women enterpreneurs- management skills and business problems

8/14/2019 women enterpreneurs- management skills and business problems

1/9

T H E W O M A N E N T R E P R E N E U R :M A N A G E M E N T S K IL L S A N DB U S I N E S S P R O B L E M S

by Robert D. Hisrich and Candida Brush

ABSTRACT: LA FEMME D'AFFAIRES: SES HABILETES EN FAIT DE GESTIOSES PROBLEMES DANS LE DOMAINE D ES A FFAIRES

Jusqu'd main tenant, bien que le chiffre des entreprises dont Ies propridtaires sont diAin soit en hausse, peu de recherches ont 6t faites sur Ies habilet^s des femmes d'aff

fait d e gestion et surIe s difficult^s auxquelleselles sont appe l^sk faire face pr^isementk causleur sexe.- En effet,Ie s recherchesd6j& faites en cette mati^re ont port^ notamment surIe s diff^types de femme d'affaires, leur motivation, leurs caract^ristiques ddmographiques et Iesd'entreprise auxquelles elles se sont assocides.O r, pour rem ^e r k cefte lacune nous avons faipertise, k une fehelle nationale, de 468 femmes d'affaires. Plus pr&is6ment, nous nous sorenseignds sur leurs milieux et leurs entrainements, ainsi que sur leurs entreprises dans ledes affaires, leurs habilitds en fait de gestion, et, en dernier Ueii,Ie s prbbl mes auxquelles ellesexposdes par le fait qu'elles sont du sexe fdminin. De cette expertise nous avons pu tirer cconclusions pratiques, dont nous ferons part& nos lecteurs dans l'article qui suit.

Sta rting a nd operating a business en-tails considerable risk and effort ,especially for the entrepreneur, whocreates and builds a business fromscratch, thereby assuming all the re-sponsibilities for development and man-agement as well as the correspondingrisks and gains. The risk is perhaps evengreater for a woman entrepreneur, whohas all the usual business problems aswell as the problems associated withbeing a woman in a male-dominatedarena. In spite of this, increasing num-bers of women have entered the labor

Dr. Hisrich is associate professor of management and di-rector of the Small Business I nst itute at Boston College. He isl d f & k

force, some of whom have electestart and operate their own busines

A Bureau of Census report base1972 data indicates that female owbusinesses accounted for only 4.6 pe

of all firms in the United States, witreceipts from female-owned businaccounting for only 0.03 percent obusiness receipts. The Small BusiAdministration reports that the numof self-employed women increased 1.7 million in 1977 to 2.3 million1982a 35 percent increase. Duringsame period the number of self-empl

men rose by only 12 percent. Womowned businesses accounted for forty billion dollars in revenues '


2/9

ves for starting their own companies,nd their business problemsis basedn studies of male entrepreneurs.^ This not surprising, since men make up the

majority of people who start and runheir own businesses. Interest in womenntrepreneurs as research subjects haseveloped more recently.

Studies of female entrepreneui-s haveddressed basically the same questionss those of male entrepreneurs. Onetudy of twenty female entrepreneursound that their major motivations fortarting a business were: the need tochieve, the desire to be independent,he need for job sat isfact ion, andconomic necessity. These female entre-reneurs tended to have an autocratictyle of management, and their majorroblem during startup was credit dis-rimination. Underestimating operatingnd/or marketing costs was a subse-uent problem.3

Another study of 122 black, white,Hispanic, and American Indian womenntrepreneurs found that the responsesf both minority and non-minority

women entrepreneurs differed signifi-antly from those of women in the gen-ral population on tests measuringchievement, autonomy, aggression, con-ormity," independence, benevolence, and

eadership. Differences were also foundetween minori ty and non-minori ty

women entrepreneurs, with minority en-repreneurs reporting that they started

'See, for example: Neil Cohen. "The Five Ages of Ihe En-epreneur." Vpitture (July 1980), pp.40-43; Orvis Collins and

David G. Moore,'I'he Enterprising Man, Michigan S tate Uni-ersity, East Lansing, Michigan (1964); Eugene Gomolka,Characteristics of Minority International and Sm all Businessnterprises,"American Journal of Small Business (July 1977),

p , 12-21; John A, Hornady and John Abond,"Characteristicsf Successful Entrepreneurs,"Personnel Psychology (1971),p . 50-60; Edward B. Roberts, "Entrepreneurship and Tech-

l A B i St d f I t H t K d C i

their businesses at a later age than thenon-minority women. Non-minority fe-male entrepreneurs scored higher onratings of need for achievement and in-dependence; minority women appeared to

place greater value on conformity andbenevolence.''

