National Unit for Women's Enterprise: Background

In 2002, Paisley Enterprise Research Centre (PERC) was commissioned to undertake a study examining the feasibility of a centre to promote and support women's enterprise in Scotland. The study was asked to consider the need for such a centre, what functions it would undertake, and what form it should take. It considered support for women in enterprise within the context of key policy categories including: business start-ups; business growth and development; innovation; access to funding; and social inclusion.

The study concluded that there was a need for a dedicated National Women's Unit, based internally within Scottish Enterprise (SE) and Highlands and Islands Enterprise (HIE). In April 2003, the Scottish Executive directed SE and HIE to establish a National Unit for Women's Enterprise (NUWE). The key initial tasks of the Unit were to set up an independent advisory group and carry out a comprehensive research programme to examine:

• the extent of women's enterprise in Scotland;
• the issues that women face when attempting to establish and grow their businesses; and
• the effectiveness of current support programmes.

Following the establishment of the Unit, two broad studies were undertaken.

The first phase of this research (led by the Training and Employment Unit of the University of Glasgow and Paisley University) gathered baseline data on the extent of women's enterprise in Scotland, analysed research in this area and examined the issues and constraints facing women who want to establish and grow businesses.

The second phase (undertaken by EKOS economic development consultants) explored the coverage and effectiveness of current mainstream and target programmes and funding mechanisms that support the creation and development of businesses in Scotland and, in particular, examined women's use and attitudes to business support and funding.

The research has informed the formation of the Women's Enterprise Strategy - Sharpening the Focus, which DFM launched on 8 March 2005.

Launch of Scottish Executive and Scottish Enterprise Women's Enterprise Strategy: 8 March 2005

On 8 March 2005, International Women's Day, Jim Wallace, Enterprise Minister launched a new report by Scottish Enterprise and Highlands and Islands Enterprise on women's enterprise, entitled Sharpening The Focus on Women's Enterprise in Scotland (PDF, 823kb)

Research studies were undertaken across 2003-4 to explore the state of women's enterprise in Scotland and the factors that stimulate or constrain the start-up, survival and growth of women-led businesses. The report also highlights the services and activities currently provided by the enterprise agencies to assist more women to start-up and grow their businesses and the strategies to be adopted to ensure more new businesses are created by women.

UK Perspective

In 2003 the UK Government launched 'A Strategic Framework for Women's Enterprise' which clearly recognises the position of the devolved administrations in the delivery and provision of services to meet the needs of women. We are also monitoring developments with HM Treasury and the Small Business Service on the Chancellor's specific interest in women's enterprise, partly through the recently formed Women's Enterprise Panel.

Women's Enterprise Strategy: Research Summary

1. The research study describes the state of women's enterprise in Scotland and the factors that stimulate or constrain the start-up, survival and growth of women-led businesses. It is based on a review of the research literature and analysis of available Scottish data.

2. There is no single or comprehensive data source on women's enterprise. From a variety of sources, the state of women's enterprise can be summarised as follows:

• Women run 12% of Scottish independent companies (i.e. 4,900).
• There are 67,100 self-employed women in Scotland, which is 27% of total self-employment. Some of these are in partnerships (with both other women and men). Consequently, this translates into fewer (but an unknown number of) businesses.
• Independent women-led businesses employ 66,350 people or 7% of all jobs in Scotland's independent firms.
• Women-led firms are, on average, relatively small with many run on a part-time basis. Women run few large or externally-owned companies.
• Women's enterprise is concentrated mainly in retail, personal services, education and health.
• A substantial minority of businesses are run jointly by a male/female team.

Combining the various data sources, it is estimate that 20% of Scotland's businesses are led by women.

3. Women's enterprise is less extensive in Scotland than the US. In the US, 38% of the self-employed are women and 26% of all businesses are owned by women.

4. The proportion of businesses led by women has been increasing gradually. They account for a greater share of start-ups than their share of the existing business stock.

