Why more women are becoming entrepreneurs.

WHY MORE WOMEN ARE BECOMING ENTREPRENEURS

From 1972 to 1982 the number of self-employed women in the United States increased by 69 percent. This represented a rate of increase five times greater than that for men in the same period. From 1977 to 1980 the proportion of non-farm, sole

proprietorships operated by women increased from 22.6 percent to 26.1 percent. In addition, the number of non-farm, sole proprietorships operated by couples soared from 284,405 in 1981 to 440,000 in 1982. To find out why women are turning to entrepreneurship in increasing numbers, two surveys were conducted: one of women entrepreneurs in the state of Georgia, and another of both male and female entrepreneurs in the Atlanta area for purposes of comparison.

OBJECTIVES OF THE SURVEYS

Previous studies, including one published in this journal by Robert D. Hisrich and Candida Brush in 1984, have reported that the women entrepreneur is not an "average" woman and that she has problems not encountered by her male peers. The Hisrich and Brush study covered 18 states, and like most previous studies of this type, focused on the characteristics of the women and the nature of their businesses and problems. While the objectives of the two surveys described in the present article were similar to those of the Hisrich/Brush study, some additional objectives were added and others were omitted. The information sought in the present study included the reasons why women were going into business for themselves; the type (or types) of women who were doing so; and how successful they had been. The first survey in the study was designed for women only; the second for both male and female respondents.

A secondary objective was to try to determine how representative the results of this survey, conducted in a limited geographic area, may be of entrepreneurs in general. This determination was considered important because in-depth studies frequently require personal interviews, which are often feasible only when the study is limited to a relatively smaller area. The results of this study are thus compared with those of the large study conducted by Hisrich and Brush.

Informed observers have posited a number of hypotheses as to why there has been such a marked growth in the number of women-owned businesses. Included among these is the belief that, of the comparatively large number of women now occupying the lower rungs of the corporate ladder, many have found it impossible to climb to a level where they can "run the show." Consequently, they have "opted out" to found their own businesses. Another explanation is that many women have come to the conclusion that compared to working for others, running one's own business is more compatible with woman's demanding role in child rearing, because of the greater flexibility afforded by setting one's own working hours. Testing these and other popular hypotheses was a final objective of this study.

METHOD

To accomplish these objectives, 291 questionnaires were sent to women-owned businesses in the state of Georgia. Fifty-three percent (154) of these were returned. The greater Atlanta area accounted for the majority of the respondents. Respondents were asked about their personal and business characteristics; their reasons for going into business; the disadvantages and advantages of being a woman business owner; their chief problem and what they now wish they had done differently; how important income from their business was; and whether their expectations had been met. In order to gain fresh insights and to collect qualitative data, respondents were encouraged to add their comments, and many did.

In order to investigate whether there is a difference between male and female entrepreneurs, a second questionnaire intended for male as well as female respondents was later sent to advertising and public relations firms and retailers in the greater Atlanta area. These industries were chosen because the great majority of the respondents to the first survey were engaged in retailing or other service businesses. The relevant questions on the second questionnaire were identical to those on the first. One hundred and seventy-one of these additional questionnaires were sent out, and 47 percent (80) were returned.

A principal reason for including women in the second survey was that the first provided no basis for determining whether or not a woman had male business partner(s). No list of male-owned firms was available, so firms with names which did not suggest that they were owned by women were selected. Most of the potentially male-owned retail firms sampled in the second survey were ones which merchandised products seldom offered by female-owned firms.

RESULTS

Personal Characteristics

Sixteen percent of the women entrepreneurs who participated in this study had gone into business with a relative--most commonly a husband--while 3 percent had acquired a business through inheritance. Another 16 percent had gone into business with non-relatives. The substantial majority (64 percent), however, had established or purchased businesses of their own. Forty percent of the respondents had previous experience in businesses of the same type as the ones they now owned.

Of 145 women entrepreneurs answering this question, 86 indicated that they were married, while seven were widowed, 38 were divorced, and 14 had never been married. Thirty-four indicated that they had one child, while 76 had more than one and 35 were childless. Nearly three-fourths were included in the age categories of 30-39 years (39 percent) and 40-49 years (34 percent).

A majority of these women entrepreneurs had previous managerial experience. Sixty-three percent had been employed as managers before going into business for themselves. Slightly more than half had five or more years of business experience before starting their own firms, and one-fourth had more than ten years experience (see table 1). Before going into business for themselves they had held a wide variety of jobs. Among the occupations most frequently mentioned were secretary, typist, or clerk; salesperson (non-retail being almost as important as retail); accountant or bookkeeper; and teacher. Many other previous occupations, however, were listed.

The educational attainment of the group was above average. Of 146 women entrepreneurs responding, 13 indicated that they had only a high school education, and three had not completed high school. Conversely, 46 had attended college; thirty were college graduates; 21 had done some graduate work; and 33 had graduate degrees. (Eight failed to indicate their educational attainment.) Liberal arts was the most common area of study. Very few had studied business. (Some commented that they wished they had.)

