COGS 2009 by Marla Nelson

COGS 2009 Challenges and Opportunities for Growth and Sustainability A focus on women entrepreneurs

Delta Economics http://www.deltaeconomics.com Acknowledgements Delta Economics is grateful for the support of WECOE and Advantage West Midlands for their sponsorship of this report as part of their commitment to supporting womenÂ&#x2019;s enterprise thought leadership in the region and the UK.

Foreword by Marla Nelson Director, WECOE We can t afford to waste any business talent. Broadening participation in enterprise is vital to tackling the economic and social challenges the UK faces today. For Britain to emerge from the downturn in the strongest position, we need all of our talented people to maximise their business potential. We are committed to ensuring that those under-represented in business are given every opportunity to turn their ideas and aspirations into successful enterprises.

Business Secretary Lord Mandelson

Entrepreneurship is an important driver for economic growth, competitiveness and job creation. Stimulating entrepreneurship is an important challenge for the UK as a whole. The importance of women as a largely untapped pool of entrepreneurial talent has been widely recognised within the West Midlands region, with Advantage West Midlands, the Regional Development Agency funding the creation of four Enterprise Centres of Expertise, to address the fact many under-represented groups are not featured within Enterprise. Women (WECOE) is one of those. Over the past two years, (Dec 07-09) WECOE have provided a range of strategic, policy-driven support for the wider development of the Women s Enterprise Agenda across the region. Creating the conditions that allow women to start and grow their business, exploit their ideas and ensure they have access to high quality support is vital if the West Midlands region is going to bridge a widening gender entrepreneurial activity gap. More women-led enterprises are needed to increase the stock of businesses and to contribute to economic growth and innovation. SMEs represent 99.9% of Britain s business community with women-led SMEs representing 15%, contributing £45 billion to GVA per year. However, if women started businesses at the same rate as men there would be an extra 150,000 business created (BIS Enterprise Directorate Analytical Unit estimates).

Women s Enterprise related policy actions must focus on the development of a support escalator to allow women s business to grow and achieve their full potential. In an output declining environment raising productivity through innovation & entrepreneurship is KEY to pulling the West Midlands region out of recession. In terms of focusing specialist targeted support to existing female owned businesses, conservative estimates carried out by WECOE based on the work we have done during the past two years show that through targeted business support alone the region could generate an additional £2.32bn in value added profit over the next 6 year from women s enterprise alone. WECOE are pleased to sponsor the Challenges and Opportunities for Growth and Sustainability Study (COGS) which assesses those growth orientated women entrepreneurs in the West Midlands in such detail: sectors, types of business, growth and performance, motivations and challenges. This COGS report lends considerable weight to the need to further explore a more holistic approach in developing support for our female entrepreneurs and established business owners, including the escalator of support as part of a solutions mix at regional level. The development of women s enterprise remains a key Ministerial priority for the Government. Women are the largest under represented group in terms of participation in enterprise, and offer a wealth of untapped talent and economic opportunity. Closing the gap between male and female entrepreneurship rates across the West Midlands region will significantly boost GDP - women are vastly untapped as an economic force. Developing the support for established female entrepreneurial businesses across this region will make a direct and significant impact on regional economic development. As we emerge from the recession and prior economic crisis, we must jointly elevate our actions towards gender equality in enterprise, as an economic imperative.

Executive summary of findings The context: The 2009 Challenges and Opportunities for Growth and Sustainability (COGS) survey was conducted between the middle of August and the middle of October 2009, exactly 12 months on from the worst financial crash since the 1920 s when the previous COGS survey was conducted and towards the end of the third quarter of negative growth in the UK economy. Unsurprisingly, then, the hard financial data reported by entrepreneurs in terms of turnover and jobs created is substantially more negative than in 2008. UK wide turnovers are down by 18.5%, irrespective of gender and the data on access to finance this year suggest an entrepreneurial community that has tightened its belt and changed its business models through a truly tough year of trading. The impact on the COGS survey is clear. Achieving a sample of 2,120 growth-oriented entrepreneurs was more difficult than in 2008 and many of those from the 2008 survey who had agreed to participate in the 2009 survey were not contactable again, either because they had gone out of business or because their turnovers had dropped below the lower band to be included in the survey. Because of the climate, the focus on growth-orientation and performance has inevitably taken a secondary place to the focus on understanding the challenges that entrepreneurs have faced and how they have coped. This report focuses on women growth-oriented entrepreneurs. It was always intended that COGS would be able to provide insights into this group in order to dispel some of the myths about women s businesses that they are smaller, less capitalised and have less growth potential than their male counterparts. But where in 2008 we found that differences in turnover were not statistically significant, women s turnovers in 2009 have been so affected that the differences are highly significant and this has skewed some of the results (for example current turnover per employee). Yet despite this, the survey findings in 2008 are replicated in 2009: Women invest as much in their businesses at start up as men: it took entrepreneurs on average £105,000 to start their business irrespective of gender and women and men alike invest just over 70% of this from their own resources Women experience similar rates of job and turnover growth to men from when they started despite the drop this year in their turnovers Women s turnover growth and job creation expectations are similar to men s Women are more likely to appreciate the business support they get from public and private sources and more likely to feel that they are creating intangible value through their companies (positive social and

environmental impact, job creation and strong branding) as well as tangible value such as market share and company value The recession: Women s turnovers are significantly lower in 2009 compared to 2008 with an average drop of 48% compared to 2008. The survey was divided into two groups: a re-call sample (40% of those surveyed) who participated in 2009 and a top up sample to bring the sample to the size required who did not participate in 2008. The top-up sample had turnovers which were, on average, 25% lower (for both men and women) than the recall sample. However, even in the recall sample, the drop in turnovers amongst men is just 5% while for women it is 37% confirming that women s businesses have been disproportionately affected compared to men s, perhaps because the sectors in which they operate (retail and services) are known to have been badly hit by the credit crunch. 20% of women are looking for finance now compared to 14% of men and this is a significant difference. The primary reason for them looking for money is to finance growth, although investment and working capital are also important. Of those not looking for finance, 84% said that they had no need for the money compared to 80% of men. Women are generally more concerned about cash flow, profitability, the macroeconomic climate and difficulties in their sector than they were in 2008 and it would be disingenuous to ignore this while celebrating their growth potential. The recession has taken its toll on women s enterprises and policy makers need to ensure that women s businesses are not disproportionately more likely to fail in the current climate. Basic demographics of growth-oriented women s enterprises 48% of the sample are between the ages of 41 and 50, nearly 18% have postgraduate qualifications (compared to 9.4% of men) and 23% are graduates. Although the sample as a whole is predominately White British, 10.9% of them are from Black or Minority Ethnic groups (BME) which is significantly higher than the 6.9% of the male sample that are from minority ethnic backgrounds. Start-up motivations - 60% of the women in the sample were motivated by the desire to make a difference either socially, environmentally or in terms of job creation. This was the single most important motivating factor for 62% of women (compared to 37.6% of men). Like their male counterparts, 68% wanted to follow a dream or idea, 55% wanted to do something different and 72% wanted autonomy over their time. However, only 52.3% were driven by the desire to make lot so money compared to 64.3% of men.

Entrepreneurial characteristics - Women and men are as likely to have met at least one of the OECD definitions of innovativeness1 but are less likely than men to have met all four. 22% had owned a business before compared to 35% of men, they are significantly less likely to have markets abroad than men and they are significantly more likely to be in retail and service sectors than men. Nearly 20% of women had used external research compared to 15% of men. Growth, performance and management There is a big difference in terms of the length of time it takes a woman s business to grow compared to a man s business. 54% of men experienced growth of greater than 200% in their first five years of trading compared to 29% of women. However, one third of women had experienced 500% turnover growth in the older companies (6-10 years) compared to 28.5% of men. 33% of women and 29% of men said that their businesses had grown quicker than they expected and this faster than expected growth rate holds irrespective of age of business. 36% of women running younger businesses (2-5 years) said their businesses had grown faster than they expected compared to 29% of men. 32% of women running older businesses (6-10 years) said their growth had been quicker than expected compared to 20% of men. High growth is represented by turnovers of more than 200% for companies of 5 years or less; 29.3% of women fell into this category. 33% of women who ran older businesses fell into the high growth category of greater than 500% since start up. As in 2008, however, there are no significant differences in job creation with men creating on average, 6 jobs and women 7. Women have a slightly higher costs within turnover at 63% compared to 61% for men but their expected turnover growth is not statistically significantly lower than men s, and their actual percentage turnover growth is the same at 54%. Women are significantly more likely than men to feel that they have performed well in terms of intangible (nonmonetisable) value creation like branding, social impact and environmental impact, but also rank themselves more highly in terms of hard value creation like healthy cashflow, market share and protecting intellectual property. Start-up Investment and Finance: In 2009, the average amount invested in a company at start-up by the entrepreneur was £105,000 and this was similar for men and women, as was the percentage that the entrepreneur invests themselves (71% for men and 72% for women). This money predominantly comes from savings or current accounts for both women and men. External finance (the money that is not raised from the entrepreneur s own resources) comes principally from the bank in the form of overdrafts or loans, but women are over four times more likely to access government grants compared to men.

accounts for both women and men. External finance (the money that is not raised from the entrepreneur s own resources) comes principally from the bank in the form of overdrafts or loans, but women are over four times more likely to access government grants compared to men. Business challenges through growth: Women were less likely than men to be troubled by cashflow, credit profile or profitability when they started their businesses but more likely to be concerned about building teams and competition from UK competitors. Women are still less likely then men to be worried about profitability now, but otherwise are similar to men in terms of what represents challenges to their growth at present. However, their attitudes are markedly more negative than they were last year and this suggests they are concerned about a broad range of issues to do with the macroeconomic climate.

