Department for Business, Innovation and Skills small business survey in 2014 suggested that women-led businesses fare less well over time than equally led or entirely male-led businesses. In 2014, 24% of one-year-old businesses were female- led and 45% were male-led, but of four to five-year-old businesses, only 14% were female-led and 49% were male-led.

I mentioned research on women and entrepreneurship that I undertook some months ago. Through a series of seminars and public meetings, I looked at three dimensions of the gender gap in entrepreneurship in the UK: the rate of business start-up, the sustainability of enterprises, and the speed of growth of female-led versus male-led enterprise. Findings from our focus groups research suggest that there is greater support for starting up an enterprise, as well as perhaps at the top end, but a lack of support for established women entrepreneurs in the middle who are looking to grow their enterprise and are struggling to find support and advice on how to do so. Access to finance can be harder to come by, with investors and banks assessing some women’s businesses as more risky. Indeed, one woman I met, who had set up a child care business in Reading, was turned down for investment by her bank because it could not understand her business model—frankly, it did not understand the business of child care. She remortgaged her house to put her own finance into the business, and went on to increase her turnover and to employ about 20 people.

The needs of this group of women are not being met, so their economic potential is not being realised. The key question that emerges is what more needs to be done by the UK to bridge the gender gap not just in start-ups but in growth and sustainability. Closing the gap means understanding better the circumstances and gender differences in entrepreneurship, so I will spend a few minutes talking about motivations and barriers.

We know that although women have the ambition to set up businesses and grow them, different motivations make entrepreneurship attractive to them. They can include pursuing social goals, a personal passion or a niche in the market, or seeking a work-life balance, flexibility or more control over one’s life. It is positive that young mothers are leading an entrepreneurial surge in new business start-ups—the high cost of child care and the easy availability of technology that allows businesses to be started and run from home contribute to that surge—but if our current statistics are anything to go by, those businesses will need support to survive and grow. A new breed of business women, dubbed “the returners”, has made an excellent contribution to the increase in the proportion of small and medium-sized enterprises run by women from 14% a few years ago to 20% today. The number of women over the age of 30 seeking start-up finance and mentoring has increased by a third in recent years. In some measures, therefore, we see some positive trends, but the research suggests that women-led enterprises have less of a chance of surviving and growing.

Barriers to growth may be encountered by female and male entrepreneurs. According to emerging research by the Centre for Entrepreneurs, all groups express concerns about cash flow and about getting the right people and skills, but women are more likely than men to identify child care and supporting their partner’s career as barriers that affect their own enterprise. They were also more likely to want specific business education—a point made by the hon. Member for Upper Bann (David Simpson)—face-to-face contact, and good mentors, in contrast with men, who specified that they sought advice.

That may shed some light on another gender-specific barrier: lower self-belief, as identified in research by Xero. A third of women said that a lack of self-belief had been the biggest barrier standing in the way of launching their small business, and it was the single reason most often given. In my research, I found that access to support and advice remains a problem. Women want forms of business education that are better tailored to their needs, and they raised with me the need for enterprise education in schools, so that young people can build entrepreneurial skills. We do not know who will become the entrepreneurs of the future, and that door should be open to children from a very young age.

In Liverpool, I saw an excellent example of networking and advice tailored to reach women when I visited the outstanding Women’s Organisation. Simply by moving the sessions to more family-friendly times, the organisation ensured that the number of women who attended business support events increased. The classic timing of business events and drinks right after work at 5.30 pm clashes perfectly with the time when kids are at home, or at after-school clubs, and dinner needs to be made.

Confidence can also be a significant factor in personal risk levels that may guide or limit the decisions that women make. Women may calibrate risk and confidence differently in taking tough decisions; they may also be less likely to see themselves as entrepreneurs than as business owners or founders, which may affect how they perceive and respond to marketing campaigns.

The Government have introduced some strategies, but there is still a long way to go. The Government published the Burt report, “Inclusive Support for Women in Enterprise” in February. That was helpful, but it is unfortunate that when the role was established, it was aimed at promoting and supporting female entrepreneurs, focusing on raising awareness rather than producing sound, evidence-based policy recommendations. The report recognises some initiatives such as StartUp loans, the enterprise allowance and local growth hubs, but it also suggests that there have been deficiencies in the way support has reached women, because it has been extremely patchy, rather than universal.

The report recognises the need to change some of our language around support, so that it looks and sounds more accessible and relevant to women entrepreneurs, who may search for it online. I am often struck by the huge contrast between the US Small Business Administration website, which has mainstreamed women’s business support and which feels customer-centric and targeted towards small business, and the website of the Department for Business, Innovation and Skills, which I believes serves Ministers more than it does those who seek access to services.

I welcome the fact that the Government have recognised the need to give diverse businesses diverse support. They have extended the types of support that may need to be provided to businesses set up by different people—for example, young people and those from ethnic minority backgrounds—to ensure that there is access and guidance for mentoring, networking and sources of finance. However, women have told me that they feel the Government’s support is located in a range of places and those who are looking for support find it hard to join up; they also find it difficult to identify what is really relevant and where to get the quality help they need. A page for women-led enterprise is attached to the GREAT Business website, but it feels like an add-on and a collation of bits and pieces. It could be far more integrated. I would be interested to know why the Aspire fund, a £12.5 million fund that makes equity investments of between £100,000 and £1 million on a co-investment basis, has so far invested only £4.7 million in women-led enterprises. It is certain that problems remain. As David Prosser wrote in The Independent last week:

“There is certainly a problem to tackle here. Government statistics suggest that fewer than one in five smaller companies are led by women. That’s not enough—not just because social justice demands equality of opportunity, though of course it does, but also because there is every reason to expect women-led companies to outperform.”

I will close with a few questions for the Minister. First, what cross-Government work is going on to integrate support for women-led enterprises at start-up and growth stages, and which Departments are actively involved? Secondly, what consideration have the Government given to putting the Women’s Business Council, which has done some important work, on a statutory footing so that it remains part of our business and policy-making infrastructure? Thirdly, why has the Aspire fund, which is designed to invest in women-led enterprises, invested only a third of its intended funds? Fourthly, which Minister is accountable for closing the gender gap in entrepreneurship, and whose dashboard is it on?