Twenty-one women who participatedin a study of the demographic character-istics, motivations, and business prob-lems of female entrepreneurs indicatedthat they had particular problems withcollateral, obtaining credit, and over-coming society's belief that women arenot as serious as men about business.^

A final study focused on how the char-acter is t ics of women entrepreneursvaried according to the type of business.The results indicated that women entre-preneurs exhibited some distinctive char-acteristics. They were older and moreeducated than either the general populaceor the respondents in previous studies.They also had very supportive parentsand husbands. Female entrepreneurs innon traditiona l bu siness areas (finance, in-surance, manufacturing, and construc-tion) also differed from their counterpartsin more traditionally "female" businessareas (retail and w holesale trade). The lat-ter group had particular difficulty ingaining access to external financial

sources.^The studies reported above dealt with

restricted samples. In order to answerquestions about female entrepreneurs ingeneral throughout the United States, asurvey was developed, the constructionand results of which are described below.

'James DeCarlo and Paul R. Lyons, "A Comparison of

Selected Personal Characteristics of Minority and Non-Minority Female Entrepreneurs,"Journal of Small BusinessManagement (December 1979), pp, 22-29.

'Robert D Hisricb and Marie O'Brien "The Woman En


3/9

RESEARCH DESIGN

A questionna ire was developed whichincluded a mixture of scaled, dichoto-mous, multiple choice, open-ended, andrank-order items designed to assess thefollowing: motiva tion for sta rtin g a busi-ness, general entrepreneurial characteris-tics, management skills, social and psy-chological factors, educational and occu-pational influences, demographic infor-mation, and business data.

Mailing lists of women entrepreneurswere obtained from trade associationsand state offices. The questionnaire wasthen mailed to 1,151 women entrepre-neurs in 18 states. The survey includedwomen from all areas of the country.Four hundred and sixty-eight usablequestionnaires (fully completed and con-taining all of the relevant information)were returned, a41 percent response rate.

FINDINGS

The findings are divided into fourareas: the demographic composition andbackground of the women entrepreneurs,the nature of their business ventures, theskills of the en trepre neu rs, and th e prob-lems they confronted.

Demographics

The m ajority of the 468 women e ntre-preneu rs in the sam ple were between theages of 35 and 45; 55 percent were mar-ried and had children. Fifty-one percentof the women were the first-born in theirfamilies, and 68 perce nt had atte nd ed col-lege or graduate school. Nearly 70 per-cent of the women entrepreneurs hadliberal arts degrees in one of several ma-jors, with business administration beingthe most frequently mentioned. Fewer

than 9 percent reported majors in engi-neering and sciencean obvious barrier

i h di i ll l

degrees reporting that their degreesin one area or another of liberal ar

Edu cation played an impo rtant rthe back groun ds of the women ent

neurs. Not only were their parentsticularly their fathersmore highlycated than the general populace, buwomen entrepreneurs also tendemarry more highly educated menimportance of education is reflectthe following comment of one womatrepreneur:

In my family, education was very iportan t. M y mother was a dentist iday when most women did not evgraduate from high school. But it wmy father who was my real motiva t

This respondent's father, a self-empprofessional, gave her the exampleencourag em ent she needed to be sucful in her own business.

This high education level of

women entrepreneurs and their par ereflected in the ir social class67 p eof the women entrepreneurs indith at they grew up in the middle- to uclass enviro nm ents. Social class wascorrelated with the parents' occupaThe majority of the women entreprenstated that their fathers wereemployed. A relatively small perceof the mothers, fathers, and spousethe women e ntrepreneu rs w ere blue cworke rs (3 perc ent of the spou ses, 8cent of the m others, and19 percent offathers). Spouses held predominprofessional or technical positions. kind of background appears to havevided the women entrepreneurs good role models as well as a sup porfinancially sound environment in wto begin new business ventures.

