Research Summary
Entrepreneurial Ideas Motivate Women to Start Businesses
The primary reason that women are launching new businesses is that they are inspired by an entrepreneurial idea. The next most frequently stated reason women give for starting their businesses is frustration with their previous work environment, according to a new study released today by three prominent women’s business organizations the National Foundation for Women Business Owners (NFWBO), Catalyst, and The Committee of 200.
Those leaving corporations increasingly cite frustration with that environment
“Paths to Entrepreneurship: New Directions for Women in Business” was sponsored by Salomon Smith Barney and is based on a nationally-representative survey of 800 women and men business owners.
The study sought to understand why the number of women-owned businesses in the United States is increasing at nearly twice that of the national average. “Women are most likely to start their own enterprises because they recognize opportunities to implement entrepreneurial ideas or do for themselves what they were doing for their employers,” explained Lois Haber, CLU, ChFC, Chair of NFWBO and CEO of Delaware Valley Financial Services, Inc., Berwyn, PA. “Forty-four percent (44%) of the women said this was their motivation.”
The study also revealed dramatic changes during the past two decades. Women who started businesses over the last 10 years are more likely to have prior experience in professional or management positions than in clerical positions. Those leaving corporations increasingly cite frustration with the work environment as a factor.
“Women business owners are more likely to report having experienced specific frustrations in their work environment than men business owners and these factors have increased in recent years,” according to Sheila Wellington, President of Catalyst. “There have also been significant increases in the numbers of women entrepreneurs who cite being unchallenged in their previous job.”
Fifty-one percent (51%) of women business owners with prior private sector experience cite the desire for more flexibility as the major reason for leaving their corporate position, while 29% cite “glass ceiling” issues. Forty-four percent (44%) of women business owners citing the “glass ceiling” issues as a key reason for their move to entrepreneurship felt their contributions were not recognized or valued. The statement “you were not taken seriously by your employer or supervisor” fit the personal experience of 33% of these women very or extremely well. Over half (58%) say nothing would attract them back to the corporate world; 24% say more money and 11% say greater flexibility could attract them back.
Women who have become business owners in recent years and those whose companies have higher sales are much more likely than their predecessors to start a business related to their previous field. “The study also revealed that while the businesses started by men are most likely to be closely related to their previous jobs or careers, most women either start a business totally unrelated to their previous job or turn a personal interest into a business pursuit,” explained Linda K. Paresky, Chair of The Committee of 200 Foundation.
Women business owners are more likely than men business owners to have turned a personal interest into a business pursuit. Fourteen percent (14%) of women business owners, compared to 2% of men business owners, report turning a personal interest into a business pursuit.
The “Paths to Entrepreneurship” survey also revealed the following:
Most entrepreneurs had prior private sector career experience, with women business owners less likely to have come from a large company than men, and more likely to have nonprofit organization experience;
Women who started businesses within the past 10 years are much more likely to come from management positions than clerical posts prior to starting their businesses;
Women business owners are more likely to have started a business than to purchase one as compared with men business owners;
Being one’s own boss and having greater freedom are among the greatest rewards of entrepreneurship cited by women business owners, while dealing with employee problems and long hours are among the greatest dislikes.
“It is vitally important that large companies understand why women may consider entrepreneurship over corporate careers, in order to create an environment within corporate America that is responsive to their needs,” said Heidi G. Miller, Chief Financial Officer, Travelers Group. “The results also provide us with information to better serve women entrepreneurs as clients.”
Charts
“Glass Ceiling” Issues, Desire for Challenge Are Great Motivators...
Women Business Owners of Newer Firms More Likely to Have Had Mgmt. ExperienceMen Start Businesses Related to Previous Field, Women Evenly Divided
Methodology Note: A nationally-representative, randomly-drawn sample of 800 women and men business owners 650 women and 150 men was interviewed by telephone in September, 1997. To ensure adequate representation of larger firms and women-owned firms for analysis, the survey was stratified by employment size and gender. The survey results were then weighted to their correct population totals for analysis. The sampling errors for sample sizes of 650 and 150, respectively, are ±4.0% and ±8.2% at the 95% confidence level. This means that, 95 times out of 100, survey responses are within the above ranges of true population values.
The complete report, “Paths to Entrepreneurship: New Directions for Women in Business,” is available for $90 from Catalyst, 120 Wall Street, 5th Floor, New York, NY 10005 or the National Foundation for Women Business Owners, 1100 Wayne Avenue, Suite 830, Silver Spring, MD 20910 (Discounts are available for Catalyst members who contribute $5,000 or more annually, NAWBO members and NFWBO corporate partners.)
The National Foundation for Women Business Owners (NFWBO) is a nonprofit research and leadership development foundation. NFWBO is recognized as the premier source of information and intelligence on women business owners and their enterprises by corporations, policy makers, financial institutions and the media. Up-to-date intelligence about women business owners and their enterprises worldwide is documented in NFWBO’s original research and analysis. The Foundation is affiliated with the National Association of Women Business Owners (NAWBO).
Catalyst is the nonprofit research and advisory services organization that works with business and the professions to advance women. Its dual mission is to enable women to achieve their full professional potential and to help employers capitalize on women’s talent.
The Committee of 200 (C200) was founded in 1982. C200 is a professional organization of preeminent business women who exemplify and promote entrepreneurship and corporate leadership among women of this generation and the next. C200 currently comprises more than 375 U.S. and international members from 70 industries.
Salomon Smith Barney is the exclusive sponsor of this study. Salomon Smith Barney is the service mark used by Salomon Smith Barney, Inc., affiliated but separately registered broker dealers under common control of Salomon Smith Barney Holdings Inc. The combined firm has revenue close to $11 billion, derived from five major businesses: institutional sales and trading, global arbitrage, private client investment services, asset management and investment banking. Our parent company, Travelers Group, is one of the largest and most profitable diversified financial services companies in the world, with a market value of more than $50 billion.
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Citation
Center for Women’s Business Research. “Entrepreneurial Ideas Motivate Women to Start Businesses.” Research Summary. February 24, 1998. Washington, DC.