A Tendency for Businesses to Stay Small

By Deb Perelman  |  Posted 2008-05-15 Print this article Print

"One of the biggest challenges for women in corporate settings is that the traditional business paradigm doesn't take into consideration the many nuances that affect a women's life. You're forced to choose between being on the fast-track and getting everything you need or taking care of your family. You're either on the fast-track or you're not," Susan Solovic, author of the Girls' Guide to Building a Million-Dollar Business and co-founder of SBTV.com, a video news network for small business, told eWEEK.

"Women entrepreneurs are saying 'I want to do it my way.' It's not that they want to work fewer hours but hours that are more conducive to their lives."

This theory reasons that if fewer women are working in technology, fewer will be starting new-technology ventures.

Yet women's participation level in tech entrepreneurship-at 4.3 percent, according to Dow Jones VentureSource-is significantly lower than their representation in the field-at 26 percent. This makes many observers feel that there's more than just a lack of interest in technology keeping women from participating in business creation.

Several facets of successful business creation suggest that differing experiences of men and women, compounded with an under representation in the technology sector, might better account for their starkly low numbers.

A tendency for businesses to stay small

One of the most notable differences between small businesses launched by women and men is that those in the former group are statistically more likely to stay small. 

"Fewer than 800,000 of women-owned small business ever cross the $250,000 mark. They tend to stay small and not get to the next level. I think the mass media perceives these women-owned businesses as cottages-teeny tiny," said Solovic.

Solovic said that she finds that a lot of women are afraid to say that they want to build a big business or that they see their venture as having the potential for substantial growth. Instead, women are more likely to play it down or speak of it as a side effort.

"It is important enough to say it out loud so that others can invest in that vision or dream. They'll say that they want to build a little business that can supplement the family income, and there's nothing wrong with that-as long as you do it from an educated point of view, and know what your options are," said Solovic. 

Lack of access to networks

Sharon Vosmek, CEO of Astia, a non-profit organization that works to accelerate the funding and growth of women-led startups, said that she's recently seen a lot of interest by women in moving into high-growth companies, but they're struggling on multiple levels, the first of which is the lack of a set of connections.

"Women tend not to have the same networks as their male counterparts do, and even when they have them, they access them differently. Men do very well at doing business with their friends and colleagues. Women need to build those same strong business networks," said Vosmek.

Vosmek is one of many who have pointed to the role of a lack of access to the "in networks," such as the angel investors of the business world-in creating an extra-steep uphill climb for would-be women entrepreneurs. Solovic explained that networks are more than business connections-they are individuals that feel that they will work well together.

"People do business with people they know and feel comfortable with. It tends to be a male-dominated industry, because men have done a better job of networking within it. They've usually taken time to get to know people in the lending area, so when they need outside capital, they already know who to call," said Solovic. 


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