Introduction: the policy context The role of women s enterprise in closing the productivity gap has taken on a new urgency in the current recessionary climate. Both on the grounds of economic efficiency and on the grounds of equality of opportunity, it is imperative that policy focuses on encouraging more women into enterprise as way of closing the productivity gap with the United States and as a way of creating more opportunities for women to engage in the labour market. As the credit crunch has turned into the worst recession in the postwar period, the extent to which we can address the resultant productivity issues2 through greater engagement of women in business activity gains a new relevance. For example, the popular policy mantra, that if women s business ownership was at the same rate that it is in the USA we would have 750,000 more businesses a year creating jobs and giving women opportunities to fulfil their dreams,3 has underpinned the economic case for supporting women s enterprise. This is now embellished by the statement that, women entrepreneurs already make a significant contribution to the UK economy some £130 billion in turnover. There is huge potential for them to achieve more, aiding economic recovery. Bridging this aspect of the productivity gap with the USA would add £23 billion in Gross Value Added to the UK economy each year, and according to the Women s Enterprise Task Force would create another 900,000 businesses. 4 The evidence base to support the business case for promoting growth-oriented women s enterprise is still weak and this undermines the attempts to formulate policy for this vital group.5 For example, we know that there are fewer women entrepreneurs than male entrepreneurs in the UK and even fewer women running established businesses.6 Women s businesses taken as a group are more likely to be smaller and under-capitalised7 and this has fuelled the idea that women may find it more difficult to access finance8 because of the smaller size, higher risk, less growth-oriented nature of their businesses. But we also know that when similar groups of male and female businesses are compared, both in terms of their access to finance9 and in terms of their growth potential10 the differences between them disappear. Also, they have similar growth aspirations and similar experiences in accessing finance for growth. We know relatively little about how women s attitudes impact on how they grow their businesses and how, if at all, this differs to men. As a result, policy towards women s enterprise has polarised. It has failed to capture the missing middle of sustainable growth-oriented entrepreneurs who have survived to become established and who have substantial turnovers11 and who have growth aspirations that require support to go up the growth escalator. It has instead focused on predominantly on women as an under-represented group in the labour market and in self employment/ entrepreneurship and has worked on building the numbers

of women actively looking to engage in the labour market through self-employment or entrepreneurship through the demand side raising awareness, networking and skills and training development. Alongside this, the emphasis of organisations like the National Policy Centre for Women s Enterprise and the Women s Enterprise Task Force has been to look at the business case for supporting growthoriented women s businesses through greater access to finance (for example, through the Aspire Fund). This report is an attempt to close an important gap in the evidence base and, therefore, to assist in the process of policy formulation in the future. It is based on a survey of 2,120 entrepreneurs, of whom 16.6% were women. All of the entrepreneurs surveyed were running established businesses that had been growing for more than two years and had achieved turnovers of above £250,000. In essence this is the survivor group of entrepreneurs the ones that have gone through the initial start-up and on to a path of sustainability and potentially growth. This framework allows us to distinguish between high and low growth entrepreneurs and to compare their performance accordingly. The report is also a comparison with the same survey taken in 2008 of 1,800 entrepreneurs, and quantifies the impacts of the downturn on women s businesses. It finds that women have been more affected than men in terms of turnover, but that in spite of this they still expect substantial growth over the next three years and anticipate, on average, creating a further 25 jobs. Their aspirations and management experiences through the recession are very similar to men. This suggests that while the financial aspects of their business are dented by the downturn, their business models as well as the potential contribution they can make to the recovery are unaltered. The COGS methodology The COGS survey12 is designed to help us better understand the entrepreneurs in charge of young companies, the process by which their businesses grow, the challenges faced by them and how they have coped with them, as well as the future opportunities and growth potential ahead. In 2009 we surveyed 2,120 entrepreneurs across the UK13 who had set up companies that are older than two years but less than ten years and who have generated turnovers in excess of £250,000 already.14 The overall aim is to begin to plug the gap in the evidence base around growing businesses generally and to compare demographic groups, such as men and women, in particular. There were no quotas set for gender, ethnicity or age but the sample weightings ensure that the results are representative of the business population within the sample frame and all results reported in the text as significant are at the 5% level unless otherwise stated.

Interviews lasted approximately 15 minutes and were with the founder or co-founder only. They were conducted by telephone using Computer Automated Telephone Interviewing (CATI) techniques. The COGS panel: In order to be able to track the experiences of growth amongst this group, 40% of the sample in the UK as whole were re-call interviews from the 2008 survey. We also conducted case study interviews with companies from the survey in both years who agreed to participate as cases and the ones that we were able to re-contact in 2009 who were female are included in this document. Levels of significance: In the tables, the levels of statistical significance are indicated as follows: *** Denotes significance at the 1% level ** Denotes significance at the 5% level * Denotes significance at the 10% level Where no level of significance is given but results reported, this is for indicative purposes only. Definitions of growth The economics of entrepreneurship literature has focused on entrepreneurs and small businesses and their contribution to economic growth and development since Birch (1989)15 first established that small businesses are the predominant providers of jobs in the American economy. As a result, studies since have focused on job creation as a means of measuring growth.16 By focusing on employment generation, however, any study is restricted only to understanding growth in businesses that naturally create jobs. This may reflect more traditional sectors rather than newer, service based, sectors which can generate turnover without generating jobs. Similarly, the phenomenon of jobless growth , especially in the United States in the 1990 s and eastern Germany at the beginning of this century, where new technology-based companies created significant value without creating either jobs or profitability means that other measures, such as return on investment or turnover per employee are equally as important. The OECD defines high growth as those companies achieving greater than 20% turnover growth year on year for three years (broadly Gazelles ).17 However, as more that 75% of companies in the COGS sample classified as high growth under that definition, it is not suitable to distinguish between those who are and are not gazelles . Many of the companies in the COGS survey would not characterise themselves either as Gazelles or as job creators. They are on a growth path and while for nearly 30% of the sample this growth is rapid, at above 500% since start, this is likely to reflect more the fact that they are young firms establishing themselves before they reach their full value-creating (or GVA) potential which can often take ten years or more.

We are therefore interested in the processes that they are going through rather than in measuring the scale of growth itself. We have identified those companies that have grown more rapidly in terms of turnover but this is for descriptive purposes only and aids the understanding of our real interest which is the process by which entrepreneurs grow their firms and create wealth and value in the long term. The firms in the study are all growth oriented in that they are working to make their businesses sustainable in every sense of the word but a smaller proportion of them also classify as high growth according to OECD definitions in that they have achieved one of the following: Greater than 200% turnover growth in their first five years of trading Greater than 500% turnover growth in their first ten years of trading The scope of this report This is the second report based on the Delta Economics Challenges and Opportunities for Growth and Sustainability (COGS) study that looks specifically at women s sustainable growth-oriented businesses18 It argues that women entrepreneurs are no less likely to have growth aspirations and growth potential than their male counterparts, that women are equally represented amongst the highest growth companies and that there are no statistically significant differences between men and women in terms of their turnover in relation to their start-up investment, or in terms of their turnover per employee. There are significant differences in their motivations but these do not translate into lower financial performance, more challenges in terms of access to finance or lower value creation (people management, job creation and positive social or environmental impact). In other words, women are different but this does not affect their long term business development and business performance skills. However, there are several reasons why this evidence in itself does not present a reason to take the foot from the accelerator in women s business support: First, the fact that so few women drop out of enterprise during the earliest stages of business development is the policy elephant in the room. While GEM reports that women are half as likely to set up businesses as men, this report finds that, by the time women are on a path to developing sustainable and growth-oriented businesses, just 16.6% of them are women. Second, the businesses that women entrepreneurs run have been hit more substantially than their male counterparts. Overall between 2008 and 2009 turnovers have dropped by 18.5%. For men the equivalent figure is 14.4% and for women it is 46.1%. Early evidence suggested that women were not being affected by the downturn,19 but the data in this report, when compared to the data in the 2008 survey, suggest that there is indeed some cause for concern as the full effects work through. In 2008, for example, the differences between men and women s turnover amongst growth-oriented

entrepreneurs was not significant; in 2009 it is. Third, although there is a similar percentage of the women in the 2009 survey who are in the highest growth category (above 500% growth since start) to men, there are indeed more women s businesses in the smaller growth categories, suggesting that even amongst this group of sustainable growth-oriented entrepreneurs, there is a bias amongst women towards smaller entities, limiting the ultimate Gross Value Added (GVA) contribution that they make to the economy. The report is a contribution to the policy debate on women s enterprise which urgently needs to address the issue of the Missing Middle of women entrepreneurs with growth objectives but with little idea of how to realise those goals. It looks at the demographics of women entrepreneurs, their motivations and characteristics, their access to finance and business support and their growth and business performance. It also looks at the experiences that women have had of the last 12 months and argues that if the long term value of this group of entrepreneurs is to be fully realised, there is a need to ensure that women entrepreneurs are aware of the support services, including access to finance, available to them as routes for ensuring their survival.

The Recessionary Context

Figure 1 shows that overall in the UK turnovers have gone down by 18.5%. For women, the drop in turnover is 46.1% and for men it is 14.1%. The figure suggests big regional differences, some of which may be due to sampling error. Even so, there are some regions where women s enterprises have not suffered as much as others (for example, in the North West, Scotland, Yorkshire and Humberside and Wales where the data suggest turnovers may actually have grown amongst women s businesses). 20% of women are looking for external finance at the moment compared to 14.4% of men, as illustrated in Figure 2.

It would neither be sensible nor honest were a report such as this not to acknowledge the impact that the recession has had on the entrepreneurial sector generally and women in particular. While the role of the heroic entrepreneur who leads the charge out of the economic downturn is still being celebrated20 the reality on the ground is that many entrepreneurs have experienced difficult trading conditions that have required them to rethink the way in which they operate their businesses, the way in which they manage their people and the role of additional finance in ensuring their sustainability.

Figure 2: Those looking for finance now by gender

The impact of the last year is illustrated in Figure 1 which shows how turnovers have dropped between the two COGS surveys by gender and UK region.

13 31 16.7 16.8 12.5 16.2 5.3 28.6 1.7 14.4 20.5 15.3

12.6 14.8 12.9

16.7 11.1 14.3 11.8 15.4 12.4 13 27.6 16.1

17.8 12.5 16.7

North West

20 15

men women total

60 40 Figure 2 suggests that women are generally more likely to be looking for finance than men, although this is not the case for all regions. For example, in the West Midlands, women are substantially less likely to be looking for finance at the moment than men.

20 0

-20

% change men % change women % change overall

West Midlands

South West

South East

London

Scotland

Yorkshire and Humberside

Region

Northern Ireland

North West

North East

East Midlands

-60

East of England

-40

The fact that women are more likely to be looking for finance does not imply that they are looking for money to cover short term business challenges. As illustrated in Figure 3, women are much less likely than men to be looking for money to ease cash flow and more likely to be looking for money to fund investment.

