Women as Entrepreneurs and Small Business Owners
By Disha Sarna
Over the past few decades, the rise of women entrepreneurs has been exponential, with women owning 37% of the enterprises globally, according to Harvard Business Review. It also reports that more than 200 million women have been actively participating in entrepreneurial activities and women entrepreneurs have been gaining more traction in the media as well as the financial world. Hence, analysing the various aspects that are important in business management and looking at it through the lens of gender becomes essential. This article is an attempt to understand the recent surge in women entrepreneurs, the challenges they face, the challenges they have overcome, and then talking specifically about the state of women entrepreneurs in India and the many success stories of celebrated women-owned enterprises.
There are around 114% more women entrepreneurs today than twenty years ago according to Business Insider and this rapid boost in the number of women entrepreneurs is a result of a combination of factors. Surveys done by Sarah Thebaud and Harvard Business Review have found that while some women do start a business to introduce a new and unique product into the marketplace and because they want to become an entrepreneurial success, a good majority of women become entrepreneurs as the only alternative to the demands of corporate life. As many women are primary caregivers, they believe that starting their own business gives them a greater sense of autonomy and a more flexible schedule. They also have more control over their future as they can advance more quickly without the gender parity that often accompanies corporate jobs and they can become financially independent without participating actively in the gender status quo. In addition, since they are the ones in power and can choose their employees, they are at a lower risk to experience workplace harassment. Due to the amalgamation of these factors, many women have started opting for an entrepreneurial lifestyle instead of a corporate one.
However, this brings about its own set of challenges and issues. One of the most essential resources that any start-up requires is financial investments and a study by Bush and colleagues talked about how women still attract a sparse number of early investors and the study found a staggering gender gap where teams with only men were four times more likely to acquire funds from venture capitalists than teams with even one woman. According to their data, only 2.7% of teams with women acquired funds and 86% of all venture-capitalist funded businesses have no women. Financing is perhaps the biggest challenge that women face. Around 61% of the women entrepreneurs choose to self-finance their businesses, which puts them at a greater risk of financial instability due to the risky nature of business. This leads to more intrinsic motivational and psychological issues where women were 21% less likely to be optimistic about their business performances, 24% more women said that their businesses do not have appropriate marketing strategies for the next quarter and 25% of women entrepreneurs did not believe that they have an effective sales plan for the coming quarter. This kind of lack of confidence stems from the inherent lack of business funds and the fact that they do not have a fallback cushion to support themselves as they have used most of their personal savings to fund their business. Another important challenge that comes up in developing countries is the social stigma that accompanies working women. Women are expected to just be caregivers and when they step outside of this presupposed image, they are met with excruciating opposition and must face several social challenges like lack of support from family, biases of clients, biases of suppliers to start and continue their business.
India provides an interesting case study when it comes to the challenges faced by women entrepreneurs. In a study conducted by researcher Malika Das, it was found that women entrepreneurs in India face issues concerning cash flow, inadequate capital, product quality, employees, marketing, time management and family issues. At the same time, when it comes to work-family conflict, most women saw an increase in the quality of relationship with their spouse and at the same time a higher conflict with their role as a homemaker. This could be because of the increased financial stability gained from the business and the reduced availability of free time. Another interesting point that Atanu Sengupta and colleagues raise is how the managerial decisions made by women are highly dependent on family desires, which hinders the entrepreneurial talent that women may possess. Additionally, due to the extent of the informal sector in India, many women-owned businesses are not registered formally. Small women-owned businesses like those selling handmade handicrafts, suits and traditional products are usually not registered as businesses and this limits the recognition that women get as entrepreneurs as most of them do not own businesses as far as legalities are concerned.
Despite these challenges, India has its fair share of success stories. Falguni Nayar started Nykaa in 2012 as a retail business focused on beauty and wellness products. The company has overcome many challenges, including the issue of funding and raised 13 million dollars at a valuation of 1.2 billion dollars in the last round of funding in 2020 and it has earned the status of a ‘Unicorn Startup’. The company made a profit of Rs. 1200 crores in the financial year 2019 and crossed Rs 1800 crores in the financial year 2020. The company is also expected to list their initial public offering (IPO) in the Indian stock market to expand its business. Kiran Mazumdar-Shaw is the executive chairperson of Biocon who founded the company in 1978 as a pharmaceutical company. Biocon specialises in enzyme and clinical research and is now operational in 120 countries and is finding ways to treat cancer, diabetes and autoimmune diseases in an affordable manner. The company now has a market cap of 4.4 billion dollars and Mazumdar-Shaw is the recipient of a Padma Shri amongst the other numerous accolades that she has achieved.
Thus we can see how women are becoming an integral part of the entrepreneurial scenario across the world and despite facing numerous challenges, many women have persevered and are owners of successful and global businesses.
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