A new report from the U.S. National Women’s Business Council examines the very definition of “need” when it comes to the reasons why women start businesses.
“It was certainly an economic need initially,” she added during an interview. Divorced and with two sons in college, “I didn’t have a second income in the home. I knew I had to do something.” So Bennett took the money from her severance package, recruited several clients she had worked with as a freelancer and started her own marketing firm 4 years ago.
This is the sort of scenario that comes to mind when we talk about women launching ventures out of necessity. But as the National Women’s Business Council (NWBC), a non-partisan advisory council to the U.S. federal government, explains in its latest report, “need” does not have to be so narrowly defined.
What is Need?
“Need” is a major driver for people who start businesses. According to Babson College’s most recent Global Entrepreneurship Monitor, a third of all entrepreneurs in 65 economies it surveyed worldwide were driven by need. Women were just as likely as men to start up for this reason in thriving economies, and more likely to start up because of it in poorer parts of the world.
However, “traditional necessity entrepreneurship definitions often fail to capture the effect of gender norms on employment decisions for women,” the NWBC asserts in its new report, “Necessity as a Driver of Women’s Entrepreneurship: Her Stories.” Released last week, it is less data-driven than the council’s other publications, and instead examines how non-financial needs lead women to start up through nine women’s entrepreneurial stories.
Annie Rorem, director of policy and research at the NWBC, explains that many people think entrepreneurial motivations are binary — “either you are pushed or pulled into entrepreneurship.” But, she continues, “when we talk about that push into entrepreneurship, we talk about that as an immediate economic need. What is missing is motivations that are not always immediate.”
Rorem says factors like women’s assumed caretaker responsibilities also play a part in their perceptions of need, which is why she suggests thinking of need- and opportunity-based reasons for starting up as existing on a continuum. She separates the motivations of the women featured in the report into three categories: “the need for flexibility in workforce policies,” “the glass ceiling” and “aging out of the workforce.”
Identifying such pain points, she says, can help outfits like the NWBC identify policy solutions to foster a happier and stronger female workforce. For example, research “suggests that, if we want to encourage women to stay happily in the labor force, we need more flexible leave policies.”
This matters, she adds, especially if you want to create a more opportunity-driven entrepreneurial landscape.
Creating Opportunities to Thrive
As part of their work on the report, Rorem and her team examined the sorts of business that women develop when their motivations are more need-based, versus more opportunity-based — and found higher-growth ventures in the latter camp. “Those are willing and eager entrepreneurs with great ideas they want to employ,” she says, not people with businesses who “see it as a last resort.”
As such, it can be more beneficial to the economy overall to address problems women experience in the workplace — especially the ones that force them out — rather than induce them into entrepreneurship.
That isn’t to say that all women who start up out of necessity will suffer for it. After all, Bennett’s business has been growing each year, she happily reports. “My first year, I earned double what I was earning in the corporate world.”
Even though she started her own firm because of economic worries, she, too, praised the improved work/life balance she has today as a business owner, compared to her former life as an employee. “My kids are in different states, but I can visit them whenever I like. It can work how I need it, without having to ask for time off.”
Posted: October 19, 2017