Yorkshire and Humberside

West Midlands

South West

South East

London

Scotland

Northern Ireland

East Midlands

East of England

Region

-19.8 -25.7 -47.8 -12.5 -28.8 -14.3 -23.4 9.4 -19.7 -14.4 -46.1 -18.5

3.5 -48.2 -0.6

4.4 -40.5 -17.6 -11.4 79.0 6.5 -18.0 -27.4 -23.2

-28.7 33.5 -22.4

2.2 -18.2 -0.7

-23.0 -26.8 -26.3 -37.6 -49.3 -42.0

20 25 20.8

Source: Delta Economics/COGS survey 2008 and 2009

% change in turnover, 2008-2009

North East

Figure 1: Change in turnover between COGS 2008 and 2009 by region and gender

20.8 18.2 20.5 15.7 13.8 15.3

% respondents

Source: Delta Economics/COGS 2009

Figure 3: Reasons for looking for finance now by gender

Men

Women

Total

To provide working capital

70.0

70.4

70.1

To ease cashflow***

48.2

29.6

44.1

To provide for future growth finance**

82.6

77.5

81.5

9.8

7.0

9.2

To pay off existing debts

11.9

11.3

11.7

For investment**

58.7

64.8

60.0

Source: Delta Economics/COGS 2009

To consolidate previous lending

In fact, it appears that despite the fact that women s business turnovers are affected, men are more concerned about the credit crunch and recession as a reason for not accessing finance. This is illustrated in Figure 4 which shows the reasons, by gender, why entrepreneurs are not attempting to access finance at present. Figure 4 illustrates that men are more likely to cite the banks not lending, the high costs of finance and the recession or uncertainty in the market as reasons for not accessing finance at present than women, although interestingly, the recession is actually not a particularly important reason for not accessing finance for entrepreneurs generally. Of more importance is that founders have no need for finance and that women are

Figure 4: Reasons for not looking for finance at present by gender 2.0 1.1 1.8 2.9 0 2.5

54.2 44.1 52.6

21.3 16.4 20.5

79.6 83.9 80.2 17.9 12.8 17.1

Source: Delta Economics/COGS 2009

70 60 50

men women total

40 30 20

Recession/uncertainty in the market

Raised money from another source

Provided the finance myself**

Costs of finance are too high**

No point, the banks aren t lending**

10 No need for finance**

% of those not needing finance

Reasons for not looking for finance

more likely to respond positively to this than men. In the words of one financier interviewed Customers, especially women are being very conservative and not taking risks, but they may be missing opportunities as a result. This may, of course, simply be a function of the smaller size of women s businesses in the 2009 survey, referred to above. However, given the reduction in overall turnovers and the extent to which women have been affected by the slump in consumer demand, it is equally possible that they have tightened their management structures and business models to ensure that they are not taking on any unnecessary debt. This is corroborated by data elsewhere in the survey about management of the growth process: 52.3% of women compared to 36.5% of men said that they had found managing cash flow very easy or easy as their companies had grown. There were no significant differences between men and women in terms how easy they had found it to manage the macroeconomic climate with 25.1% of respondents overall saying that this had been very easy or easy. 39.5% of women compared to 45.4% of men said that the macroeconomic climate had impacted negatively on their business. Yet the responses to questions about the immediate challenges to growth that women face tell their own story; women, although confident about their capacity to get through it and the extent to which they have created value despite the downturn, are nevertheless experiencing immediate challenges to growth. This is illustrated in Figure 5, which shows the responses to questions, by gender, about the general business climate that might affect growth in the immediate future. Figure 5 suggests that all business environmental issues, with the exception of building teams and accessing international markets have become more challenging for women over the past year. In 2008 women were less concerned than men about all the aspects of the external operating environment but this is not the case in 2009.

Figure 5: Immediate challenges to growth - women s responses in 2008 and 2009 Source: Delta Economics/COGS 2009

Challenges faced

45.9 52.7

General difficulties in sector

6.8 My credit profile 10.2

Accessing finance for growth

Building the right team

Cashflow

Competition from overseas competitors 11.1 14.5

Competition from UK competitors

Difficulties entering international 11.7 . markets 10 Macroeconomic climate

% respondents

38.6 . 45.6 . 44 . 37.5 . 27.1 . 31.6 .

Maintaining profit

53.1 59.4 . 66.7 62.2 57 59.9

2008 2009

Summary The impact of the recession has been felt particularly severely by women in terms of a reduction in their turnover and in terms of their overall confidence about the operating environment. But while they are more likely to be looking for finance at present, this is for investment rather than to pay off debt, consolidate lending or cover cash flow. Similarly, women appear to be more positive about the impact that the recession has had on their business suggesting that they have been able to modify their business models to ensure that they can get through the crisis. What is critical now is that as the economy starts to recover, women are able to invest in their businesses at the same rate as men. Certainly their reasons for accessing finance at present suggest that they want to do this. However, in the words of interviewee for this project, We are on a knife edge and it could go either way. Businesses have tightened their belts and not looked for finance while their markets have seemed vulnerable. As we start to pick up, it is likely that they will have to invest before they start to see revenues increase there will be companies that go under as a result unless they plan ahead. Women s management responses suggest that they do plan ahead and, as will be shown in the next few sections, they are expecting to grow over the next few years.

Women s management responses suggest that they do plan ahead and, as will be shown in the next few sections, they are expecting to grow over the next few years. However, this growth requires resources and the signs are that women entrepreneurs, in that they are saying they have no need for finance while expressing concerns about the impact of external factors on their growth, have battened down the hatches to a greater extent than men. They may well need immediate support to help them to achieve their evident growth potential and it is this potential that is discussed in detail in the following sections.

The Recessionary Context

Figure 7 shows the distribution of growth-oriented entrepreneurs by age and gender.

Supporting women s businesses so that they continue to grow as the UK economy comes out of recession is a key challenge for policy makers and private sector professional support services (such as banks, accountancy and legal practices and consultancies) alike. For policy makers the imperative is to increase the UK s productivity in order to restore competitiveness, while for the private sector, the interest lies in deepening and broadening the client base. Finding out about the typical characteristics of growth oriented women entrepreneurs, therefore is an important part of policy or strategy formulation.

Figure 7: Age of entrepreneur by gender

40.1 48.4 41.5

23.5 15.2 22.2

7.7 5.9 7.4

51-60

61-70

Source: Delta Economics/COGS 2009

40 30 20 10 0

31-40

Figure 6: % women in sample by region %

18-30

% of those not needding finance

It is already well known that although women are half as likely to engage in a new business venture as men and the gap between male and female established business ownership is wider women s established business ownership is 40% of male.21 COGS finds that there is an even wider gap between male and female growth-oriented entrepreneurship.

% women in sample (weighted)

41-50

2.9 4.7 3.2 25.5 25.8 25.5

Source: Delta Economics/COGS 2009

Age category

men women total

Figure 6 shows that only 16.6% of the overall sample of growth oriented entrepreneurs in the UK were women. Although some regions have higher representation of women (for example, the South West at 21% and London at 20.7%), there are regions with very low representation of women in this group (Yorkshire and Humberside, the East of England, the South East and the West Midlands, for example). While some of this may be due to sampling error, the differences between, say, London and the South East are statistically significant.

16.6

Figure 7 shows that relatively few of the entrepreneurs surveyed fell into the younger age group aged 18-30 but there are nearly two thirds more women in this group than men. The majority of women fall into the age group 41-50 (48.4%).

12.3

13.7

West Midlands

18.7

Wales

South West

South East

13.4

21.1

20.7

16.9

Scotland

London

15.8

North West

Yorkshire and Humberside

Region

15.1

East Midlands

East of England

13.3

North East

20.1

Northern Ireland

Figure 8 looks at the educational background of growthoriented women entrepreneurs. Interestingly, 17.7% of women compared to 9.6% of men with post-graduate qualifications are growth-oriented entrepreneurs. Some 40.8% of women who are running growth-oriented businesses have either post-graduate or graduate qualifications compared to 32.4% of men. Other studies have shown that established business ownership is lower amongst ethnic minority communities and COGS finds, similarly, that the proportion of Black and Minority Ethnic owned businesses in the sample is low at 7.9%, although this is broadly in line with the 2001 census figures for minority ethnic representation in the whole UK population.

Figure 8: Educational background by gender

Figure 9: Ethnicity by gender

men women total

Interestingly, 17.7% of women compared to 9.6% of men with post-graduate qualifications are growth-oriented entrepreneurs. Some 40.8% of women who are running growth-oriented businesses have either post-graduate or graduate qualifications compared to 32.4% of men. Other studies have shown that established business ownership is lower amongst ethnic minority communities and COGS finds, similarly, that the proportion of Black and Minority Ethnic owned businesses in the sample is low at 7.9%, although this is broadly in line with the 2001 census figures for minority ethnic representation in the whole UK population. Figure 9 demonstrates that the majority of growth-oriented entrepreneurs in the UK are White British and that, within this group, women are significantly less likely than men to be represented. The figure distinguishes between nonUK White founders (from within and outside Europe) and BME founders. In both of these groups, women are significantly more likely to be represented than men.

6.9 10.9 7.6

Minority ethnic groups

No formal qualifications

Highest level qualification obtained

O Level/GCSE or equivalent

A Level or equivalent

18+ vocational

Graduate

6.8 11.1 7.5

Non-UK White

% all respondents

Postgraduate**

% all respondents

100 90 80 70 60 50 40 30 20 10 0

86.3 78.0 84.9

White UK British

Source: Delta Economics/COGS 2009

23.3 18.9 22.6 6.8 4.0 6.3

14.9 18.3 15.4

18.2 11.4 17.1

9.6 17.7 10.8 22.8 23.1 22.8

Source: Delta Economics/COGS 2009

Ethnic origin men women total

Finally for this section we look at the sectoral representation of the businesses women founders have established. This is illustrated in Figure 10. The majority of women s businesses fall into the broad categories, retail or services (including business and consumer services). Again, this is generally in line with previous studies on the sectoral representation of male and female businesses.

It hasn t all been plain sailing and, like every recruitment company, they have felt the pinch as the recession has impacted on the jobs market. However, they attribute their survival to the fact that they are running their business to focus on the diversity model. We know how tough it is because we come from diversity backgrounds ourselves. It s been a roller coaster, but in the end, it s all positive. The key challenge was getting the business model right. They knew the technical side of recruitment well but did not fully appreciate the complexities of running a business. They were turned down for finance and had to remortgage their own homes to get the business through its initial phases of development. We were on 24 hour call, says Kavita. We couldn t stop, but we couldn t leave off to focus on finance either. We had no track record and got an abrupt no when we first approached the bank. But we are fighters and we didn t give up. Now we have them queuing at our door!

