WOMEN S ENTREPRENEURSHIP IN BC & CANADA Fall 2014 Operating Plan Page 0

Transcription

1 Kristine Theurer, Java Music Club WEC Loan Client WOMEN S ENTREPRENEURSHIP IN BC & CANADA Fall 2014 Operating Plan Page 0

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3 Investing in women is not just the right thing to do it is the smart thing to do. UN Secretary General Ban Ki moon at the Investing in Women and Entrepreneurship Forum, New York, NY, March 8, 2011 At a time when the world needs high growth entrepreneurs more than ever, the Kauffman Foundation has declared this to be the Decade of the Woman Entrepreneur to pursue opportunities that will inspire women to seek advisors, training, and networks that will help them unleash their potential and fundamentally change lives. The Kauffman Foundation Thoughtbook 2011, Decade of the Woman Entrepreneur

4 Copyright 2014 Women s Enterprise Centre Reproductions not permitted without prior permission of the copyright holder. Published by: Women s Enterprise Centre Suite 201, 1726 Dolphin Avenue Kelowna, BC, Canada V1Y 9R9 Toll Free: Financial support provided by:

5 Women s Entrepreneurship in BC & Canada September 2014 Table of Contents Executive Summary Economic Growth and Women s Entrepreneurship: Background The Global Context The Canadian Context Opportunities for Growth Women Entrepreneurs: Strengths and Weaknesses Barriers for Women Entrepreneurs WEC Research into BC Women Entrepreneurs: Results Motivations of Women Entrepreneurs Definitions of Success Satisfaction Level Barriers to Success Assistance to Overcome Barriers Strategies for Program Delivery Women s Enterprise Support Ecosystem in Canada Appendix 1: Selected International Best Practices United States China Europe Brazil Australia India Canada Appendix 2: Opportunities for Economic Growth Supplier Diversity Initiatives Training for Business Growth and Linkages to Tech Support Organizations Expanding the Pool of Women Investors Support for Women in Trades, Including Self Employment Training Financing Support for Young Women and Immigrants Expanded Mentoring Resources Enhanced Training, and Industry Specific Training (eg Agri Food and Tourism) Leadership Training for Women International Trade Support for Women Works Cited Women s Entrepreneurship in BC & Canada Page 1

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7 Executive Summary A strong entrepreneurial sector is essential to a thriving economy. Economic development initiatives, particularly those aimed at women, help increase the number of businesses being started and help those businesses grow and create more jobs. New businesses create more new jobs than any other sector of the North American economy. While women own over one third of all the small businesses in BC and Canada (<50 employees), their sales and employment are below the provincial and national averages. Over the past 15 years, women are increasingly starting businesses; however, they need help to grow their business. Other jurisdictions have recognized this opportunity, and women s enterprise development has become a major economic development priority around the world since There is no disputing the fact that many of the barriers women face in starting or growing a business are the same as those often faced by any start up, small business or growth oriented enterprise. However, research shows that women are exposed to special challenges in the growth phase of their business. These barriers can be personal, firm related and external. A review of the existing literature on the barriers affecting women entrepreneurs, combined with BCfocused surveys conducted by WEC and its partners, reveals that women entrepreneurs encounter barriers with regard to self confidence, financial literacy and access to capital. In order to overcome these barriers, experience based training is needed that is strategic, specific and cognizant of women entrepreneur s time constraints. Identifying women owned businesses with growth intentions in their start up phase is crucial. Early support allows women business owners to position themselves for growth. Strategies to maximize women business owners economic contributions include encouraging them to enter non traditional industries, supporting them in exporting initiatives, and educating them about financing options and appropriate risk taking behaviour. While BC leads the way in Canada in economic recovery, there is still much work to be done to support women s enterprise growth. Studies show a missing middle businesses with $100 $999K in revenue that has below average growth. This represents a section of women entrepreneurs poised for growth, and an untapped economic driver for the province of BC and the country. As the Canadian Taskforce for Women s Business Growth indicates, a 20 percent increase in total revenues among majority female owned enterprises will contribute an additional $2 billion per annum to the Canadian economy (2011). In order for government to consider gender based programs, funding and policies, it is essential to view women s entrepreneurship as an economic issue, not a gender equity issue. Women s Entrepreneurship in BC & Canada Page 3