• There were 2,270 new independent companies set up by women post-1993 and surviving in 2003. This is 14% of Scotland's new limited companies.
• Women account for just over 30% of all new self-employment businesses.
• Taken as a whole, women set up around 30% of Scotland's independent start-ups. These firms continue to be concentrated in 'traditional' women's sectors.
• ·They employed 22,250 people in 2003 (10% of all jobs created by start-ups).

5. The proportion of start-ups set up by women does not vary greatly across Scotland. However, the women's business birth rate (measured per head of population) does vary substantially. It is particularly low in Fife and the Glasgow conurbation. Areas with high male business birth rates also have a relatively high female business birth rate and visa versa. This suggests many of the same factors affect both male and female entrepreneurship.

6. Approximately 277,000 Scottish women aged between 16 and 64 are 'would be' entrepreneurs. While the number increased somewhat during the 1990's, as a proportion of the population (13%), it remains well below the equivalent figure for Scottish men (20%). It is also well below the figure for women in Southern England (21%). Of these, 34,000 have a current active interest in setting up a business. Scottish women 'would be' entrepreneurs are less committed than their male counterparts and have lower growth ambitions for their business.

While spread throughout society, the majority are young, in employment and from a home owning background. While relatively few have a seriously socially disadvantaged background, many have limited business related skills and networks.

7. As with men, their main motives for wanting to become self-employed are independence, flexibility and control over one's own destiny. While making money is important, few want or expect to become rich. Compared to men, the main differences are that many want to work from home and to combine family and work responsibilities more effectively.

8. Just over 81% of Scottish women (compared to 68% of men) say they do not want to run their own business. A majority of these women say they could not set up their own business. Approximately 30% of Scottish women aged 16 - 64 (compared to 18% of men) have never thought about the self-employment option. There is little research on how and when individuals become 'would be' entrepreneurs or how policy might increase their number. However, the following contribute to the creation of 'would be' entrepreneurs:

• Family background and, in particular, whether other members of the family are, or have been, self-employed.
• Whether or not the individual knows an entrepreneur.
• Participation in education and especially higher education.
• Labour market participation and work experience.

9. With increased participation in higher education and the labour market, women's entrepreneurship is likely to increase in the future. However, on their own, increased participation in higher education and the labour market will not eliminate the gender gap. Other factors which may explain why fewer women become 'would be' entrepreneurs include:

• More women believe they could not set up their own business because they do not have the necessary skills or entrepreneurial characteristics and that it is simply not feasible for someone like them.
• Women are more concerned about taking on additional responsibilities and debt
• Women are more concerned about the potential adverse impacts on the family.

The latter includes childcare responsibilities. While many women become self-employed for the flexibility it offers to combine work and childcare, others have no interest in entrepreneurship because of concerns over the impact on family life and their domestic role.

10. Because specific factors such as childcare are relevant to some but not all 'would be' entrepreneurs and affect individuals differently, it is not possible to definitively identify constraints and establish which are the most significant. However, the most widely perceived constraint is finance. While there is ongoing debate over whether this is a real or simply perceived constraint, it is issue which cannot be ignored.

11. Only a small minority of start-ups achieve substantial growth. A smaller proportion of women's new starts (compared to both male and jointly established businesses) grow substantially and, on average, they grow less. The research identified 390 businesses set up by women post-1993 and surviving in 2003 that employed over 10 in 2003. Of these, 33 employed over 50. As with male businesses, the majority of these high growth start-ups are in the services including hotels, commercial cleaning, nurseries and hairdressers.

12. Many of the reasons for lower average growth are 'built in' during the pre-start and start-up stages. These include less growth ambition, under-capitalisation, lower human and social capital (e.g. skills, networks, industry experience), a more cautious attitude to risk and domestic responsibilities. Just 0.4% of women-led businesses that existed in 2000 (compared to 1.2% of male businesses) increased their employment by over 10% (subject to a minimum of 10 additional jobs) between 2000 and 2003. Based on this definition, the research identified just over 50 women-led high growth businesses. This is 5% of the Scottish total. The vast majority are in the service sector.