18.6 4.8 16.4

15 20.2 15.9

Retail

12.5 4.5 11.2 34 48 36.3 8.4 10.5 8.8

3.8 4.8 4.0

Finance & Real Estate

0.4 0.6 0.5 5.6 2.8 5.0

60 50 40 30

Wholesale

Transport

Services (business & consumer)

Manufacturing

Construction & Communication

In Kavita s words, the business has had, phenomenal impact. It has grown rapidly and they now conduct training and advisory work as well as recruitment. It s all about relationship building, she says. We don t do any marketing but we get all of our business from our reputation and word of mouth. The business is turning over in excess of £1m in spite of the economic climate and the fact that it has only been running for two years. This is testimony to how well the business model works.

Agriculture, Fisheries & Food

Kavita and her colleague, Rani Uppellle, had worked for recruitment companies for many years but felt that there was a glass ceiling in their workplace. We felt discriminated against, she says, And we wanted to be a diversity employer. So they set up Simply Recruitment in 2007 to do just that with the core value that they wanted to ensure the best service for the client that they could.

Source: Delta Economics/COGS

% respondents

KAVITA JNAGAL SIMPLY RECRUITMENT www.simply-recruitment.co.uk Lessons in growth

Figure 10: Sector and Gender

Sector men women total

Summary Women founders dominate in the 41-50 year age group and there are proportionately more women who have graduate and postgraduate education than men (as a percentage of all women). Women s businesses are predominantly in the service and retail sectors. None of these results is especially surprising. The fact that older women are more likely to be growth-oriented reinforces the fact that younger people generally, and women in particular, are less likely to run established businesses that they have founded for two simple reasons: first it takes time to build up skills and training, perhaps in a formal employment situation, and second, the business itself takes time to establish and reach the point where it classifies for inclusion in the COGS survey. What is more interesting is the fact that women from minority groups (White non UK and BME) are more likely to be growth-oriented than their male counterparts in the same grouping. This is in contrast to women who are White UK nationals. The numbers are too small to break the data down into minority ethnic sub-groups but the fact that women are more represented in this group of entrepreneurs than in minority groups suggests that there is a driver in the labour market that pushes women out of formal employment and into enterprise as a way of achieving their career goals. In the words of one entrepreneur, We set up the company because we couldn t go any further in our employment. There was a double glass ceiling we were female and from a minority group and we wanted to help people in the same position achieve their goals.

Motivations and Characteristics Underpinning much of the qualitative work conducted as part of the COGS research was a sense amongst women that they had set up their businesses on the back of their own personal experiences. They had experienced something negative themselves and wanted to ensure that others did not face similar experiences. Given this motivation, it is little surprise, as illustrated in Figure 11, that women are more likely to be motivated by the goal of making a difference than their male counterparts.

Figure 11: The motivations of male and female entrepreneurs

23.3 17.6 22.3 64.3 52.3 62.3

47.0 60.0 49.3

56.2 54.5 55.9 4.0 3.4 3.9 72.0 72.2 72.0

8.1 9.1 8.3

66.1 56.5 64.5

67.0 67.9 67.2 18.9 22.7 19.5

Source: Delta Economics/COGS 2009

This does not suggest that women s businesses are different to men s in terms of their scalability or their business structures since, for men and women, the dominant organisational form is that of private limited company. However, women in 2009 were significantly less likely to be motivated by the desire to make lots of money or to pursue a market opportunity when starting their business.22 Of the women who said that they were motivated by the desire to make a difference, 62% said that this was their biggest objective. This compares to an equivalent figure for men of 37.6% for whom making a difference was the biggest motivator. This is illustrated in Figure 12. As Figure 12 shows, the differences between men and women in terms of their Make a Difference motivations are stark. Women are less likely to have job creation or environmental impact as their primary aim but very much more likely to have as their primary aim having a positive social impact.

70 60 50

% respondents

40 30

Motivation for starting the business

To make lots of money***

As a replacement income***

To make a difference***

To have autonomy over my time

Commercialise university research

Do something different

Reinvest from sale of another business

Pursue a marketing opportunity***

Help others follow an ideal or dream*

Follow an ideal or dream

men women total

Figure 12: The aims of founders whose biggest motivator was to make a difference by gender Source: Delta Economics/COGS 2009

Men

Women

Total

37.6

62.0

42.6

Create jobs***

49.2

17.2

39.8

Have a positive environmental impact**

12.1

3.8

9.7

Have a positive social impact***

29.4

71.2

41.8

Improve quality of working life**

1.6

1.1

Making a difference was the biggest motivator when I started*** My primary aim was to:

She is critical of how existing support for her client group is measured and points out that many people who come on Making Lemonade s leadership programmes have long personal journeys to make before they can enter the labour market effectively. By the end of the programmes we offer, she says, People are ten steps closer to achieving their goals. But they may have fifty steps to take in the first place because they can be some way from where they want to be. She defines success as what her clients tell her and, as her business grows and thrives, they are clearly telling her the model works.

1.8 7.4 2.4

12.5 7.4 11.9

Made redundant***

Resigned to pursue other goals***

35.9 22.2 34.4

Closed/ceased to trade***

Steph set up Making Lemonade because she couldn t get a job after her sight loss. As she says, the business found her. Her clients come from charities, the public sector and companies who support coaching for women and disabled people. Making Lemonade s associates are themselves trained to the highest level to provide coaching and mentoring but are themselves self-employed to keep the costs of running the enterprise low and the organisation lean and flexible.

43.7 48.1 44.1

In her words, everything we do is around building confidence this is key. We provide the coaching to help people see clearly and have a vision despite their situation. We build their self esteem and belief so that they know what they have to do in order to make it happen.

Source: Delta Economics/COGS 2009

Sold or merged business***

Steph Cutler experienced sudden sight loss which changed her world in every sense. She went from being a successful fashion designer to entrepreneur overnight setting up her Making Lemonade business which provides coaching, mentoring and inspirational leadership to help women and disabled people to thrive in the labour market and business. Now in its fourth year, the business has around eight associates and runs workshops, coaching and leadership events and training to motivate people and help them understand what they need to do to be successful.

Figure 13: Methods of exit from previous business

50 40 % all respondents

STEPH CUTLER MAKING LEMONADE www.making-lemonade.co.uk A lesson in flexible thinking

21.7% of women and 34.5% of men had owned a business before and 27.3% of women compared to 25.9% of men still owned a proportion of that business. Methods of exit from the previous business differ significantly, as illustrated in Figure 13.

30 20 10 0

Ethnic origin men women total

Figure 13 shows that women are more likely to have sold or merged their business or to have been made redundant and significantly less likely to have left the business because it ceased to trade or because they resigned to pursue other goals. Women s businesses are significantly more likely to be based in UK markets, as illustrated in Figure 14.

Figure 14: Locations of markets by gender

BioFuels International ltd 9.7 2.8 8.6

14.1 8.0 13.1

30.5 23.9 29.4

97.2 96.9 97.2

Source: Delta Economics/COGS 2009

100

60 40

Location of market

Asia***

North America***

Europe**

% all respondents

men women total

The strong UK base of women s businesses reinforces the data presented in Figure 14 above: that relatively few women are concerned either about entering international markets or competition from overseas competitors. Women do characterise their businesses as innovative. To meet the OECD criteria for an innovative firm the response must meet one of the following criteria: The product or service must be new to customers The product or service must be different to those currently offered by competitors The business must spend a regular percentage of its turnover on research and development (R&D) The business must offer a new approach to an existing product or process technology/sector The COGS study additionally creates a category of High Innovation where the founder responds positively to all of the above criteria. The results are presented in Figure 15.

Sharon Warmington and her business partner created a concept for a unique innovation that compressed leaf litter from municipal parks, towns and cities into logs. The concept of Leaf Log was born and very quickly Sharon realised that the business could be global selling sustainable fuels to domestic and commercial clients. She set up the company BioFuels International with Leaf Log as the trademark name in 2007 and set about raising investment. She had initial finance from family and friends and a small loan and business support from Business Link. With that robust help, she secured a small unit in the West Midlands to undertake trials of the concept. She and her partner won a prestigious Shell Springboard grant for developing it further and this catapulted them onto an exponential growth path. Orders for the Leaf Logs came in very quickly and she needed to scale up in order to meet them. The challenge was not just to employ people and expand the premises but to design and develop the production technology as well. After some investment from a business angel, they set in motion the process of expansion and have gone from 4 employees in 2008 to 20 by the end of the year. They have major contracts pending and are innovating to produce a rustic log from wood waste and a new fire-lighter product as well. It has, as Sharon testifies, been a steep learning curve and could not have been done without support from Business Link through the startup phase to accessing more sustained investment finance now. Starting up and growing a business as the recession began to bite was not the easiest thing to do, but she is unwilling to say whether it was because of the market that they found accessing finance in the first instance difficult or whether it was the downside of a new business. They had to scale back on their initial plans and put people on to a shorter working week earlier this year to make sure that they didn t have to lose staff. The review of the business model has been successful and the company is on a growth path now. In Sharon s words, You can t stop the leaves from falling, and she is certain that people will be using this renewable energy source across the world in a few years time.

Figure 15: Innovativeness by gender, 2009

11.6 8.5 11.1 72.6 74.7 27.0

44.0 41.9 43.6

30.1 24.1 29.1

44.4 42.9 44.2 41.4 42.3 41.6

Source: Delta Economics/COGS 2009

100

60 40

Type of innovativeness

One or more of the above

All of the above**

Provide new approach to technology or sector

Spend a regular % turnover to R&D**

Product/service new to competitors

Product/service new to customers

% all respondents

men women total

Figure 15 presents a picture of the innovation base of growth-oriented entrepreneurs: 1. Women and men are very similar in terms of offering new products or services to customers or a product or service that is not offered by competitors. Women are slightly less likely than men to say that they offer a new approach to a technology or sector but again, this difference is not statistically significant. 2. Based on the above, some 72.6% of male business founders and 74.7% of women business founders classify themselves as innovative in that they answer positively to one or more of the criteria. 3. Men are more likely than women to say that they spend a proportion of their turnover on R&D and thus are more likely to classify as highly innovative in that they meet all four criteria. Interestingly nearly 20% of women had used the external research and innovation base compared to 14.8% of men and although more men felt that they had performed well or very well in terms of protecting their intellectual property (30.7% compared to 26.4%), women were more likely to say that their access to the research base had impacted positively or very positively on their business (16.1% compared to 11.7%).