8 1. Economic Growth and Women s Entrepreneurship: Background Enhancing and supporting entrepreneurs is essential. To illustrate, 98% of all businesses in the province of BC are small businesses that together employ over one million people, representing 57% of the province s private sector employment. The province of British Columbia prides itself on its entrepreneurial spirit, and boasts the second highest rate of women business owners of all the provinces, at 37.7% (BC Stats, 2013). A healthy small business sector is essential to a robust, dynamic economy and strong, vibrant communities. Economic development initiatives to help small businesses and entrepreneurs grow and conduct business internationally contribute to BC s economic growth in a way that is consistent with the BC Jobs Plan and recommendations by the BC Small Business Roundtable, as well as other similar national programs. Entrepreneurs provide the majority of new jobs. When people have jobs, society thrives both economically and socially. Entrepreneurship plays a major role in job creation it is high growth entrepreneurs who provide the majority of net new jobs in developed economies each year. While start ups of high growth companies have the largest impact on the economy, fewer women than men are building high growth companies (Mitchell, 2011). Encouraging women owned businesses to grow represents an economic development opportunity. In fact, it is an opportunity being seized by both developed and developing economies around the world. It can be the third piece of a three pronged approach to economic growth, complementing the other two growth strategies of international trade development and innovation/tech commercialization support. The discrepancy between women s actual economic contributions versus their potential to be more engaged in the economy is increasingly referred to as the economic gender gap the gap in economic growth caused by the less than optimum participation of women in the economy. Successfully addressing these barriers and improving the alignment between women s education levels, entrepreneurial talents and economic outcomes will result in significant new economic activity and growth. It is well documented that educated, income earning women are especially powerful catalysts for development because they tend to invest more of their money in their families health, education, and well being than their male counterparts around the world. The countries most successful in narrowing gender equality gaps consistently achieve the strongest economic performance. There is clear evidence of a critical link between women s roles in the economy and economic prosperity at the local, national and global levels. While Canada leads in many ways, there is more to be done. 2. The Global Context "Entrepreneurship makes a difference to economic prosperity, and a country without high business start up rates is risking economic stagnation, says Michael Hay, project director of the Global Women s Entrepreneurship in BC & Canada Page 4

9 Entrepreneurship Monitor (GEM) and professor at the London Business School. The 2010 GEM report estimates that over 187 million women are starting and running businesses in the 59 economies it studies. GEM reports that most firms are still started and operated by men, with peak entrepreneurial activity among those aged Overall, men are twice as likely as women to be involved in entrepreneurial activity worldwide. Women s enterprise development has become a major priority in many nations around the world since the beginning of At the March 2011 Investing in Women and Entrepreneurship Forum in New York, the UN Secretary General, Ban Ki moon remarked that investing in women is not just the right thing to do it is the smart thing to do. In September 2011, the APEC countries held their first ever APEC Summit on Women and the Economy in San Francisco, where the 21 member nations unanimously agreed to focus on women s economic growth as an economic strategy in their countries. The San Francisco Declaration (2011) commits to four focus areas to develop and implement initiatives to improve women s: 1. access to capital; 2. access to markets; 3. capacity and skills building; and 4. promotion to leadership. The Women s Enterprise Initiative, of which Women s Enterprise Centre (WEC) in BC is a part, participated as part of the Canadian delegation to this APEC summit, and both are founding members of Women s Enterprise Organizations of Canada, the national association of business support agencies which provide services to women entrepreneurs. These national and international organizations recognize that entrepreneurship thrives when women are actively involved (Women entrepreneurs are key to long term economic growth, n.d.). 3. The Canadian Context A 2013 BMO Financial Group survey reveals that 36% of women in Canada are interested in starting their own business within the next ten years. Of those, 57% say one of the primary reasons for doing so would be to do something they love. The study also shows a healthy interest in entrepreneurship for women under 35, with 19% reporting that they are very likely to start a business within the next five years. According to Colleen McMorrow, Ernst & Young s Entrepreneurial Services Leader in Canada, Canada s ideal environment and proactive frame of mind are setting the standard for entrepreneurial culture. In fact, 88% of survey respondents agree these qualities are putting the country on the map as a startup paradise (Calgary Herald, 2011). Omnibus survey results from research conducted by the Mustel Group for WEC with 502 men and women in British Columbia in Women s Entrepreneurship in BC & Canada Page 5

