Three Challenges Faced by Women Entrepreneurs

Written by Theodora Pavlidou

Women entrepreneurs are considered important to the economic development and they contribute not only to job creation but also to the diversity of entrepreneurship in the economic process. Worldwide, only one in three small, medium, and large enterprises is owned by women. Men still run a very big part of the business. Although, we cannot deny that over the past decade, despite the challenges women face, they have begun to establish more successful businesses. According to the article published by Inc. “There are 114 percent more women entrepreneurs than 20 years ago”. Quite impressive!

Nevertheless, the journey of a female entrepreneur is definitely not easy. Consequently, it is crucial to understand the obstacles that limit the growth and survival of women entrepreneurs’ businesses. Some of the challenges women may face are negative social and cultural attitudes, gender discrimination, self-sabotage, or even lack of education and training in some countries, such as India. In this article, we are focusing on three different areas: Finance, Network, and Risk.

Lack of Capital

According to the recent report by Fundera “women entrepreneurs get offered smaller loans across every product, from the same groups”. You may think that this is probably because women do not ask more than men, and I agree with you. Female entrepreneurs do request about $35,000 less in business funding than men. Thus, they are under capitalizing their businesses. On the other hand, a significant proportion of women entrepreneurs do not ask for funding at all. Only 25% of female business owners seek funding, despite the fact that women are able to raise more money through crowdfunding than men, which is an excellent way to pursue funding.

Let’s take a minute and look at the big picture. Have you ever thought whether the questions investors ask women entrepreneurs differ from the questions male entrepreneurs get? You may wonder why this matters. According to Dana Kanze’s research, 67% of the questions posed to male entrepreneurs were promotion-focused. While 66% of those posed to female entrepreneurs were prevention-focused. Even though the way both genders present their ideas is the same. What is even more interesting in this research is that women investors follow the exact same pattern; they ask promotion-focused questions to men and prevention-focused questions to women. This process definitely does not help women promote their businesses and get the funding they need. Acknowledging that is an excellent opportunity for female entrepreneurs to change the “game” and turn a prevention-question into a promotion one by focusing on the growth of their start-ups.

Lack of Network

Establishing a support network is critical to succeed as an entrepreneur. The philosophy ‘it’s not what you know; it’s who you know’ still rings true. Inc. reported that 48% of female founders lack available advisors and mentors and this limits their professional growth.

As a result, women need to start talking more about their businesses not only to people they know and feel comfortable with, but also to people with an interest in their industry. Don’t assume that just because your business is still small, people will judge or won’t be interested. Don’t be afraid of asking and being clear about what you need. You will be amazed at the number of people who may be interested in helping you when they know exactly what your mission is and what you need. As Affiong Willimans (CEO/Founder of REelFruit) said, “It takes a village to raise a business… Increase the quality of your network and you will have access to the most powerful tool available to scale your businesses.”

Check out these women-centred networking events and online forums; WIN Conference, eWomenNetwork, Bizwomen and Ellevate Network.

Risk-Averse VS Advanced Risk Awareness

We often hear people saying women are risk-averse, and this is an obstacle women entrepreneurs face that prevents them from success. Let me disagree with that. It is a myth we need to disprove. Not taking many risks does not necessarily mean you are not a risk-taker. It may mean you have advanced risk awareness.

Entrepreneurs often make decisions about their business. Hence, having this weight and being responsible for the whole business, should make you prudent and careful. Women evaluate many things in more detail prior to making decisions. Therefore, their decisions are simply sustainable in the long run.

The journey of a female entrepreneur is long and difficult. However, this doesn’t mean it is impossible to succeed and overcome all the challenges you will come across. Do not be afraid of failing, because entrepreneurship is a learning experience and you may need to fail and try again before you succeed.