Women entrepreneurs have no shortage of innovation or successful business track records. What they do lack, however, is access to funding and support from government, banking and the incubator communities. These are some of several key findings in a newly released BMO study, Everywhere, Every Day Innovating – Women Entrepreneurs and Innovation conducted by researchers from Carleton University and The Beacon Agency.
The study, based on interviews with 146 diverse female entrepreneurs including 23 indigenous women, revealed that women’s innovations are largely under-recognized, simply because they fall outside the technology sector. In fact, 90 per cent of women-led businesses are in the service sector compared with 70 per cent of men-led business.
Women-led businesses represent 50 per cent of all new business, according to the Business Development Bank of Canada. While they tend to be smaller than those led by men, the report notes that the businesses have higher survival rates and create more jobs.
One challenge of note to the entrepreneurs was the struggle to connect with incubator and mentorship programs, as a large majority of them focus on attracting technology companies. An added hurdle on that front is ageism, as many available programs have age limits, and women tend to start their businesses at a later stage in their careers. Some that did start young said they found it difficult to be taken seriously and were subject to sexual harassment.
Susan Brown, executive sponsor of the BMO for Women Group, says the report builds on a previous study, A Force to Reckon With: Women, Entrepreneurship and Risk. “It was interesting to see that women entrepreneurs have a higher success rate than men, because they tend to be risk rational and mitigate risk really well. In many cases women would rather not go into debt with their business, which can hamper their ability to grow. They are also slower to export, which is something they need to consider.”
A major sticking point is that Canadian investors don’t see the service sectors as being innovative, she says. “But many of them innovate every day, using technology to deliver better products and services to meet customer needs. They may not always be creating the technology, but they are users.”
Shelley True, president of TRUEdotDESIGN, a strategic marketing and branding company in Ottawa and research participant, has done considerable innovation in the area of artificial intelligence and social media. When she went through the process of funding an acquisition to grow her business, however, she faced many challenges. “I had to go to a number of lenders and banks and was turned down several times, for no real reason.”
Even when she exceeded the revenue numbers the banks demanded for approval, “they still turned me down,” she says.
Another research participant was Katie Frappier, co-owner of Ottawa-based Victoire Boutique. She and her business partner opened their first store 12 years ago when they were in their early 20s. “Our lack of experience and our age presented a lot of difficulties getting funding. We were repeatedly asked if we had a male counterpart or husband to co-sign for us. The best one bank could offer was a $500 credit card and a $1,000 secured line of credit.”
Now even with two stores and more than $1 million in annual sales, the struggle for funding continues. “It is still our biggest challenge. We now have two credit cards and a $10,000 line of credit and that’s it. That’s how big the financial constraints are for us.
The report concludes with an extensive list of recommendations for government, financial institutions and female entrepreneurs. These include:
— Introducing an innovation framework that includes women entrepreneurs in policy design and commits equitable grant funds
— Addressing unconscious bias in small-business loan acceptance and investing in programs that support female entrepreneurs
— Educating female entrepreneurs about options available to them
— Generating policies on enhanced child care and maternity benefits for women entrepreneurs
— Addressing the lack of business training and ineligibility for financing among indigenous women, and establishing on-reserve mentorship programs and networking opportunities.
Brown agrees that financial institutions need to understand that women entrepreneurs want a different kind of conversation. “We need to build better relationships with female clients in the way we provide support, advice and financing to help them grow their business. Women for their part need to improve their knowledge base around financing and develop an appetite for debt that will allow them to grow their businesses more quickly.”
On the day the report was presented to an audience in Ottawa, Brown experienced new-found optimism following a conversation with an incubator leader. “He saw it as a great opportunity for them to refocus their efforts and be more inclusive of women. To me that was one of the best outcomes from this report.”
A full copy of the Everywhere, Every Day Innovating – Women Entrepreneurs and Innovation report can be found here.