10 March 2014 show that 87% feel successful women entrepreneurs and the contribution of womenowned businesses are recognized and accepted by society. This illustrates that the social landscape is primed for further growth in women s enterprise development. There are numerous opportunities to promote economic growth through women s enterprise development, because in Canada, women owned businesses tend to have fewer employees and lower sales than male owned businesses. On average, women owned businesses generate only 50% of the revenues of male owned businesses. However, their net profit before tax is 89% of male owned firms (Jung, 2010). This shows a strong contribution to the economy in terms of profitability, and indicates that women entrepreneurs are promising prospects for economic growth. Barbara Orser, who holds the Deloitte Professorship in the Management of Growth Enterprises at the Telfer School of Management in Ottawa, states that it is a misconception that women do not want to expand their businesses (Eichler, 2012). This misconception is not borne by the reality of the explosion of female entrepreneurs in Canada and the United States, and the world at large. The reality is that BC women do want to expand their businesses, and there is evidence from the US that they may have fared above average over the last 15 years in terms of employment and revenue growth rates (albeit from a smaller base). Since women owned businesses in Canada tend to have higher profitability levels than their male counterparts (Jung, 2010), the potential for this subset of the SME market to contribute to economic growth and job creation is that much greater. However, some specific barriers need to be overcome in order to realize this potential. Contrary to the assumptions often made about micro business ownership in Canada, the proportions of male and female owned businesses with fewer than five employees are almost identical, at 79% and 81% respectively. Yet, there is often a presumption that only the majority women owned businesses are micro businesses. 3.1 Opportunities for Growth Research suggests that high growth companies help the economy the most through job creation and leadership in new industries (Mitchell, 2011). In the US, women owned firms have fared better than their male counterparts over the past 14 years (American Express Open Report on the State of Women owned Businesses, 2011). Male owned firms grew by only 25% in the US between 1997 and 2011 half the rate of women owned firms. Employment in male owned firms has actually declined by nearly 5% over the past 14 years, while revenues grew by just 33%, both well below the growth seen among women owned firms and the national average. Some of the improved results for women business owners can be attributed to targeted US federal, state and municipal government supplier diversity programs to assist women owned businesses to access corporate and government procurement opportunities, where they have historically been under represented in both Canada and the US. Women s Entrepreneurship in BC & Canada Page 6

11 According to the American Express State of Women Owned Businesses Report (2011), womenowned firms with sales less than $100,000 and those generating $1 million or more have seen above average revenue growth since 1997; however, women owned firms with sales between $100,000 and $999,000 in revenue have grown at a below average rate. This missing middle needs focused assistance to be stimulated to grow. This same phenomenon is likely to exist in Canada as well, where working capital remains difficult to attain, and many women business owners note barriers such as difficulty in business planning and the need for more training (Women s Enterprise Centre Discussion Paper, 2011). In order to maximize the potential of entrepreneurial women, women need to be encouraged and supported in more profitable and higher wage industries. Only 6% of women firms in Canada are in knowledge based industries or manufacturing sectors (Pregel, n.d.). Furthermore, a 2011 study released by the Kauffman Foundation states that women have managed to break through the glass ceiling in engineering and technology, but not through the glass walls to break out and start their own companies (Kauffman, 2011). This represents an opportunity to help women create larger and more profitable businesses in the technology sector. Another real driver of economic benefit is exports. Only 10% of Canadian firms export and fewer than 10% of Canadian women entrepreneurs are exporting now, so there are huge opportunities for women to grow and expand their businesses internationally, says Josie L. Mousseau, Canada s Trade Commissioner for Women in International Trade with DFATD. The million women owned businesses in Canada represent $117 billion per annum of economic activity. A 20% increase in total revenues by these firms would contribute an additional $2 billion into the Canadian economy (Taskforce for Women s Business Growth, 2011). The economic argument is clear that helping women grow their businesses is a strong economic stimulus strategy. 3.2 Women Entrepreneurs: Strengths and Weaknesses In Canada, women owned firms tend to be more profitable as a percent of sales than male owned firms, according to the 2010 Industry Canada Small Business Financing Profile: Women Entrepreneurs. The same report states that 6% more women had growth intentions than men (44% vs. 38% respectively) in Furthermore, women s intentions to grow their business increased by 13% between 2004 and This is a positive trend; however, despite these plans to grow their business, only 37% of women s businesses in BC are considered high growth, compared to 63% of male owned firms. Research conducted in BC in 2011 determined that 57% of growth oriented women business owners are uncomfortable with carrying debt. In 2007, BC male owned firms borrowed an average of 141% more than female owned companies (Women s Enterprise Centre Discussion Paper, 2011). Women s Entrepreneurship in BC & Canada Page 7