Th B i V t


4/9

ourse, reflects th e liberal ar ts educationsnd p ast experiences of most of the entre-reneurs, over 70 percent of whom hadrevious service-related experience.Theducational system and the general en-

ironment appeared to provide littleen-ouragem ent or advice for these entrepre-eurs, as the following two commentsemonstrate:

It would be good to raise society's ex-pectations for the female population;better career guidance and advice isalso needed for women students.

Women should grow up with the expec-

tation that they will need to supportthemselves.

The type of business venture variedidely, from the very innovative (a pri-ate post office) to the male-dominatedelds of petroleum products and plumb-g, but traditionally female areas (such

s a travel agency or clothing design) pre-ominated, as shown in table 1. The busi-

ess area most women entrepreneursere involved in was sales. The womentablished these enterprises themselves,e type of business varying from realtate and insurance to wholesaling andanufacturers' representatives.

Table 1NATURE OF BUSINESS VENTURE

pe o< BOsiness

esnsultingsign/Art/Architectureblic Relations and Advertisingrsonnel and Business Servicesmputer.Related Businessanufacturingcretarialucational Servicesw/Medical Servicesstribution and Construction

Percentage

19.714.610.08.37.77.57.06.76.15.44.5

slightly modified product for an existingmarket. Few women entrepreneurs formcompanies that enter new markets withdistinctly new inventions.

Table 2GROSS BUSINESS REVENUES

IN 1980 AND 1981

Percentage o< Firms

Gross Revenue in Doliars

Less than $30,000$30,000-$99,999

$100,000-$499,999$500,000-$999,999$1,000,000-$4,999,999$5,000,000 and over

1980

2628

29881

1981

2027

32991

A large proportion of the businesseswere incorporated (43 percent). Thirty-five percent were sole proprietorships;12percent were general partnerships. Mostof the businesses were relatively y o u n g -over 60 percent had beenin operation forfour years or less. The gross revenuesofthe firms were fairly low,as would be ex-pected given the short periods of time inoperation and the predominance of busi-nesses in the service sector. Table 2shows gross revenuesfor 1980 and 1981.These figures are consonant with the em-ployment patterns of the businesses (seetable 3). More than 30 percentof the busi-nesses had no employees other than thewoman entrepreneur herself, and 42 per-cent had only one to four employees.

Even though the present venture wasthe first for most of the women entre-preneurs (78 percent), 64 percent hadgained previous experiencein their busi-ness area. This is consistent with previ-ous findings that entrepreneurs tendto


5/9

Table 3SIZE OF FIRMS BY

NUMBER OF EMPLOYEES

Number ofEmployees

Percentage of Firms byType of Employees

None1-45-9

10-1920-4950 or more

'Less than 1

FullTime

3042131041

percent.

PartTime

3448

8641

Family

6632***

quently mentioned etreas of recent pastexperience were teaching, ad m inistratio n(middle management), and secretarialpositions, most often in service busi-nesses (see table4). Ninety perc ent of thefemale e ntreprene urs owned service busi-nesses.

Table 4MOST RECENT PAST EXPERIENCE

OF W OM EN ENTREPRENEURS

Field

EducationAdminis t ra t ionSecretarial

Art/PhotographyMarl


6/9

Table 5WOMEN ENTREPRENEURS' SELF-APPRAISALS

OF MANAGEMENT SKILLS

Percentage oi Responses

Management Skill

Finance: securing c apitai.forecasting, budgeting

Dealing with Peopie: management.development, and training

Marketing/Sales: marketing research.promotion, selling

dea Generation/ProductInnovation

Business Operations:inventory, production.day-to-day operations

Organizing and Planning:business strategy.policies, and organization

Poor

15

2

6

3

3

4

Fair

32

10

20

10

18

15

Good

27

28

20

26

32

29

VeryGood

15

33

33

27

30

29

Excellent

6

27

22

33

. 17

23

NoOpinion

4

1

What I needed was more effectiveSBA involvement during the firstyear. I approached both, the SBA andSCORE for ass istan ce (not money) andfelt I was treated in a patronizing way.I received very little encouragementbecause of my financial circumstances.