POLLY GOWERS EVERYCLICK www.everyclick.com Award winning entrepreneur with a charitable heart Everyclick is an online capacity which enables everyone to give to any UK charity and for individuals and businesses to fundraise for their favourite charity in the way they want. Funds are generated by users by searching, shopping, donation and sponsorship. Each month Everyclick ensures funds are distributed to recipient charities via the Charities Trust. The size of the UK market is largely untapped according to Polly Gowers, the founder. She says that currently in the UK just 2% of the £8 billion donated to our 200,000 charities is given online. Polly has won many awards for the business has recently been given a financial boost from the prestigious Aspire Fund, which co-invests in Female owned businesses to enable them to grow further. When asked how the business started, Polly says the idea came to her when she was working for a market research agency and realised that the commission raised by online businesses could equally be applied for the benefit of charities. So she asked around for advice and with a Business Link adviser expanded the idea into a robust business plan. The business started in 2004 and went live in mid 2005. Growth has been steady since that initial investment of approximately £500,000. Polly noted that she has had excellent business advice at each critical stage of the growth of the business. The business is for profit with 140 shareholders and although the recession has meant a loss of some employees, they still have 12 and plan to expand back up to previous levels and beyond. But, Polly is adamant that expansion must only occur when they are in line with the realities of the economic situation. She notes that as her company expands, she has had to think more about communicating clearly and regularly with the shareholders and investors. This is not always top of the list for a business at an early stage. Personally, Polly thinks that there are hard questions to ask yourself if you are thinking of starting or expanding a business. If you are not 100% convinced with the idea, then don t do it. She says that It is much, much tougher than you think it will be. It s a roller coaster ride. However the excitement and fulfilment of seeing an idea turn into a business makes all the heartache and sleepless nights well worth while.

Summary There are two key points that need to be brought out of the analysis for this section: 1. Women founders in 2009 had noticeably different motivations to their male counterparts and placed greater emphasis on the making a difference motivators compared to more commercial motivators like making money or pursuing a market opportunity. Some of this may be due to the fact that the recession has accentuated an existing emerging pattern amongst entrepreneurs that commercial business models can be used to meet social, community or environmental objectives as well. Business support advisers specialising on this market in the West Midlands were keen to stress that women within the social enterprise sector did have growth potential but seemed more cautious, more risk averse and had fewer support networks, all of which limited their growth when there was no obvious economic reason for the business not to be scalable. 2. The differing motivations do not imply that women are less innovative or less likely to access the innovation base in universities. However, women are less likely to be highly innovative or highly active in all four areas of innovation including R&D. This is reflected by interviews with innovation incubators, again in the West Midlands, who pointed out that women are far less likely to be using their facilities than men. While they might access courses or research, they do not use the research infrastructure for locating and building their businesses, suggesting again that their growth potential may be limited by lack of awareness of what this type of support can offer. All in all, this section presents a picture of the characteristics of women s enterprise which, while suggesting growth and innovation potential, also suggests that women are more likely to be motivated by social goals and objectives. More research is required to analyse exactly how women innovate within the social sector and what their support requirements are within that context, but given the interest that is growing across the world in the area of scalable social enterprise using for profit, or profit with a purpose business models, the analysis presented here suggests that there would be some real mileage in developing this type of support for growth-oriented women entrepreneurs.

Growth, performance and management Total

Mean turnover 2008

£1.51m

£1.46m

£1.51m

Mean turnover 2009

£1.30m £787,000

£1.23m

% Change

14%

18.5%

Mean turnover recall sample

£1.44m £929m

£1.35m

Mean turnover top-up sample

£1.19m £706m

£1.13m

% difference between recall and mean turnover 2008

-5%

-16.3%

Figure 17: Growth experience of male and female growthorientated founders, 2009

All of this reinforces the fact that women s enterprises have been particularly vulnerable to the challenges of the slump in demand caused by recession in the UK. However, it does not appear necessarily to have impacted on their growth experiences. As shown in Figure 17, women have experienced faster growth than their male counterparts, irrespective of the age of the company.

24.3 15.4 22.8

Source: Delta Economics/COGS 2009

% all respondents

40 men women total

30 20 10 0

Growth experience

My business has not grown as quickly as I expected***

However, what is really important about Figure 16 is the fact that the recall sample, in other words those people who participated in 2008 and agreed to be re-interviewed, have also seen their turnovers fall. For women, this is much higher at 37% than it is for men at just 5%.

-37%

The difference between men and women is even more marked if the age of the firm is taken into account: For companies up to five years old, 36.2% of women founders and 29.2% of male founders had experienced growth that was quicker than expected. 26.4% of men compared to 15.9% of men said their businesses had not grown at the rate they expected. For companies older than five years, 31.8% of women and 19.9% of men said that their businesses had grown faster than expected.

50.6 47.6 50.1

Thus far there might be a sense that the new, top-up, sample in the 2009 COGS survey might be distorting the overall picture, both in terms of turnover and in terms of the motivations of female entrepreneurs. Figure 16 shows that the top-up sample, which represents 60% of the overall sample, does indeed have lower turnovers for both men and women, irrespective of the age of the company.

46.1%

Figure 17 suggests that women are more likely to experience faster growth than they expected and less likely to experience growth as expected or slower than expected compared to their male counterparts.

My business has grown at the rate I expected***

In 2009, women s businesses were noticeably smaller than men s, largely due to the impact of the recession on their turnovers. On average, irrespective of how long a business has been trading, the turnover for a man s business in 2009 was £1.3m while for a women s business it was £787,000. This, as illustrated in Figure 16 is in stark contrast to the picture in 2008.

21.9 32.8 23.7

Source: Delta Economics/COGS 2008 and 2009 datasets

Women

My business has grown quicker than expected***

Figure 16: Top up sample

Men

This translates as follows into actual turnover growth as illustrated in Figure 18. Figure 18 shows the six groups turnover growth from the founder s first year of trading to now. Obviously this does not take into account age of firm, also the percentage growth threshold to classify as a gazelle company changes with company age for companies of up to five years it is 200% and for companies of over five years it is 500%. But even bearing this in mind, there are a number of features of this chart which are worth highlighting: 1. For men and women, the bulk of the distribution is in the lower growth end of the spectrum: 36.1% of men and 43.9% of women experience growth of less than 200%. 2. However, there is a second peak of businesses that have experienced high growth at greater than 500% (26.2% for men and 27.5% for women). This is a large proportion of the sample and constitutes high growth whatever the age of the business. 3. Men are more likely than women to experience medium growth of between 201% and 500%. Figure 18: Turnover growth since start in bands by gender 2009

9.1 5.8 8.7 26.2 27.5 26.4

11.3 10.6 11.2

17.3 12.2 16.6

8.8 11.6 9.2 27.3 32.3 27.9

Source: Delta Economics/COGS 2009

30 25

15 10

% growth in bands

500+

401-500

301-400

201-300

101-200

<100%

% all respondents

men women total

BIRGIT KEHRER BSustained: a lesson in sustainable growth BSustained was established in 2007 using locally produced and organic ingredients to provide vegan and vegetarian catering for everything from business conferences and weddings to children s parties. It has used a variety of support in the last two years including Business Links and is now not just providing healthy catering options to clients but is also providing healthy eating training for people from disadvantaged backgrounds. This is a major new initiative supported by the National Health Service and other funding bodies and gives people help and guidance on gardening and growing produce, managing to eat a diet of 5 a Day on a Budget and providing help and support to schools and community groups on healthy eating and organic gardening. Birgit herself has over 15 years of experience as a trainer and leadership coach and enterprise support provider in the West Midlands and, by her own admission, has found the process of growing the business in the current economic climate difficult. She has successfully managed to make the business as recession proof as possible, focusing on the innovative and flexible nature of the business and adapting the business model accordingly. She has made sure that any catering contracts are paid up front which is good for cash flow but has also made sure that she makes the flexibility and customer-focused attitudes a unique selling point of her business. This has helped her overcome the challenges of growth to get to the point now where, despite the downturn, she is going from strength to strength . She is excited yet cautious about the obvious growth potential of her business. She has undertaken a root and branch review of her business model and made sure it is viable and fit for purpose but she doesn t want growth for growth s sake. Our business relies on getting the right people in place; we want to build our reputation and profile nationally but this should not be done at the expense of compromising what we deliver. BSustained can be contacted via www.bsustained.co.uk

Figure 19: Turnover growth by age of business and gender (high growth in bold)

2-5 years old

6-10 years old

Source: Delta Economics/COGS 2009

Men

Women

Total

Men

Women

<100%

13.8

29.3

15.6

7.4

6.1

7.3

101-200

32.2

41.5

33.3

25.8

29.9

26.3

201-300

19.5

7.3

18.0

16.6

13.6

16.3

301-400

8.4

7.3

8.3

16.6

13.6

16.3

401-500

8.1

4.9

7.7

9.4

5.4

8.9

18.1

9.8

17.1

28.5

33.3

29.1

500+

Figure 19 also has some interesting features: 1. The majority of younger women s businesses (70.8%) are in the lower growth category of less than 200% in 2-5 years of trading. 2. Men are significantly more likely to experience extremely rapid growth in their first five years of trading (greater than 500%) than women at 18.1% compared to just 9.8%. 3. However, the distribution of turnover growth amongst older businesses is more similar with relatively few firms experiencing less than 100% growth and nearly 28.5% of men s businesses and 33.3% of women s businesses experiencing 500% growth. This is not gazelle type growth as emphasised at the outset of the report. The businesses have smaller turnovers to start with and what we are illustrating here is just how quickly businesses grow in their first ten years of trading if they are to become sustainable. What it does suggest, however, is two things: first, women s businesses may be slightly slower to take off than their male counterparts in the first five years of trading but generate faster growth after they have been trading for five years. Second, overall, nearly 30% of companies of over five years old are in the highest growth category of greater than 500%. This suggests a strong basis for high growth in the UK economy.