In the sample surveyed by Hisrich and Brush, 55 percent were married, and the majority were between 45 and 55 years of age. The majority of the respondents to the present survey who indicated their marital status were married, and 55 percent were 40 years of age or older. Thus, there appeared to be no significant difference between the respondents to the two surveys in these respects. In both surveys, also, most of the women entrepreneurs were operating sales-type businesses.

With regard to educational attainment, however, there were substantial differences between the two studies. Sixty-eight percent of the Hisrich/Brush respondents had attended college or graduate school, while 86 percent of the Georgians surveyed by the author had either attended college, graduated from college, attended graduate school, or received a graduate degree.

Nearly 70 percent of the college graduates in the Hisrich/Brush sample had liberal arts degrees. By comparison, of the 91 female entrepreneurs reporting their degrees in this survey, only 40 percent had a liberal arts degree. It should be noted, however, that while the Hisrich/Brush study included business majors in the liberal arts field, the present study separated business majors from all others. Thirteen percent of the respondents naming their major in the present study had majored in business. Business was the most common major among the Hisrich and Brush "liberal arts degree" recipients.

The majority of the Hisrich/Brush respondents' fathers were self-employed. Similarly, slightly over 50 percent of the respondents to the present survey reported that they had close relatives who were self-employed.

Business Characteristics

As was true of the Hisrich/Brush survey, the great majority of the women entrepreneurs in this study were engaged in businesses providing services--most commonly retailing. However, the respondents owned many different types of businesses. Included were professional services (accountant, architect, attorney, physician, chiropractor, and pharmacist), journalism, technical illustration, and photography (including the undersea variety). Other services included psychological consultation, mental health clinic, nursing service, secretarial service, maid service, commercial painting, construction, pest control, electronics, commercial space planning and interior design, calligraphy, film and video production, and communications. Still other businesses were retailing (women's apparel, lawn mowers, gifts, music, wallpaper, art, flowers, hardware, and carpeting), wholesaling, manufacturing (belts, clothes), importing, printing, plumbing, steel erection, real estate, automobile dealership, puppet making, travel agency, and various consulting services (management, communications, and political marketing). Other business areas reported include advertising, computer software, typesetting and graphic design, restaurant, delicatessen, convenience store, catering service, food service management, locksmith, fitness center, insurance, and insurance fraud investigation. Scarcely any two respondents were in exactly the same type of business.

The largest firm headed by one of these women entrepreneurs employed 400 persons. Four others employed more than fifty persons, and fourteen had more than 20 employees. Nineteen reported no employees other than the owner. The average number of persons employed by firms which had employees was 13. Many of the different firms' employees were part-time or employed on a contractual basis.

Six percent of the firms reported gross annual sales revenues of between one and five million dollars, while one percent reported sales revenues exceeding five million dollars. The most frequently reported range of gross annual revenue (by 30 percent of the respondents) was $100,000 to $499,999. These figures are quite close to those reported by Hisrich and Brush. (For example: 32 percent of the firms in that study had gross revenues of $100,000 to $499,999, and one percent reported gross revenues in excess of $5,000,000.)

Only a small difference was found between the present study and the Hisrich/Brush survey as to average age of the firms operated by respondents. More than 60 percent of the Hisrich/Brush firms had been in business for four years or less, while 52 percent of the firms in the present survey were less than five years old.

Why They Went into Business

The responses of this sample suggest that the motivation of women entrepreneurs is similar to that of their male counterparts. Among the women covered by this study, being one's own boss (checked 66 times), the challenge (64), and the opportunity to make more money (54) far outweighed compatibility with family duties (20) as a reason for going into business. Twenty-two respondents said that owning a business was the best way for a woman to do the kind of work she preferred, while twenty said it was the best way for either sex. (These numbers add to more than 154 because some respondents checked more than one reason for going into business.) One of the respondents said:

As bad as it gets, and it does get bad, I wouldn't have it any other way. What a blast to be totally in charge of your income and your future. You can be whatever you want to be.

Some of the respondents stated that they had gone into business for themselves because of the lack of opportunity for women that they had experienced while working for others. One said that she had given fifteen years of her life to the banking business, "doing the work of five men, but not getting the promotions deserved and promised--nor the pay." Another commented:

After being in business on my own for a few years, I can tell you I would never again work for someone else. I never worked for anybody who had half the brains and abilities I do. It is terribly frustrating to constantly be in that position: being able to see so clearly how things should be done; yet having no power to act; then seeing exactly what you predicted come to pass. It is a joy to be able to set the path for your business and see your own management bring such great results and rewards. I highly recommend it for any responsible, mature, experienced woman.

The preceding comments would appear to support the claim that "entrepreneurs of both sexes tend to be independent, aggressive, creative, and frustrated when they're not in charge."

Family responsibilities were the reason, at least in part, for some of these women going into business for themselves. One respondent said that women with children have "more flexibility in self-owned businesses." Another explained that, "If I did not have children, I would never have left the corporate structure. At the time, I was the highest paid woman in a 12,000-plus employee company, but being superwoman was taking its toll."

