In today's economy, female entrepreneurs are a mighty force. Nearly one million females are self-employed in this country and their ranks are growing.
In 2012, there were 950,000 self-employed women. Between 2001 and 2011, their numbers grew by 23 per cent (accounting for slightly more than one-third of self-employed persons). At the same time, the number of self-employed men grew by just 14 per cent. In 2014, Ontario had the highest concentration of self-employed women, followed by British Columbia, Alberta and Quebec.
A TD Economics Report from January 2015 reports three main motivations for becoming an entrepreneur: classic (the desire for independence, creativity, challenge or wanting to be one's own boss); forced (due to job loss or other reasons); and work-family, when entrepreneurs seek greater personal and professional balance in their lives.
According to the report, male entrepreneurs (71 per cent) were more motivated by classic reasons than women (53 per cent). Both sexes were equally motivated (22 per cent each) by forced situations. And 25 per cent of female entrepreneurs were motivated by work-family reasons, compared to only 7 per cent of male entrepreneurs.
Female-owned businesses are more likely to be small (one to 99 employees) than medium-sized. Most women-owned firms have one to four employees, the TD report says, and predominantly represent traditionally female-centric industries. About 90 per cent of female-owned businesses are in the services sector (anything from interior design to marketing to accounting), while this number is only 70 per cent for male-owned businesses.
Smaller size, more innovative
They might be smaller, but that doesn't mean female-owned enterprises are less innovative. In fact, they are slightly more inclined than male-owned ventures to have been involved in an innovation activity. Their most common type of innovation tends to be a new or improved good or service.
However, women entrepreneurs seem less likely to pursue other growth-enhancing strategies than men. Only about 5 per cent are engaged in exporting, but that may be because they are more inclined to offer domestically oriented services than men.
In 2010 an Industry Canada Women Entrepreneurs report found that on average, female business owners were younger and reported fewer years of management or ownership experience compared with male business owners.
Their revenues were still significantly less than revenues earned by majority male-owned firms in 2004 and 2007. However, before-tax net incomes generated by majority female-owned firms were comparable to net incomes generated by majority male-owned firms.
New research from BMO Financial Group with Carleton University and The Beacon Agency confirms that female entrepreneurs are ambitious and are making risk-related decisions necessary to achieve their objectives.
Despite the evidence that female-led enterprises are increasing in number, financial institutions and investors have not fully understood or supported their resource needs to start and grow their businesses. The high value often placed on projected fast growth does not support women entrepreneurs who take a holistic approach to growth and focus more on long-term sustainability.
This is why one of the biggest hurdles women entrepreneurs report facing is financing. In the BMO report, 80 per cent of female business owners said they faced obstacles in securing loans from banks. Often they start businesses using their own resources or by taking personal loans from friends or family, and/or through organizations such as the Business Development Bank. They use personal finances to fund a business for multiple reasons such as lack of financial literacy, fear of being turned down by the bank and a general dislike of debt.
Women often seek ways to increase profit at their current business level rather than simply looking to grow. They are likely to seek expert advice when considering growth and many have taken courses on entrepreneurship.
The TD report found that while women are still under-represented among entrepreneurs, the upswing in female self-employment is a positive sign that more women are overcoming the hurdles and striking out on their own.
This content was produced by The Globe and Mail's advertising department. The Globe's editorial department was not involved in its creation.