Total

Further evidence on performance and growth is presented in Figure 20. Figure 20 illustrates that women and men s businesses, although showing different reactions to the current crisis are growing and performing in very similar ways. The costs of turnover are similar, suggesting profitability is similar, the numbers of jobs created are similar, although women appear to have created marginally more jobs on average and the proxy for return on investment (turnover as a percentage of initial investment) are identical for men and women founders. The only significant difference is in current turnover per employee which was identical to male turnover per employee in 2008 and has worsened for women in 2009. This is arguably a function of the fact that women s turnovers have reduced but women have not let staff go as their turnovers have gone down, either in anticipation of a swift rebound or because they have altered the way in which they have worked with staff through the recession, for example by putting them on to short time working arrangements.

Figure 20: The aims of founders whose biggest motivator was to make a difference by gender Source: Delta Economics/COGS 2009

Men Average turnover growth since start

Women

Total

153%

154%

153%

Median jobs now

Median jobs created since start

Expected turnover growth in the next three years (not significant)

239%

200%

234%

Median turnover as % initial investment (proxy return on investment)

180%

£189,000

£113,000

£179,000

61%

63%

61.5%

Mean turnover per employee now** % Cost of turnover now

YVONNE DAVIES TELEVISION JUNCTION Case study of a fast moving media sector enterprise Yvonne co-founded the media production company Television Junction in 1997, based in city centre Birmingham, West Midlands. Yvonne began her career as a primary teacher and media education adviser, then moved on to Central Television as an education officer. She worked for Channel 4 returning to Carlton Television as Head of Education. Television Junction was established with fellow director Paul Davies when Carlton closed several of their Midlands divisions. Yvonne and her co-director took advantage of the training packages Carlton offered through Business Links to develop the initial business plan for the new company. This included broadcast contacts and other clients from their period with Carlton. Television Junction began with four full-time staff. The rest were free-lancers brought in on a project by project basis. A period of rapid expansion followed with the company making a wide variety of programmes for the BBC and Channel 4 Schools. Television Junction has always been keen to keep up with developing technologies and expanded initially into CD-ROMs in 1999. Alongside this the company broadened its client base into nonbroadcast, whilst maintaining a broad educational remit. Yvonne says that the non-broadcast part of the business is a key strength . Under the education banner the company has gained valuable experience of every media genre e.g. documentaries, animation, game shows, children s drama. In fact TVJ has been national and international television award-winners in a variety of categories. Television Junction is always searching for market opportunities that match its expertise. Most recently Yvonne and co-MD Paul have appointed a digital development director and this area is already showing signs of success with a recent two-year commission providing access to regional moving image archive. Digital is a key development area for the future. TVJ has also expanded into print as part of offering clients a total package, targeting work at a national as well as a regional level.

Yvonne notes that the company has been fortunate in being able to weather the recession so far. Instead of cutting staff they have developed more skills in-house and are not employing as many freelancers. She says part of making a success of this is having a young, talented work force keen to develop their careers, prepared to learn new skills and do a range of high as well as lower level tasks. The recession has also meant going for new work wherever and whenever possible. This has meant increased work load for producers and MDs e.g. writing funding applications and preparing pitches. Keeping current clients on board to ensure repeat business has also been key. Yvonne therefore suggests that you will have a good track record with certain clients. Go back to them and make sure you and they get the repeat business. Building and maintaining a good relationship of trust with clients means they will be calling you when an opportunity arises. On being asked about any issues specific to being a female entrepreneur, she says that it can definitely be a man s world but this doesn t mean you have to adopt a macho management style. There are more and more confident, able women around in business today who achieve success by being themselves. It is not always easy and you have to be prepared to take risks, even be prepared to fail. She says, It s all good learning experience! And having a sense of humour helps Furthermore, she notes that for her, the company has not simply been about making a huge profit from day one. It has been about having the conviction that you are doing something you believe in, a worthwhile job that could make a difference. It is far easier to sell your ideas and bring in the business when it s something you genuinely believe in.

From the managerial questions integrated into the survey it is also clear that women are more confident about their capacity to be creating intangible value in their business: 34.0% of women compared to 28.9% of men felt that their business had performed well or very well in terms of salaried job creation. 20.5% of women compared to 14.0% of men felt that their businesses had performed well or very well in terms of non-salaried job creation. 39.5% of women compared to 37.6% of men felt that their businesses had performed well or very well in terms of environmental impact. 73.3% of women compared to 66.4% of men felt that their businesses had performed well in terms of the welfare of their employees. 54.0% of women compared to 39.6% of men felt that their businesses had performed well in terms of its social impact on the community. 48.9% of women compared to 47.4% of men felt that their businesses had performed well in terms of building their brand. Summary What this section has shown is that, despite the impact of the downturn on immediate turnovers and confidence, there is convincing evidence that women s businesses, with the right support and infrastructures, can achieve growth similar to their male counterparts. In the words of one adviser, You are looking at a group of people who need a more holistic approach to support. Women want to create intangible as well as tangible value. In non-recessionary times, there is evidence that women can achieve both.

Financial and business support

The sources of money not invested by the entrepreneur themselves are given in Figure 22.

In 2009 it took entrepreneurs ÂŁ105,000 to start up a business of which the entrepreneur will invest between 71% (men) and 72% (women) or approximately ÂŁ75,000 of their own money. This is a considerable sum of money and, for the majority of entrepreneurs, whether male or female, comes from current account and savings, as illustrated in Figure 21.

Women are more likely than men to access finance from family and friends, banks and public sector grants, but men are more likely to use business angels/private investors and venture capital (although the numbers for the latter are very small).

Figure 21: Sources of money invested by the entrepreneur in their business

Figure 22: Source of external finance by gender Source: Delta Economics/COGS 2009

1.5 0.8 1.4 2.3 0 2 4.8 22.3 7.2

0.4 0.8 0.5

32.4 35.5 32.8

11.3 15.7 11.9 31.7 19 29.9

0.3 1.6 0.6

16.1 20.2 16.9 4.1 1.6 3.6 2 2.1 2

8.6 5.3 8

11.4 18.1 12.6

72 64 70.6 5.1 7.4 5.5

Source: Delta Economics/COGS 2009

60 50 30

64% of women and 72% of men will put money into their business from their own savings or current account. The figure is significantly lower for women and the differences is made up by the fact that, in this yearÂ&#x2019;s survey, more women raised the finance through the sale of a house or another asset or through a personal bank loan.

Other government or public sector grants**

Source of external finance

Small firms loan guarantee scheme**

Equity or venture capital

Loan or hire purchase**

Mortgage or remortgage**

Used the money from redundancy or early retirement

Source of money invested myself

Personal bank loan**

Credit card

Sale of house or another asset*

Sale of another business

Current account and/or savings**

Credit cards

men women total

Bank

Other private investors**

Family and friends

% respondents

men women total

13.3% of men and 12.2% of women are not successful when they try to access finance at start up according to the 2009 survey. The reasons for this are presented in Figure 23.

Figure 23: Reasons given for not being successful in accessing finance by gender

Men

Source: Delta Economics/COGS 2009

Lack of collateral

Women

Total

11.4

9.3

11.1

5.9

5.0

24.6

32.6

25.8

5.9

9.3

6.5

10.2

4.7

9.3

7.2

14.3

8.3

Recession (no more information given)***

17.8

4.7

15.8

Source of finance not currently lending

10.6

11.6

10.8

8.1

7.0

7.9

Not been trading for long enough*** Business not viable too risky Not eligible for source of finance/didn t meet criteria No reason given Source of finance not interested in product or industry

Business turned down finance because terms were bad The data in Figure 23 are mostly indicative rather than statistically significant since numbers are small but even so, they suggest that generally, the reasons for not accessing finance are to do with lack of business planning or accessing inappropriate sources of finance. This is true for women and men, although interestingly more men cited the recession as a reason for being turned down for finance than did women. Women are, generally speaking, more positive about the process of accessing finance and advice than are men: 16.5% of women compared to 15.5% of men said that the process of accessing finance had impacted positively on their business. 50.7% of women compared to 38.5% of men said that the process of accessing advice from professionals had impacted positively on their business. 13.6% of women compared to 10.0% of men said that the process of accessing grants had impacted positively on their business. 21.0% of women and 13.0% of men said that the process of getting advice from support agencies and networks had impacted positively on their business.

This suggests that women learn and develop their businesses through the process of accessing advice from business support, whether through the bank, through professional advisers or through public sector support and grant awarding agencies. Figure 23 shows how advice used changes as a woman s business develops and the numbers finding it useful or very useful. There are three striking features of Figure 24. First, as the business gets older and the entrepreneur more experienced, she is less likely to use sources of advice that are personally close to her such as family, close personal friends or even nobody. But she is more likely to make use of informal networks such as business support networks or work colleagues and mentors suggesting that these have an important role in providing day to day peer advice. One entrepreneur was in no doubt as to what was the most important factor for her: excellent business advice at each critical stage of the growing of the business.

Figure 24: Uses of business support and its usefulness (women founders) Source: Delta Economics/COGS 2009

Advice used at Start (%)

Advice used now (%)

% finding advice useful

Family and friends

32.2

26.7

63.7

Mentor

15.7

16.5

81.4

Another entrepreneur

26.6

22.4

70.6

An entrepreneurial or business support network

14.3

22.4

39.6

Bank

36.9

30.4

48.8

Potential investor

7.4

5.7

68.0

Work colleagues

24.5

38.9

59.3

Business support professional (lawyer, accountant etc)

59.5

67.9

72.6

Family

42.5

33.5

72.1

Business Links or government support

30.5

29.0

44.1

4.3

1.4

Nobody

SANDRA GARLICK DE MARCO HUNTER SOLICITORS Sandra Garlick set up De Marco Hunter Solicitors in 2007 with Lianne Payne just as the recession was starting. They were both experienced legal practitioners but were taken by surprise by just how difficult the process of setting up the business was. By their own admission, they went through a difficult time developing their niche employment law practice and the appropriate way of financing it in order to ensure that the business was both sustainable and growth-oriented. It was failing to access finance from a bank that really challenged their thinking. We started off with one set of ideas which proved very costly, says Sandra. We took the whole business model apart and looked at what we had done well and what hadn t worked so well. We totally changed focus, had to make a few redundancies and worked out where our strengths and weaknesses were. Our biggest issue was cashflow. Their learning curve was steep and Sandra admits that they had all the technical ability to run a legal practice but had not acquired sufficient experience in understanding finance. This can kill a business, she says. By the middle of 2009 they had turned the model around and with fewer staff and are now doing more and better work. The new business model, focused on the niche they are developing and a requirement for flexibility, especially in terms of costs, at the outset, is highly successful and they have accessed the finance they need from the bank to manage the growth process. Sandra is grateful for the support she received from the Women s Business Development Agency on managing the growth process. It stopped us from dabbling and made us think in a totally different and independent way that enabled us to get the money we needed.