12 3.3 Barriers for Women Entrepreneurs The challenges that exist for women entrepreneurs can be classified into personal, firm related and external barriers. Following is a discussion of the recent literature on the barriers affecting women entrepreneurs in terms of these three categories Personal Barriers The role of women in society has a significant impact on the types of businesses women start and the sectors of the economy in which they operate. Most developed countries have already created, developed and continue to successfully implement programs to help women entrepreneurs overcome some of these personal barriers. Appendix 1 outlines selected international best practices and programs that have resulted in positive social and economic impacts. There has been a positive change in BC with regard to certain personal barriers. In 2008, 40% of women entrepreneurs listed bias against women as well as time and family responsibilities as their #3 and #4 barriers. In 2011, only 27% of respondents listed family responsibilities as a barrier, it was ranked #5 on their list of top barriers. Increasingly, women are choosing business ownership and finding ways to make it work with their family responsibilities (Women s Enterprise Centre Research). Women report more than men that personal and entrepreneurial skills are an issue impacting their business success. This can be a reflection of their confidence level. Women s Enterprise Centre 2007 mentoring research on early stage entrepreneurs indicates that confidence plays a big role in how women perceive their ability to promote their products or services. Confidence levels impact how women present themselves, set prices, and negotiate on behalf of their business whether that be with a financial institution, supplier, staff, customer, peer, or even a family member. In addition, more women than men reportedly suffer from the imposter syndrome, which is characterized by a lack of confidence and uncertainty about whether they are entitled to be in their position. This syndrome is found to be particularly common among women who are successful in their given careers (Kets de Vries, 2005). Additionally, while there are sufficient business networks to help entrepreneurs, women business owners face challenges in accessing those networks. This is partially due to a lack of knowledge or experience forming new networks and capitalizing on existing contacts to bring in new business. The 2012 Global Entrepreneurship Monitor Women s Report found that while fear of failure is a top concern for all entrepreneurs, it plagues women business owners more than their male counterparts. "Even though women may have more years of education, it may not relate to selfperceived confidence in their entrepreneurial capabilities," says Candida Brush, a professor of entrepreneurship at Babson College and one of the researchers for the GEM report. "In developed economies, entrepreneurship is opportunity driven and women, who are well Women s Entrepreneurship in BC & Canada Page 8

13 schooled in other disciplines than entrepreneurship, may question their ability to identify, assess and act on an opportunity" (Mielach, 2013). Personal Barriers for Aboriginals and Immigrants Higher levels of business support are typically needed by Aboriginal women to realize their goals of self employment and entrepreneurship. In addition to business support, aboriginal women require extended support addressing other challenges that occur in their communities that can impact their success such as: confidence to engage and participate in mainstream activities, valuation of personal strengths and talents not traditionally recognized, and limited resources for childcare and transportation (Baxter, 2011). In addition, on reserve aboriginal women face a greater challenge when applying for financing due to the fact that financial institutions may not use reserve land [or other assets held on reserve] as collateral (Baxter, 2011). One fifth of women owned businesses are run by women who have immigrated to Canada. Immigrant women tend to start their business within five years of arriving in the country and, after five years, there is very little material difference between the characteristics of businesses run by immigrant women and those run by Canadian born women (CIBC, 2005). Despite their entrepreneurial tendencies, immigrant women need extra support in specific areas. Their understanding of the Canadian licensing requirements, taxation, health and safety rules, credit rating systems and other business practices may be limited. They may experience language barriers which affect their ability to create a compelling business plan. Accounting standards may differ in their home country, and their professional designation may not be recognized in this country. They may experience a lower level of confidence due to these issues. In addition, newcomers may lack social and professional networks, as discussed in an article by Women Entrepreneurs Community: All business owners face challenges, but women entrepreneurs often have additional challenges and obstacles that their male peers are less likely to encounter. [ ] With such great demands on their time, energy and resources, they struggle to balance family life and work. As a result of all these issues, entrepreneurship within the newcomer community is still a primarily male dominated field. (n.d.) Personal Barriers for Youth In a report on National Youth Social Entrepreneurs Social Attitudes conducted in British Columbia and Ontario published in 2011, the female participants note that there is little support available to women to help them succeed in male dominated fields of work. Young women who are building businesses in non traditional areas indicate they would like to have access to female mentors who have experienced success. Women s Entrepreneurship in BC & Canada Page 9

14 3.3.2 External and Firm Related Barriers The primary firm related barriers that women entrepreneurs encounter relate to financial barriers. A lack of confidence and a need for business skills and training, stemming from women business owners personal barriers, can compound their firm related barriers and hinder the growth of their business. Start up training tends to ignore planning for future growth, focusing instead on business startup planning, marketing advice, and personal budget planning to ensure the new entrepreneur has enough cash to carry her until the business gets going (Hadary, 2010). Starting a business requires a different set of skills than running and succeeding in business, and women know they need management expertise to run a larger or growth oriented company. If the idea of growth planning is not introduced early enough into the business start up planning process, planning at a later time becomes a barrier when women are thinking about, or trying to, grow their business. According to a report from BDC entitled Women Entrepreneurs and Access to Financing, businesswomen are more cautious than men when it comes to financing their business; in fact, they are less inclined to turn to a financial institution. They take on less debt and are more likely to use their personal savings to start their business or their own capital to run it. However, because their businesses are often small, businesswomen also have more limited financial needs. (n.d.) Women business owners experience limited access to angel networks and other sources of equity, insufficient collateral (RBC Economics, 2013), confusion about terms and jargon, limited understanding about types of equity and debt capital and a lack of understanding regarding best practices in structuring deals and utilizing financial information. For some, the line between commercial and personal credit is obscure, while others assume that loan security and cosignature requirements are gender related. BMO s 2013 study notes that 42% of Canadian women surveyed who would start a business if given the opportunity, consider access to capital to be their biggest challenge. Economic barriers include access to growth capital, but also women entrepreneurs investment readiness. Investment readiness is defined as the capacity of a small business or an entrepreneur to understand and respond adequately to the concerns of banks, business angels, or venture capital funds who are providers of the external financing the business is seeking. A 2011 survey of BC women entrepreneurs found that while credit histories and collateral levels may not affect how women think about growth, they may affect whether they choose to pursue a growth strategy (WEC). Women may assume (based on past experiences and history) that they will not be able to obtain financing and, therefore, they do not consider pursuing it. This impedes the growth of the economy because a business that does not grow does not create more new jobs (not to minimize the jobs and economic activity it has already created). Women s Entrepreneurship in BC & Canada Page 10

