There is much debate about how to support female entrepreneurs. Women entrepreneurs run 30 percent of all the small businesses in the United States and employ 7.9 million people creating $1.4 trillion in sales. Studies show that women's organizations are less likely to survive, despite evidence that they are as successful, if not more successful, than male run businesses. However, women-owned businesses still need peer-to-peer support.
A new analysis by Boston Consulting Group (BCG) shows that if women and men worldwide were equally represented in business positions, worldwide GDP would rise by approximately 3% to 6%, boosting the entire global economy by $5 trillion.
One of the significant issues is funding for women-owned businesses (WBOs). They receive just 7 percent of venture capital investment money, which is highly disproportionate to their economic role. Additionally, women entrepreneurs' loan approval rates are 15 to 20 percent less than for men. Something is not right.
So how do we support women entrepreneurs? While we must focus on credit access, the critical factor in these businesses' success tends to be overlooked: access to networks and peer to peer support.
Why peer-to-peer support is crucial:
The Ulster University Business School carried out a new study examining the value of peer support for women. It found that most participants deemed peer support, where people in similar positions share their experience, to be extremely important. Networks are a crucial factor for small business success. Research by the Asia Foundation found that stronger and broader peer-to-peer networks are linked to more equitable treatment of gender in business and improved access to a variety of funding sources.
Other reasons peer-to-peer support is crucial include:
Mentorship:
Often, men are mentored when they first enter an office, giving them a chance to try and fail, but still have a safety net. Women need this same opportunity. They need to see where they want to be to get there.
Financing:
Venture capitalists tend to fund businesses that they feel connected to, but the problem is that the "business and political world is still overwhelmingly male, and 89 percent of investors are male." To compete, women need to create equitable finance systems that are comparable to the networks that men already use.
Early stages:
Getting through the "birth pains" of any business is difficult. According to the U.S. Bureau of Labor Statistics (BLS), about 20% of new companies close during the first two years of being open and 45% close during the first five years. Having a network to lean on emotionally and for experience during this time is crucial to success.
Bias:
Both intentional and unintentional bias is rife in the business world. The same confidence that is admired in men is often seen as arrogance in women. As a society, we need to see more women peer groups, so we can begin to examine some of our prejudices and normalize women in powerful positions.
Social Communication:
The genders communicate differently, and overwhelmingly women are more comfortable dealing with each other in business situations than men. Women feel the need to soften their communication in groups with men who feel no such compunction in all-women groups. Ironically, this softening of communication is often seen as unprofessional by men. To end this cycle, more women should practice business communications in a peer group where they feel free to communicate freely.
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