Female entrepreneurs: great for women, great for Britain

As a nation, we are paying the price for not better supporting women at work. The UK Women’s Business Council report ‘Maximising women’s contribution to future economic growth’ published earlier this summer found that there are over 2.4 million women who are not in work but want to work, and over 1.3 million women who want to increase the number of hours they work. It also found that by equalising the labour force participation rates of men and women, the UK could further increase GDP per capita growth by 0.5% p.a., with potential gains of 10% of GDP by 2030.

There is an emerging consensus that the economy is not working in a way that recognises and responds to the true reality of women’s lives and their needs. The levels of unemployment and underemployment are compounded by the fact that women have borne the brunt of public sector cuts which has had a significant effect on their personal and family income.

Add to the mix the fact that women still take on the bulk of caring roles with varying levels of employer support. We still have a long way to go. The Women’s Business Council report also highlighted the gender gap in entrepreneurship. If women were setting up and running new businesses at the same rate as men, we could have an extra one million female entrepreneurs. In July 2013, an OECD report (‘Entrepreneurship at a Glance’) showed that “Women remain substantially underrepresented as entrepreneurs. Men are 2-3 times more likely to own businesses with employees as women.” Of the 40 countries surveyed in the OECD research, the UK falls in the bottom quartile. The UK also has a higher than average gender gap in earnings from self-employment.

The challenge we face in tackling the gender gap in entrepreneurship is not just the setting up of women-led businesses, but supporting their development and growth. There are many small, good dispersed initiatives in the UK, but trying to find integrated support services as a nascent start-up is overwhelming and confusing.

The US Small Business Association (SBA) has lessons that Labour can learn from. Go onto the SBA site and you can start developing a business plan and get advice from a mentor as simply as logging on to do a tax return. The SBA website also is a good signposting for women and entrepreneurship support – a national strategy embedded within mainstream business support. The Women’s Business Centres supported by the SBA offer a network of support and training at grassroots level. One Women’s Business Centre in the UK in Newham, started in 2008 following the women’s enterprise task force under Labour, has had similar successes.

In January the US Government introduced a statutory goal that 5% of federal contracting dollars are awarded to women-owned small businesses. Federal contracts may also be set aside for women-owned small businesses in certain industries where women are under-represented. This has had an impact on attitudes of large companies bidding for government contracts who are now seeking women-led enterprises to be part of their supply base in order to have a better chance of winning federal contracts. It is not about greater spending, but it is about an attitude and an incentive to change a culture, and open up opportunities for women in business.

Other countries are also looking at initiatives which could make a big difference to the number and growth prospects of women led enterprise.

This year, India is planning to launch a new (state run) women’s bank, outlined in the 2013 Federal Budget and likely to be operational by November. The bank will to lend mostly to women and women-run businesses, will employ predominantly women, and will address gender-related aspects of empowerment and financial inclusion. Whilst Britain’s banks have some limited tailored services for women-led businesses – the potential could be so much greater.

To see a shift in scale of women’s entrepreneurship and women’s wider contribution to the economy will need a more integrated strategy and more coordinated support infrastructure. With Labour’s track record in this space, it’s an area for us to build on. It’s not just good for women, but will be great for Britain.