The biggest roadblock to women'ssuccess is the lack of business-relatedskills such as independence, self-confi-dence, assertiveness, and drive (skillsmen learn while growing up), as well asthe absence of a defined women's net-

work for referrals and business in-roads into other successful business es.

Women continued to encounter prob-ems as their businesses continued in

operation, but the problems were men-tioned less frequently than at startup(see table 7). Again, lack of experiencewith financial planning was a majorproblem, but other difficulties, such ashiring competent staff and attractingcustomers, which were deemed relative-

SUMMARY AND CONCLUSION

The "typical" woman entrepreneuras depicted in this stu dy is the first-bornchild of middle class parentsa self-employed father, and mother who doesnot work outside the hom e. After obtain-ing a liberal arts degree, the typicalwoman entrepreneur marries a college-educated man who works in a profes-sional or technical capacity. She thenhas children, and works as a teacher, ad-ministrator, or secretary. She does not

start her own businessmost likely aservice-related oneuntil the age offorty or later. Her biggest businessstartup problems are with finance,credit, and a lack of business training.Once the bus iness is in operation, lack offinancial planning experience is hergreatest difficulty.

There are, of course, exceptions tothis composite portrait, but a greatmany of the 465 women entrepreneurs


7/9

Table 6STARTUP PROBLEMS

Problem Area

Lack of business trainingObtaining iines of creditLack of financiai planning experienceLack of guidance and counseiWeak collateral positionLack of management experienceLack of experience in use of outside services

(e.g., accounting and legal)Other (e.g., cash flow, hiring,

attracting business)Lack of involvement with business colleaguesDemands of company affecting personal

relationshipsLack of respect for business womenPersonal problemsLegal problems

Responses

Percentage

302826212121

17

1716

1615

77

Numb

140131122

949494

80

8075

75703333

Table 7PROBLEMS IN CURRENT OPERATIONS

Problem AreaResponses

Percentage N

18

17

15131111101010954

umb

84

80

70615151474747422319

Lack of experience in financial planningOther (attracting business, cash flow, hiring,

and organization)

Demands of company affecting personal relationshipsWeak collateral positionObtaining lines of creditLack of business trainingLack of guidance and counselLack of involvement with business colleaguesLack of management experienceLack of experience in use of outside servicesLegal problemsPersonal problems

pren eurs able to gain the trainin g and zation? Will their busin esses surviv


8/9

who have not yet begun their businessentures? The responses and commentsf the women them selves indicatea needor the following changes:

Elimination of stereotypes so asto increase acceptance of womenin the business world.

M ore visible role models and men-tors for younger women, so tha tthey can see how women can besuccessful in business and invarious professions.

Changes in women's own atti-tudes and goals, including a will-ingness to learn finance.

Some specific changes that need toe implemented in order for women en-epreneurs to become a more important

nd effective element in the business en-ronment include:

Wom en should be encouraged to

study in fields other than liberalar ts . Guidance counselors andothers should point out the valueof learning more technical sub-jects that can be useful whenstarting a business, especially inmale-dominated fields such ascomputer science, science, engi-neering, and, of course, business.

Wom en need to have access to awide variety of seminars on both

general and specific topics. Generaltopics that need to be covered arefinance, cash flow management,marketing, preparation of businessplans and loan applications, and

general business organization.SpecieJ seminars could address spe-cific industry topics such as "de-veloping a business plan for a newretail store." Women entrepreneursare generally well-educated, andtheir desire for such informationmakes it likely that such seminarswould be well-attended.

Wom en entrep reneu rs should availthemselves of all of the informa-tion services now avedlable, indshould seek assistance from ex-perts in the field, from colleagues,and from friends in order to estab-lish both formal and informed net-works that serve as support sys-tems. Experienced mentors could

be drawn from these networkstoact as advisors, particularly onfinancial matters.

If women are encouraged and en-abled to prepare themselves for runningbusinesses through formal educationand attendance at strategic seminars,and through the formation of supportnetworks, their chances for success inthe business environment should in-crease significantly.

EPA SMALL BUSINESS OMBUDSMAN

The U.S. Environmental Protection Agency now has a Small Business

mbudsman to make sure your problems and suggestions are heard andou are fairly treated. The Ombudsman is charged with giving you easierh h l l h l


9/9

Documents

women enterpreneurs- management skills and business problems