Second, although less likely to take advice from a bank, the woman founder is substantially more likely to take advice from a professional business adviser such as a lawyer or an accountant as her business grows. This reflects the complexity of business growth including employing people and the tax and regulatory systems. Third, women appreciate the support they receive, as witnessed by the fact that the majority of respondents found all forms of advice useful or very useful. Summary Women are just as likely to put substantial investment into their start-up business and, in a sense, for men and women, this helps explain why they are unwilling to risk taking on more debt as their business grows generally and during the downturn in particular. They have on average, invested nearly £75,000 in their businesses and this is a large personal stake in its success. However, they do make use of business support and advice and this becomes less personal and more business oriented as the business gets older. Even so, women are more likely to make use of a range of services including mentoring and entrepreneurial networks and to find them extremely useful. All this suggests that public and private sectors have an important role to play in fuelling the growth of women s enterprises. In the words of one entrepreneur, I take advice from wherever I can. There is no such thing as a bad piece of advice everyone has a different take on what you are trying to do.

HELGA HENRY FIERCE EARTH Playing the part on a shoestring Fierce Earth runs events and festivals and also trains and develops people in the cultural and creative industries sector, mainly for large public sector organisations, such as the Arts Council and Birmingham City Council. Fierce Earth has been reliant on its core large contracts with the Arts Council, both at national and regional office level but as these have decreased, in the light of budget cuts and major structural changes at local councils and at the Arts Council throughout England, so the company has had to cut back on staff and at the same time increase the number of smaller contracts, diversify what it does and rely on various cost cutting measures. Helga says this is typical of any similar organisation which is reliant on public arts funding or reliant on winning contracts for the delivery of services to public sector clients. There have been drastic cuts in those grants, but also in the number of private companies who are willing to invest, sponsor or run promotional events. Training in creative industry schemes have been cut or have changed their focus (from for example start up businesses to those with high growth potential) too. So Fierce Earth really has mainly felt the impact of the recession in the light of a range of cutbacks from every source. However, staff numbers have been cut by natural wastage - allowing staff to relocate or leave and not be replaced. All costs have been closely examined and action taken wherever possible to cut back or economise. They have survived by looking at new markets out of the region and by all staff taking on a greater variety of roles or specialisms within the organisation. Helga points out that as their Artistic Director had moved to run a festival in London where he could not take on such as day to day hands on role, the remaining staff had to maintain the momentum by finding new markets and carving out a new identity for the company as best they could.

On a personal level, Helga advises to connect with other entrepreneurs, people who are in the same boat as you and to use any current circumstance to make your team the best it can be, but also to step back sometimes and try to see things from another s or a different point of view. It is too easy to retreat into doing too much and allowing your energy to be depleted, when you have taken on too much. Doing less can sometimes mean achieving more. She had had to build teams very quickly which she says is a really tricky task but one which can potentially take up too much time and energy if you don t do it early enough. Helga thinks this is an area where business support can help. Not directly with the team, but in providing general advice which would help to prevent the key staff member or manager from burning out. She initially felt that it was solely her responsibility to sort out things and to struggle with issues on her own. She now realises that the answer is to increase the openness, to become potentially more vulnerable to criticism, but actually, as a consequence, to get more support for those issues and problems to enable her to get through it. Helga does now have a great team to work with, a network of other senior managers to talk to on a confidential basis, a mentor and a coach, all of which have helped her enormously.

JANE STRETTON DOVE FARM Case study of a woman entrepreneur advocating that diversification helps in a recession Jane runs her rural business in partnership with her husband: a mixed farm (arable, beef, sheep and machinery trading) with the addition of an on-site, small holiday and corporate venue. She says, the agricultural side of the business can be volatile anyway, with global markets having an increasing influence over such things as grain prices, and cost of inputs, and due to the extreme weather patterns of recent times. Jane points out - A small farm these days, however efficiently run, is not enough to secure a livelihood to bring up a family. Some kind of additional income is required. The benefit of diversification into a completely different sector, is that it helps to spread risk and can also bring financial benefits when farming is doing poorly, and vice versa. The most striking challenge we have seen over the past year, is around the issue of cashflow. It is still common practice in farming, to have a 12 month delay between work completed and invoice being paid. Agreed EU payments for farmers, for environmental care and conservation, are also often received by farmers, many months in arrears. The problem now, is that larger suppliers, e.g. finance providers and fuel suppliers, are suddenly being much tighter on credit control or want money in advance. Previous understanding and flexible terms have been swept aside, and this has caused some cashflow headaches! The holiday cottages market has been patchy across the UK. At Dove Farm, we specialise in short breaks for larger groups, and celebration breaks, explains Jane. Selecting to serve a niche market in this way has served the business well. Not only has it taken seasonality out of trading, but our marketing is geared towards those who are demonstrating value-led spending. People are cutting back on second and third holidays, but not on the things that matter to them, like special birthdays and anniversaries. It s not a recession proof policy, but we are certainly faring better than some in the trade, with forward bookings up, compared to this time last year.

Conclusions: managing the challenges Every business faces challenges as it grows and it has already been demonstrated that women are more concerned about how the external environment will affect their immediate growth than they were 12 months ago.

Figure 25 shows how the challenges that entrepreneurs face as they grow change from when they start to when they are running a more established business. The data in Figure 25 present an interesting picture of the interplay between company maturity and the current economic climate. For example, men and women are less likely now to be concerned about cashflow (although the drop for women is less than the drop for men), similarly worried about access to finance and similarly concerned by issues around markets and competition. Women are much less likely to feel that building a team is a challenge to growth than men or than they were when they started and both men and women are less likely to be worried about the credit profile.

All of this suggests, as has been stressed throughout the report, that the findings on growth in 2009 have to be seen in the context of the general economic downturn. WomenÂ&#x2019;s businesses in particular have suffered as a result of a general collapse of demand and, although they do not appear to be disproportionately affected in terms access to finance compared to men, there responses to general questions around confidence and challenges to growth do suggest that they are more likely to be wary of what the immediate future holds. However, as has been argued throughout, this does not influence the extent to which womenÂ&#x2019;s businesses have created value and will create value in the future. In terms of general performance, women create marginally, but not significantly, more jobs than men and produce identical turnover as a percentage of the initial amounts invested. Their growth expectations are similar and their actual experiences of growth more positive in that they have grown more quickly than their male counterparts. Equally, women appear to rank themselves more highly in terms of intangible value creation such environmental impact, social impact, welfare of employees and salaried and unsalaried jobs created.

However, reflecting the change in economic climate since start (since all these companies are older than two years), concern about the macroeconomic climate, profitability and general difficulties in the sector have grown substantially for both genders.

Figure 25: The challenges faced by entrepreneurs when they start their business and now

Challenges faced at start

Challenges faced now

Source: Delta Economics/COGS 2009

Men

Women

Total

Cashflow

60.4

49.3

58.6

Building a team

60.9

65.0

Accessing finance

32.5

Accessing international markets

Men

Women

Total

48.4

45.6

48.0

61.6

37.9

37.5

37.8

30.8

32.2

32.7

31.6

32.5

15.0

11.7

14.5

14.0

10.0

13.7

The macroeconomic climate

28.2

28.5

28.2

60.8

59.4

60.6

Profitability

60.6

54.3

59.6

68.8

62.2

67.7

Competition from UK competitors

59.7

54.7

58.8

61.8

59.9

61.5

Competition from overseas competitors

17.3

14.8

16.9

19.1

14.5

18.3

My credit profile

26.0

21.3

25.2

17.4

16.2

17.2

General difficulties in sector

40.5

43.5

41.0

59.5

52.7

58.3

There are marked differences between men and women in terms of their motivations. Women in the 2009 study were far more likely than men to have been motivated by the desire to make a difference either socially, environmentally or through job creation. This is reflected in their attitudes towards their own intangible value creation and that they are as innovative as men overall, even if they are not as likely to invest a regular proportion of turnover in formal R&D as are men. Most striking of all is the use that women make of support structures in the public and private sector. They find support useful, especially from professional advisers and entrepreneurial networks and mentors, and this suggests that they are open to ideas about how to maximise the growth and development potential in their businesses. At present there is evidence in the survey for 2009 that women have been substantially affected by the downturn. Policy, by bringing together public and private sector sources of support, should be focusing on signposting and coaching women to access both financial and advisory help through the downturn. It appears from the data that women may be running their businesses on a slightly tighter basis than men because more women said that they had no need for finance. This could restrict their growth as the UK economy comes out of the downturn and it is imperative that the support structures are aware of this as a potential threat to the already low representation of women in this vital group of entrepreneurs in the economy. Longer term, according to experts and entrepreneurs interviewed for this report, business support in the public sector should focus on the fact that 81% of women find mentoring support helpful yet relatively few (16.5%) access it. The data presented here suggest that 33% of women who run older companies (older than five years but less than ten years) are in the highest growth category having achieved more than 500% turnover growth despite the downturn. Advice from a mentor who remains consistently with the founder through the growth process was thought by interviewees to be a valuable resource in terms of insight and in terms of signposting to other support. Some women would prefer a female mentor; others are not bothered by gender but do appreciate consistency in support. The growth trajectory of many female businesses in 2009 has been tempered by the economic climate yet growth ambitions remain undaunted. This missing middle has vast potential to drive growth in the UK economy; what is necessary now is to harness that potential with finance, social and human capital to ensure that it is fully realised.