15 Industry Canada reports that women are significantly more likely to be turned down for a loan due to insufficient security and poor credit histories than their male counterparts. It is not clear from the data whether the security and credit histories of women are worse, or whether they simply get turned down more for these reasons. Regarding the reasons for business discontinuance, it was found that in USA and Israel, the lack of access to finance impacts women more than men (GEM, 2012). External and firm related barriers can partially be attributed to financial literacy challenges. Women entrepreneurs often cannot see or understand the realities of their financial situation due to their relative lack of management experience and business training (on average, men have ten years more management and business experience). This lack of understanding affects not only how a business owner thinks about or pursues growth, but it may also lead to poor decisions such as attempting growth when it is not appropriate (WEC, 2011). It may also lead to the decision not to grow, which inhibits the growth of the economy. The next section presents an overview of the results of recent research conducted by WEC into the barriers that BC women entrepreneurs encounter in their business, including a focus on the specific struggles of growth oriented women business owners, which demonstrates that barriers still exist for women entrepreneurs in BC. 4. WEC Research into BC Women Entrepreneurs: Results Three significant pieces of primary research into BC women owned businesses have been carried out since the fall of While the research summarized in this section is BC focused, the results can be considered representative of the rest of the country, given similar levels of women s entrepreneurship across Canada. In October 2011, WEC was commissioned by Vancity Community Foundation to survey growthoriented women owned businesses and summarize the findings related to barriers. The research targeted growth oriented businesses, and a total of 131 women were surveyed, of which 97 were WEC clients and 42 were members of the Forum for Women Entrepreneurs (FWE). Respondents identified a number of personal, firm, and external related barriers to growing their business. In the spring of 2012, a more general cross section of WEC clients was surveyed (n=245) regarding the same barriers. Their responses were somewhat different, as they comprised both growthoriented and non growth oriented companies. In 2013, Dr. Lynn Sparling, Professor at Okanagan School of Business carried out research for WEC to compare male and female entrepreneurs barriers, self confidence, and use of mentors. A telephone survey was conducted by Mustel Group with a sample obtained from a Dun & Bradstreet database. The sample, comprised of 50% male and 50% female, and had a total of 240 respondents. This study was partially funded by the Social Sciences and Humanities Research Council of Canada (SSHRC) and WEC. Women s Entrepreneurship in BC & Canada Page 11

16 WEC s 2011 survey found that the intention to grow a business generally occurs in the early years of business, and this presents an opportunity to identify these businesses in order to support their growth. The timing of growth intentions is crucial 88% decide to grow during their first five years in business (WEC, 2011). Identifying women owned businesses with growth intentions early in their business cycle and giving them the support they need to overcome their barriers will have the greatest economic impact. The 2011 survey also found that non growth firms are much more likely to be B2C than the highgrowth firms (86% vs 39%). Using the 2011 WEC Loan Portfolio Analysis as a base for this information, a significantly higher number of high growth firms (61%) are in the B2B space. Among the 2011 WEC survey respondents, 63% are in the service sector, and 72% have fewer than five employees. This is consistent with previous studies that find as many as 80% of women owned firms are in the service sector in Canada. According to Orser, Riding and Manley (2006), womenowned firms are smaller, less likely to grow than counterpart firms owned by men, and disproportionately represented among firms in the retail and service sectors. The retail and personal service sectors are also mature industries with a high degree of competition, resulting in lower profit margins. These issues pose barriers to profitability. In order to understand the barriers to success for women entrepreneurs, it is important to recognize their motivations as well as their definitions of success and resulting satisfaction level. 4.1 Motivations of Women Entrepreneurs Women start businesses for different reasons than men, and their motivations for starting a business may affect whether or not they choose to grow. WEC s 2011 study finds that 56% of women business owners surveyed choose not to further grow their business. Of those who do intend to grow their business, their reasons are: higher income, self fulfillment, and meeting untapped consumer demand. 4.2 Definitions of Success Definitions of success differ for women as opposed to men. In particular, women entrepreneurs idea of success involves: Increasing importance of contribution to community Higher importance for women for work / life balance and professional autonomy Lower priority of personal disposable income, compared to men The figure below presents the findings from WEC s 2012 study. It illustrates that women generally rate both personal and firm aspects to be equally important aspects of success (financial, work life balance, operational, and relational). Aggregating these responses into categories, the top ranked indicators of an accomplished entrepreneur are financial success of the business, professional recognition, contribution to society, and work/life/relationship issues. The highest ranked criterion Women s Entrepreneurship in BC & Canada Page 12