13. Women's enterprise plays a very small role in technology based industries. Based on a wide definition of 'high tech', they run 8% (450) of Scotland's independent technology businesses. Jointly run businesses are also relatively rare. Women account for 10% of start-ups with around 3% of new start employment. In contrast to other industries, women are even more significantly under-represented in the high tech self-employment sector, which accounts for many software and computer service firms.

14. To increase women's share of Scottish enterprise, the aim of the strategy is to increase the women's business birth rate. To do this, a focus on creating 'would be' entrepreneurs and assisting existing 'would be' entrepreneurs convert their interest into action is required. Pre-start policies can also help generate more growth new starts. Many factors that create an entrepreneurial economy affect both men and women simultaneously.

15. The recommendations within the strategy are covered in more detail within the document but will address issues highlighted through the research, focusing on three broad themes:

• Finance
• Networking
• Marketing

You can find out more about these three themes under the heading Proposed Future Activities, further down the page.

Key messages are provided below.

Key messages

Research

• First time we have had robust research available which identifies the barriers faced by some women in starting and growing their business.
• This work will inform future developments by the enterprise networks as seen in the new strategy - Sharpening the Focus.
• Although the number of women setting up in business has been improving over recent years, there is still a lot more that can be done to encourage even more women to consider this option.
• Encouraging greater entrepreneurship is important to meeting the needs of a modern economy and stimulating economic growth, which is the Executive's top priority.

Past Performance

• Scottish Enterprise through the Business Gateway has focussed its efforts and resources to increase the number of women establishing new businesses through specific targeted programmes such as Women into Business, Networking Events and Business Mentoring.
• In the Highlands and Islands Enterprise area various programmes are available to all but are often tailored to meet the specific needs of female clientele in relation to timing, provision of childcare and the use of female business advisors

  .

Proposed Future Activities

Strategy has 3 broad themes where future activity will focus:

Finance - levels of funding sought by business women in the early stages tends to be relatively small and their use of public sector funding is negligible.

• As most funding is provided by banks and financial institutions the Enterprise Networks will continue to work with these organisations to ensure that they provide relevant support for businesswomen. Although the new Business Start Up Grant will have an impact on young women.
• More effective and pro-active marketing of targeted and mainstream funding programmes and assistance will be undertaken by the Enterprise Networks directly to women.

Networking - and access to other female entrepreneurs was highlighted as a requirement for both pre-start and the early years of businesses.

• The provision of national and regional Enterprise Network events targeted at women, will enable them to engage with the services and support available through the Enterprise Networks and their local and national partners.
• There is a need to encourage more businesswomen to participate in the whole range of existing business associations to ensure that their specific needs are recognised and addressed within these organisations.

Marketing - many female entrepreneurs are unaware of what business services are available and are reluctant to approach business support organisations.

• More effective, specific and targeted marketing and PR campaigns aimed at women will be introduced. (Campaign already underway in Scottish Enterprise area using press and local radio).
• Case studies featuring female led businesses and covering a wide range of business sectors will be made available.

Measurement

We want to be aspirational, currently 26% of self-employed people in Scotland are women, and by 2009 this strategy will have increased this figure to 28%.

This will form a basis to measure the impact of strategy and growth in the number of women starting up in business.

In addition, both Enterprise Networks monitor and assess the number of women led businesses directly assisted by them annually, they will continue to do so and ensure that 40% of their business assists are women led.

Case Studies

Amongst others, the following case studies were included in the report:

Thorpe Molly Recruitment

Sheila Fleet - Orkney Jewellery Designer

Other Research

Global Entrepreneuship Monitor - Scotland Report 2004 (PDF, 820kb)

GEM Global Report - Women and Entrepreneurship 2004 (PDF, 1.1mb)

This is the first Global Entrepreneurship Monitor (GEM) cross-national assessment on women's entrepreneurial activity. The 2004 GEM study on women's entrepreneurship includes 34 countries and focuses on three main objectives:

• To measure the level of women's entrepreneurial activity across countries
• To understand why women become involved in entrepreneurial activity
• To suggest policies that may increase women's involvement in entrepreneurship

GEM UK Report 2005 (PDF, 1.1mb)

GEM also produces a range of other reports which can be accessed on the GEM website.