Disadvantages and Advantages of Being a Woman

Forty-six of the 154 women entrepreneurs did not think anything would be different if they were men. Forty-four said that it would be easier to borrow money--a belief typically found by researchers. Twenty-two said it would be easier to deal with customers.

While 81 said they did not think women had any advantage over men in running a business, 64 did think so. Many remarked that women are more skilled in dealing with people. Some thought that the skills developed in running a household transfer well to the business world.

Their Chief Problems and Mistakes

A number of respondents commented on the difficulties they face. One complained, "Your social life is limited, and you are consumed day and night with business ideas and thoughts." Another said that a good housekeeper is a necessity. "What every women in business needs," said another, "is a wife. Men aren't so dumb, are they?"

Sixty cited a typical small business problem, maintaining an adequate cash flow, as their greatest problem. Forty-six found balancing the needs of business and family to be their greatest problem. (The consensus of American and British research on this subject is that most women do experience conflict between the demands of their careers and those of their families.) Twenty-five found record-keeping to be their greatest problem; however, advertising and sales promotion and obtaining adequate financing were named by almost as many.

Forty-seven respondents (of 153) would have done very little differently if, when they began their businesses, they had known what they know now. Thirty-four, however, would have raised more capital before starting the business. In the Hisrich/Brush survey, lack of education and experience were among the more frequently cited problems. In this survey, however, only 15 respondents said that they would have liked to have gained more experience, and only one said that she would have liked to have gone back to school.

The Importance of Business Income

Fifty-nine percent of the respondents said that their businesses provided at least three-fourths of their income. An additional 12 percent reported that the business furnished between 50 and 75 percent, while only 25 percent derived less than 50 percent of their total income from the business. Clearly, "pin money" is not what most women entrepreneurs are seeking. This is an aspect of women-owned business which has received little attention from researchers.

How Successful Have They Been?

Seventy-two percent of the respondents found running their own business to be either "more profitable" or "about as profitable" as they had expected. Yet, interestingly, 70 percent found that running their own business was only "about as difficult" or "less difficult" than they had expected (see table 2).

FINDINGS OF THE SECOND STUDY

The results of the second survey included in this study suggest that "being the boss" may be less important to women than to men, and the "challenge of entrepreneurship" may be more important (see table 3).

Questions about whether running one's own business had been more profitable or difficult, about as profitable or difficult, or less profitable or difficult than expected also revealed differences between the sexes. While 48 percent of the women were making more income than expected, for example, only 28 percent of the men were. Similarly, only 16 percent of the women found running their own business to be more difficult than they had expected, while 42 percent of the men found it to be more difficult. The women were more often surprised--pleasantly or unpleasantly--by the profitability of their businesses than were the men. Sixty-one percent of the men, but only 20 percent of the women, found their profits to be close to what they had expected. On the other hand, the women entrepreneurs were less often surprised by the difficulties resulting from entrepreneurship than the men were. (Seventy-two percent of the women found running their own business to be "about as difficult as they expected," as compared to only 52 percent of the men.)

The women in the second survey differed somewhat from the women in the first survey in their answers to these questions. One reason for this discrepancy may be the fact that some of the women in the first survey had male partners. (They were only asked about husbands as partners.)

CONCLUSION

One of the respondents may have revealed a primary reason for the increasing numbers of women who are now going into business when she said, "the world is wide open for women now." In other words, new challenges and a new way of dealing with financial and family responsibilities may have been discovered by these women. In addition, some who found the way to the top blocked in the corporate world have discovered new opportunities.

One might expect that the early entrants into this new arena would be better educated than the average woman and have previous experience as managers. The results of this study indicate that such is the case. However, comparatively few have the type of education usually deemed most appropriate for male business managers; that is, in business administration, science, or engineering. Yet many of the women who participated in this study have been successful, with the majority finding that their incomes as entrepreneurs have met or exceeded their expectations.

For fewer than one-quarter of women entrepreneurs, the business provides only an income supplement--the majority depend heavily upon it as their primary source of income. Their objectives and problems are largely the same as those of male entrepreneurs, though the survey results suggest that the two sexes may have different priorities as entrepreneurs, with men stressing being their own boss and women placing somewhat more emphasis on personal challenge and satisfaction.

Being female did produce some special problems for this group. Yet a substantial minority believe their sex to be no handicap. Some think that there are definite advantages to being a woman entrepreneur, particularly as the head of a business that caters to women. Others feel that women have an advantage in any "people-oriented" business because they are "better in human relations."

Finally, comparing the results of this study with those of the larger Hisrich/Brush study suggests that this sample of women entrepreneurs in Georgia is essentially similar to women entrepreneurs in other areas of the country. Further research is needed into the areas of women's motivations for starting a business, the types of problems encountered, the amounts of money they make and how much of it they depend on for necessary income, the ways in which they balance the needs of family, social life, and business, and the comparative aspects of entrepreneurship between men and women within various industry classifications.