17 was the quality of customer relations and the success criterion of lowest importance was the acquisition of personal goods. It is possible that lifestyle choices to achieve work/life balance or other family responsibilities create a barrier for the number of hours a woman entrepreneur can devote to her business. However, depending on their definition of success, they may still perceive themselves to be successful due to their ability to work fewer hours and achieve work life balance. In this study, women rank their actual success against these criteria at only 78% of their perceived importance. They perceive themselves as having relatively higher success with the autonomy and quality criteria, and relatively lower with the financial criteria. Figure 1: Business Success: Importance vs. Performance for Women Business Owners Success Criteria Generating personal income Financial stability of the business Profitability Balancing work life demands Market acceptance Quality of customer relations Quality of products or services Personal sense of accomplishment Maintaining relationships Operating performance Pursuing intellectual activities Community relations Maintaining professional autonomy Acquiring personal goods Mean importance rating Mean success rating Mean Rating Orser & Dyke similarly find in a 2008 study that women rate non financial criteria higher as indicators of success, which leads them to an important point: Because of the emphasis on financial criteria in the traditional view, it is generally reported that women achieve lower levels of success than men. This may serve to bias discussions about entrepreneurship, where traditional male values are thought of as the norm, and women s values considered the exception. In recent years, corporate social responsibility and social ventures have become much higher profile. The turbulent economic times have contributed more awareness of community needs (e.g. homelessness among the working poor), which may be the reason why contribution to community is also highly valued in the 2011 study. Women s Entrepreneurship in BC & Canada Page 13

18 4.3 Satisfaction Level Women s satisfaction with reaching business goals is generally high among women business owners. However, interpreting this can be a challenge due to the paradox of the contented female business owner whereby, in spite of lower growth, they are satisfied because they have reached their business goals. This paradox is reflected in the WEC research, which finds that 64% of respondents of the 2011 WEC study report being satisfied in reaching their business goals. 4.4 Barriers to Success Based on the framework used in previous research in the area, the surveys conducted in 2011 and 2012 classify women entrepreneurs barriers to success into three categories: personal, firmrelated and external related barriers. As noted in the table below summarizing the 2011 and 2012 studies, the ranking of the barriers between growth oriented entrepreneurs and general WEC clients are very similar with the expectation that limited management experience and finding qualified labor were recognized as much stronger barriers by the growth oriented entrepreneurs. This difference might be due to the fact that 65% of the growth oriented businesses (those polled in the 2011 WEC survey) had employees but only 45% of the 2012 study respondents had employees. Women s Entrepreneurship in BC & Canada Page 14

19 Table 1: Barriers Encountered: Growth Oriented Entrepreneurs & General WEC Clients Barriers Women Entrepreneurs Encounter (WEC Survey 2011) Personal Barriers Limited management experience 31% 18% Limited business training / education 30% 26% Difficulties with business planning 30% 26% Lack of mentoring 28% 20% Lack of time due to family responsibilities 27% 14% Limited understanding of financial statements 26% 12% Firm Related Barriers Obtaining financing 45% 32% Finding qualified labour 30% 11% Low profitability 24% 27% Management capacity / ability 20% 9% Lack of market research 17% 9% Staffing issues (high staff turnover) 16% 7% Difficulties finding suitable space 15% 9% Remoteness of business location 7% 6% External Barriers Instability of consumer demand 26% 27% Legal requirements 13% 8% Government regulations 11% 12% Taxation levels 10% 11% Insurance rates 10% 5% Lack of infrastructure (high speed internet, phone, roads) 4% N/A Inability to access affordable shipping 3% 6% A review of these findings shows that women business owners feel they encounter personal barriers with regards to management and business skills training, a need for mentors and struggles with time management. They also cite family responsibilities, which leads to timing issues both in terms of when business growth is feasible and in terms of availability for training. Finally, financial strength, financial literacy and overall confidence levels are issues for all, especially for aboriginals and immigrants. Other notable barriers encountered by respondents in the 2012 study include poor credit history (14%) and shortage of peer support networks (14%). In the 2011 WEC survey, women identify a number of firm related barriers to growing their businesses. However, these can be aggregated into the top three barriers, namely financing and profitability issues (69%), HR issues (46%), and skills and training issues (37%) Barriers to Accessing Financing Growth Oriented Entrepreneurs (n=131) WEC Clients (n=245) Financial barriers consistently rank high in these studies. In the 2012 study, the top firm related barriers are both financial challenges accessing financing and low profitability although it is not possible to establish a causal relationship. Similarly, 45% of respondents in 2011 identify obtaining financing as their biggest barrier. In fact, of the past five studies conducted by WEC, financial barriers are the only consistent barriers listed in each of the five research studies. Women s Entrepreneurship in BC & Canada Page 15