DEB LEARY FORENSIC PATHWAYS Detecting the opportunities Forensic Pathways are market leaders in supplying forensic equipment and software for police and associated work. They are currently developing new products in linked but different areas. Thus, new software for automated analysis of mobile telephone data for police detective work is the latest addition to a huge range, which has expanded along with the company. Deb reflects on what is happening due to the recession and thinks that many companies are going back to a more traditional approach in engaging with their client base. So she sees less email driving contacts and more careful relationship managing. She thinks this is good as it develops integrity and is a more transparent way to do business. She thinks that companies will also have to work smarter, be more efficient and drive down operating costs, but still maintain the ability to optimise opportunities on the upturn. Forensic Pathways is a highly innovative company as its products rely on the application of new technology in innovative ways. Hence the mobile telephone software. The markets are still there for these products although Deb says it is always essential to look for potential new markets, which always forms part of their business planning. She mentions exporting which she sees as a massive opportunity. A key issue is to connect with the right agencies ie UK Trade & Investment and be very aware of the new market in general and then be prepared to invest in the best market information available. The recession has seen turnover increase by 30%, but she says they have had longer term contracts which have been fulfilled in the last 12 months. They do sell a range of products which were hit by the exchange rates, but are now bouncing back. Deb notes that it is important to diversify and the ability to combine products sales along with services and longer term contracts goes some way to ensure financial security. Forensic Pathways is expanding and the recession has not stopped them recruiting in R and D where they see investment in postgraduate computer scientists as long term, vital and positive. They have also raised a loan, but Deb was frustrated by the lack of speed in decision making and by the amount of paperwork. She thinks the banks do not understand the need for speed in processing applications. The future promises to be very positive and Deb thinks one issues to be wary of is to actually control the speed of growth to ensure they deliver. She is also pleased that their investment in R and D and other technology has brought rewards. Contact: Deborah Leary, OBE, Tel: 01827 255170 Mobile: 07747 103429 www.forensic-pathways.com Email: deb.leary@forensic-pathways.com

Background to the Women s Enterprise Centre of Expertise Advantage West Midlands recognised the importance of women s enterprise as being a key economic driver however, in order to ensure that appropriate policies were developed they commissioned the Women s Enterprise Centre of Expertise (WECOE) project along with four other Centres of Expertise (COE s) focusing on minority ethnic young people and social enterprise. WECOE, funded by Advantage West Midlands (AWM) the West Midlands Regional Development Agency, had a fixedterm, two-year timescale (Dec 2007 2009), with a series of specific objectives to embed within mainstream support over that period and provided a range of strategic, policy driven support for the wider development of the Women s Enterprise Agenda across the region. Our role was to: Develop Market Intelligence Stakeholder Engagement Act as a critical friend to AWM/Business Link and other key stakeholders Pilot new activities in order to develop learning from action Provide capacity building support WECOE offered a dedicated source of information and expertise on women s enterprise issues, supporting the existing infrastructure of economic development and regeneration across the region. This included, for example, AWM, Business Link West Midlands, regional partnerships, business-women s networks, local networks, consortia, voluntary and community groups and the private sector. WECOE s aim was to reinforce the economic case for women s enterprise support throughout the region; building on, informing and strengthening the existing infrastructure, and embedding good practice. It also sought to understand areas of market failure and to work with partners and organisations to address this. Finally, WECOE sought to raise the profile of women s enterprise across the region, by influencing regional and national policy and by supporting a greater range of strategic partners in embedding women s enterprise into the core of their work. The Centre: Provided a range of services which embedded quality policies, practices and procedures within organisations such as West Midlands Business Link, thus both capacity building and supporting more women into enterprise. Enabled policy makers and support organisations to assist a diverse range of women in business in a more strategic and appropriate way than had previously been seen across the region.

Worked to raise the ambitions of economic development and business support organisations in their expectations and perceptions of women s enterprise and its contribution to the regional economy. Engaged regional policy makers, and a strong body of women entrepreneurs, in national dialogue with Government departments (including the Department for Business Innovation & Skills) to enable regional needs to be both identified and incorporated in the national enterprise strategy. WECOE worked to influence the development of regional policy and related research, through active involvement and attendance at all Sub-Groups of AWM s Enterprise Board. WECOE also influenced national activity, through the Ethnic Minority and Women s Enterprise Task Forces. WECOE did not provide direct service delivery for business support and economic development itself; instead it provided ideas, methodologies and good practice models through which organisations could increase the participation of women in enterprise activity across the region. It acted as an independent referent and critical friend to organisations such as Business Link West Midlands providing both expert assistance and robust analysis to improve services to clients, building on local, regional, national and international good practice in the field, whilst also exploring market failure and addressing how best to tackle such issues in a sensitive and appropriate way. WECOE worked in parallel with the other three other Centres of Expertise (COE s) commissioned by AWM (for minority ethnic enterprise, social enterprise and young people s enterprise). The COEs worked closely together to ensure a complementary approach to potential cross cutting themes (e.g. ME women s enterprise issues, women in social enterprise and young women/girls) whilst ensuring that the specific issues of region-wide women s enterprise were addressed. Women are not a homogeneous group, and as such have differing needs and requirements for economic activity and enterprise. Therefore WECOE focused upon ensuring that the needs of women who are under-represented, even within specialist women s enterprise support, (e.g. ME women, refugees and new migrants) were adequately addressed across the region. Marla Nelson Director Women s Enterprise Centre of Expertise

References 1 OECD (2005): Oslo Manual http://www.oecd.org/dataoecd/35/61/2367580.pdf 2 For example, the International Labour Organisation May 2009: The Global Financial Crisis A decent work response suggests that there will be a substantial reduction in productivity before output starts to increase again. 3 Gordon Brown (2005): Speech at the Advancing Enterprise conference, London. 4 Women s Enterprise Task Force (2009): Greater Return on Women s Enterprise http://www.womensenterprisetaskforce.co.uk/growe_report.html 5 Harding, R. (2009): Steady as she Grows: the Challenges and Opportunities for Growing Women s Enterprises, National Policy Centre for Women s Enterprise, March 2009. http://www.deltaeconomics.com/Uploads/Misc/SteadyAsSheGrowsFinal.pdf 6 Global Entrepreneurship Monitor, 2002-2008 reports for the UK and Globally suggest that women are half as likely to set up a business as their male counterparts; the Annual Survey of Small Business to 2007 reported that just 15% of businesses were owned by women and the Delta Economics Challenges and Opportunities for Growth and Sustainability report and data in 2008 and 2009 suggest, variously, that 13.5% and 16% of the UK sample of 1800 and 2120 growth entrepreneurs were women. http://www.deltaeconomics.com/COGS/ 7 Carter, S. (2009): Women s Access to Finance National Policy Centre for Women s Enterprise, March 2009 8 Fraser, S. (2005): Fraser (2005) Finance for Small and Medium Sized Enterprises: A Report on the 2004 UK Survey of SME Finances; see also Harding, R. (2006): UK Global Entrepreneurship Monitor Executive Report London Business School, 2006 and Harding, R. (2007): State of Women s Enterprise in the UK. Prowess. 9 Cosh, Hughes, Bullock and Milner (2008) Financing UK Small and Medium Sized Enterprises: The 2007 Survey. See also Women s Enterprise Task Force, 2009: The Myths and Realities of Women s Access to Finance. http://www.womensenterprisetaskforce.co.uk/myths_and_realities.html 10 Harding, R (2009): Steady as she Grows: the Challenges and Opportunities for Growing Women s Enterprises, National Policy Centre for Women s Enterprise, March 2009. . http://www.deltaeconomics.com/Uploads/Misc/SteadyAsSheGrowsFinal.pdf 11 Womenable (2007): Mapping the Missing Middle: Determining the Desire and Dimensions of Second Stage Women Business Owners. Data from the US suggests that there is a strong and vibrant cohort of women s businesses that have survived to be older than three years, that have substantial turnovers of greater than $100,000 and whose owners have growth and development aspirations for their companies. This so-called Missing Middle constitutes 91% of female entrepreneurs in total or 16% of all female entrepreneurs if micro-enterprises are excluded (with less than 10 employees). Based on a survey of 92 members of the National Association of Women Business Owners who met the age and turnover definitions, suggests that by helping the micro businesses alone to grow would increase their employment by 31%. 12 Conducted by Delta Economics with finance questions supported by HSBC.

13 This figure included a boost of 500 companies in the West Midland and the North West and 300 companies in the North East (the largest sample size feasible). The dataset is weighted by region, turnover and year founded and is representative of the whole UK business population aged 10 years or less with turnovers of £250,000 or less. The bulk of the survey was of companies with turnovers of £250,000-5m but an additional 76 companies have turnovers of between £5m and £20m to cater for any potential exponential growth. This is a lower proportion than for 2008 and reflects the overall drop in turnovers recorded. 14 This lower threshold removes the large number of registered companies that have smaller turnovers (for example below the VAT threshold and guarantees our sustainability criteria that the company must have a substantial market and potential to grow. 15 See for example, Birch, D., Haggerty, A., Parsons W. (1997): Who s Creating Jobs Cognetics, Cambridge, MA or Autio, E. (2007): Global Entrepreneurship Monitor, Report on High Growth Entrepreneurship. Available from www.gemconsortium.org; Audretsch, D. (2002): The Dynamic Role of Small Firms: Evidence from the US Small Business Economics 18 (1-3): 13-40. Springer, Netherlands. 16 Van Stel A and Storey, D. (2004): The link between firm births and Job Creation: Is there a upas tree effect? Regional Studies 38 (8): 893909. Routledge, London; Armington, C. and Acs, Z. (2004): Job Creation and Persistence in Services and Manufacturing Max Planck Institute for the Study of Society, Jena, Working Paper 16-2004. Audretsch, D., Keilbach, M. and Lehmann, E. (2006): Entrepreneurship and Economic Growth Oxford University Press, Oxford 17 Department for Business, Enterprise and Regulatory Reform (2008): High Growth firms in the UK: Lessons from a comparative UK performance. BERR Economics paper No 3, November 2008. 18 The first report was the Steady as she grows report for the National Policy Centre for Women s Enterprise referred to above. 19 Women s Enterprise Task Force (March 2009): The Impact of the Recession on Women s Enterprises. http://www.womensenterprisetaskforce.co.uk/wetf_recession_research.html. 20 Stangler, D. (June 2009): The Economic Future Just Happened Kauffman Foundation, Kansas; see also much of the reporting and emphasis around the 2009 Global Entrepreneurship Week (http://www.gew.org.uk/) 21 Hart, M. and Martiarena, A. (2009): Women and entrepreneurial activity in the West Midlands: evidence from the Global Entrepreneurship Monitor, 2002-2008. Paper prepared for WECOE, October 2009 22 This is substantially different to the 2008 survey where motivations of men and women did not differ.

Research conducted by Delta Economics: http:www.deltaeconomics.com info@deltaeconomics.com Tel: 01323 419924 Sponsored by WECOE and Advantage West Midlands: http:www.advantagewm.co.uk Tel: 0121 380 3500