20 The challenges in obtaining financing are complex, and include several aspects. They include: Lower perceived need for financing Smaller amounts borrowed Level of comfort with outside financing Different financing patterns at start up Different financing patterns for business growth Lower approval rates for short term credit Barriers to accessing financing More declines due to poor security and credit histories Higher documentation requirements The barriers identified in these studies highlight an opportunity to help women business owners identify their business growth potential and develop the skills to realize it. The next section identifies some specific opportunities to deliver programming that helps women entrepreneurs overcome these barriers. 5. Assistance to Overcome Barriers Women entrepreneurs recognize their challenges and are clear about the type of assistance they need WEC survey respondents identify 18 different types of information or services to help overcome their barriers. The top ten are as follows: Table 2: Services Identified to Overcome Barriers to Success Information or services to overcome barriers and create success Frequency Business advising services 39% Mentoring 34% Financial management training 34% Marketing training 31% Market research data for my industry 29% Assessment / evaluation of my entrepreneurial skills 25% Access to debt financing 25% Management skills training 24% Access to equity financing 23% Leadership training 22% These requests are consistent with the APEC San Francisco Declaration (2011), and the Canadian Action Strategies to Support Women s Enterprise Development, as well as several of the priorities outlined by the 2011 BC Small Business Roundtable, including the call for the Province to: Focus on factors that stimulate small business growth Support training and labour market development Leverage technology and competitiveness Women s Entrepreneurship in BC & Canada Page 16

21 Continue to instill consumer and business confidence Continue to reduce regulatory burden on small business Further enhance the entrepreneurial culture in BC These results are all quite consistent with the results from the 2010 WEC roundtable on women s business growth, hosted by WEC in partnership with the UBC Sauder School of Business and the Vancouver Board of Trade Women s Leadership Circle. At that event, growth oriented women business owners worked with academics and service providers to identify the priorities in BC. The results of that interactive symposium include: Table 3: Priority Mention Programs to Support Growth Strategy Growth Support Strategy Frequency SME Programs 100% Market Development 100% Access to Capital 87% Advisory Boards and Industry Sector Councils 76% Technology Commercialization and Adoption 75% With regards to financing barriers, thirty four percent of the women in WEC s 2011 survey report that financial management training would help them overcome their barriers to growth; 25% say access to debt financing is needed and 23% identify a need for access to equity financing. This is understandable, since only about 7% of venture capital in Canada goes to women owned ventures. The results of these studies clearly indicate opportunities to assist women entrepreneurs in overcoming their barriers with four strategic programming areas: 1. business advising; 2. mentoring; 3. business training; and 4. access to financing. Given these suggestions, Women s Enterprise Centre and its partners across Canada (members of the WEOC network) are clearly targeting its services at most of the key interventions requested to help women business owners, through business advisory services, mentoring, training in financial management, marketing, management skills and leadership and financing opportunities. WEC s commitment to continuous research into the issues affecting women business owners accounts for its relevant information and services that specifically target these areas. The Western Canadian members of the WEOC manage their own lending program, which has been identified by the Taskforce for Women s Business Growth as being a benefit for the rest of the country s women s enterprise agencies to offer as well. Women s Entrepreneurship in BC & Canada Page 17

22 6. Strategies for Program Delivery There are two generic approaches to growing a business: increasing sales and/or increasing profits. Both provide economic benefits to a country or province. When approaching what can be done in partnership with the existing Canadian women s enterprise support network to assist women business owners, both approaches should be encouraged; however, the appropriate approach for individual business owners depends on the other aspects explored in this paper (motivations, definitions of success, current satisfaction levels, and their particular set of barriers). There is strong justification to provide extra support to help address the personal and firm related challenges that growth oriented women business owners face. This support includes increased access to capital, assistance to envision and plan for growth in the first 5 years of the firm s operation, plus the information services, advice, and training and mentoring, and initiatives to assist with financial literacy and confidence building that have been identified in this report. Training in financial literacy and financial management strategies for growth are particularly needed for women business owners to better understand business opportunities and business potential. WEC s 2011 study finds that the main reason women business owners do not apply for funding from traditional lenders is that the respondents feel they don t need it (61%). To address this and related issues, additional training would assist women in envisioning how they could strategically use external financing to grow their business. The 2011 report by the Taskforce for Women s Business Growth demonstrates that financial literacy enhances enterprise growth: Canadian women seek structured learning opportunities to increase their understanding about small business financing. The need for financial training is evidenced in Canadian studies that report that women business owners are significantly less likely to seek equity capital compared to male counterparts. The report recommends that women entrepreneurs want to talk about risk, and education is necessary for women to understand which risk taking behaviours are appropriate to grow their business (2011). This support will be most effective if delivered to women business owners by business support organizations which specialize in this market, and understand their learning styles and behavioural characteristics. In terms of how women best receive support, women focus on intrinsic outcomes such as improving strategic management skills and building self confidence, while men tend to prioritize operational skills, such as identifying opportunities for growth (Orser & Riding, 2006). Research also finds that women approach leadership with a different perspective than men. Women relate more easily to the experience of other women (Hadary, 2010). This has implications for training delivery, where women need to hear from role models and focus on practical learning to provide the greatest impact. Women s Entrepreneurship in BC & Canada Page 18

23 An outline of the women s enterprise support ecosystem in Canada, and the resulting social and economic impact in the province and nationwide, is outlined in the next section. Appendix 2 offers an expanded view of opportunities to develop additional programming to address the gaps identified by women business owners in BC. 7. Women s Enterprise Support Ecosystem in Canada The Taskforce for Women s Business Growth first documented the women s enterprise support ecosystem in Canada. The following infographic is based on that initial work. In describing the government funded support organizations that work directly with women entrepreneurs across Canada, many of the members of Women s Enterprise Organizations of Canada (WEOC) have been identified as international best practices in women s enterprise development by the Chair of the Taskforce, Dr. Barbara Orser. WEOC s mission is to build a strong national network that strengthens the infrastructure of support for women entrepreneurs across Canada. The figure below illustrates the relationships between the various bodies that support women entrepreneurs in Canada. Figure 2: Canadian Women s Entrepreneur Support System Overview Women Entrepreneurs Women s Enterprise Support Organizations National and Provincial WBN s Government Agencies International Agencies Canadian SME Policy & Status Reports International SME Policy & Status Reports Detail on the main players in each of these categories can be found in the tables below. The two types of groups in this support ecosystem that interact directly with women entrepreneurs are the publicly funded Women s Enterprise (WE) Support Organizations, and the many private (for profit and non profit) Women s Business Networks (WBN s) across the country. The WE Support Organizations also interact with these WBN s regularly, as the members of these associations include women business owners, which will turn to the support organizations for support. The WE Support Organizations are also the primary contact point for the government and research agencies, both national and international, which develop research and policies to help this sector. More detail follows in Figure 3 below: Women s Entrepreneurship in BC & Canada Page 19

24 Figure 3: Canadian Women s Entrepreneur Support System Detailed on Components 7.1 About Women s Enterprise Centre A non profit organization founded in 1995 as an initiative of Western Economic Diversification Canada, Women's Enterprise Centre is BC's leading resource for women who are starting, purchasing or growing a small business. From our offices in Kelowna, Vancouver, and Victoria, we serve the 150,000 women business owners across the province, providing essential resources and services designed to build business capacity and fuel success. We provide business loans of up to $150,000 and this direct financing, plus the additional funds our clients leveraged from other lenders through our loans, amounts to $44 million in direct and indirect financing so far. Our loans have helped create and maintain hundreds of jobs in BC and over $1 billion in economic activity in the province. Our loan clients attribute a significant portion of their increased sales to the help they have received from Women s Enterprise Centre, and the loan care they receive helps increase their success rate significantly. After 5 years, 75% of our loan clients are still in operation, compared to the provincial average of 51%. Every year, WEC business advisors provide over 3,000 business advisory appointments, our client service staff respond to over 3,500 requests for business information, and our Skills Development department enhances the business skills of almost 1,000 women in our workshops and mentoring program in over 20 communities in BC. Women s Entrepreneurship in BC & Canada Page 20

25 As a provincial economic development organization, Women s Enterprise Centre works closely with partner organizations throughout the province to deliver our services in local communities. WEC s different services each have a different set of partners and other players that we interact with, some of which are publicly funded and others which are for profit. The WEC approach is to fill gaps in each area. It achieves this by conducting regular research on gaps and barriers, and working closely with service delivery partners. Figure 4: Women s Enterprise Centre Services in Context In 2013/14, WEC hosted 160 workshops in 31 communities, with 55 partners, including Community Futures Development Corporations, Chambers of Commerce and Small Business BC, as well as many Women s Business Networks such as the Forum for Women Entrepreneurs (FWE). WEC also works closely with BDC, Community Futures, Futurpreneur Canada, credit unions and traditional lenders on joint loans and referrals. WEC s unique offering, in terms of the combination of financial access and business resources, compared to other service providers in the women s space in BC is summarized in Figure 5, below. Women s Entrepreneurship in BC & Canada Page 21