A new report reveals what motivates female entrepreneurs and makes them successful, and what they think would encourage more women to set up on their own

New research from the UK CIPD, the professional body for the HR profession, reveals that urgent action is needed to stem the leaking female pipeline of talent.

Inspiring Female Entrepreneurs is the CIPD’s second report in a three-part series on entrepreneurial practices, and highlights that there are more than 2.4 million unemployed women in the UK who want to work and that if there were as many female entrepreneurs as there are male entrepreneurs, GDP could be boosted by 10% by 2030.

The contribution and value of female entrepreneurs to the UK economy deserves far greater recognition, says Alderman Fiona Woolf in the foreword to the report.

“Not only do we need to focus on opportunities for women to progress in the corporate world and to remove the barriers that stop them from doing this, but we also need to recognise the huge contribution that female entrepreneurs can make to the small business sector and UK plc,” she says.

While official figures show that there are more male than female entrepreneurs in the UK (men are around twice as likely to be entrepreneurially active as women), there are signs in recent years that female entrepreneurs are on the rise. A growing number of women in the UK are setting up on their own, according to figures released by the Office for National Statistics in July 2013. These showed that there were 1.25 million women in self-employment, including business owners, from March to May 2013. This was 19% higher than the same period in 2008, compared with growth of only 4% in the number of self-employed men.

In the UK an increasing number of professional and highly qualified women are starting up their own businesses, with many experienced in running businesses from senior corporate roles. The report sets out to explore the world of female entrepreneurs, the impact they are making on the economy and their unique approaches to leadership and running their businesses.

While the motivators for female entrepreneurs differ among individuals, some of the some common themes the report found included “entrepreneurial spirit, ambition and passion, the desire for autonomy, the turn-off of corporate politics, the need for work–life balance and flexibility - particularly for new mothers – and an unhappiness with the gender pay gap and glass ceiling in corporate life.”

If women are getting out of corporate life to escape its constraints, potential entrepreneurs will be heartened to hear that the pay gap can go the other way once a woman is running her own business.

Research featured in The Times in early 2013 (a sample of 2,000 clients for Barclays Wealth and Investment Management) shows the pay gap that is experienced in corporate life is reversed in start-up businesses, with women financially outperforming their male counterparts by 14% (£55,000). Also evidence from Simply Business (Hall 2010) would suggest that female-owned businesses are less risky – with potentially a greater eye on sustainability and the long term (female-owned businesses cost insurers 60% less in payouts, male-owned firms are more likely to fail than female-owned, male entrepreneurs were forced to shed more staff in recession).

The CIPD research shows how impressive female talent leaking from big corporations is triggering the emergence of new businesses vital to stimulating sustainable economic growth in the UK. So what can be learned from this new breed of female entrepreneurs and their approach to business development and growth?

The report captures the stories of a number of female entrepreneurs who share their insights and what they have learned from running their own businesses. 

They include Claire Mason, the founder and managing director of the UK’s most award-winning B2B communications consultancy, Man Bites Dog, and a 2010 Growing Business Young Gun. 

Now employing over 20 staff, Claire’s advice to would-be entrepreneurs is to “put together a robust business plan and test your business model out – make sure that you are sustainable from day one.” She also recommends approaching your best prospects for business first “rather than waiting until you feel you are big enough and credible enough to knock on the door. Being shy won’t grow your business.”

Following the disastrous loss of their 300 plus cattle in her family business, Sue Archer was forced to create a new business model as a matter of survival. Creating a sideline ice-cream enterprise kept the business alive and now she employs six people full-time as well as part-time and seasonal staff to make the ice cream. Her advice to other women is to “Take all the advice and help that you can get. Apply for any grants and bursaries that you are eligible for and constantly evolve and refresh your brand to stay ahead of competitors.”

The report found that female entrepreneurs tended to be more motivated by doing work that gives them a sense of purpose than by the idea of becoming wealthy. Many were also motivated “by having the space and freedom to progress their business ideas in a way that is not possible within the corporate environment.”

Although the effort and hours that they put into their businesses is substantial, they have the autonomy to do this on their own terms.

‘I saw a way of fulfilling a personal goal to support organisations in the voluntary sector do a better job of helping others through good people management,” saysJan Golding, who set up Roots HR CIC, a social enterprise established to solve a social problem and maximise resources to front-line service delivery.

Reflecting a more risk-averse approach than the typical male entrepreneur, the report found that the tendency among those interviewed was to take a self-financing approach to their businesses and not to carry unnecessary debt. Some of the female entrepreneurs focused more on the strategy of building their businesses in a gradual way.

One aspiring entrepreneur, Sarah Chambers, admitted: “I am a naturally cautious person and I wanted to do all this without the risk of taking on loans and getting into debt.”

The entrepreneurs interviewed recognised the importance of good relationship management with customers, clients and employees and they took a direct and personal approach to this. For most of them, business generation comes through word of mouth, personal referrals and smart networking with like-minded people. Many were also at pains to protect their brands and saw this as their key differentiator in the marketplace, securing quality kitemarks and entering awards.

The women entrepreneurs demonstrated considerable business awareness and acumen, and prided themselves on being alert to new opportunities for their businesses. However, the report said, “they are not blinded by their own success and have a clear awareness of their own strengths and weaknesses and where they need other people’s expertise. They were able to identify common problems and work on solutions as part of their business models.”

“My approach to my business has been shaped by my experience of working in a corporate environment. My maxim is to base my business decisions and actions on a thorough understanding of the business I am in, the problems and challenges that arise and designing appropriate solutions…. I focus on developing a good understanding of my customers’ needs and giving them the best customer experience that I can,” said Sandra Cull of Looks of Envy.

Knowing exactly what is happening in their business was also a common trait.

“I make sure I know how my business is performing – turnover, profits and where the market is going,” said Carole Stubbs of Why Franchise, while Victoria Nicol who launched The Windmill Markets and Mums on the Go advised, “Don’t let passion get in the way of objectivity.”

Women have learned many skills from corporate life that they are now applying to their businesses. The female entrepreneurs interviewed were skilful in making use of corporate experiences, connections and exposure to business leadership to shape their own business acumen. According to the report, “They have a massive appetite for continuous learning and are self-auditing on their skill sets. They recognise the importance of coaching and mentoring and actively build a support network around themselves.”

The study calls on government to focus attention on the contributions that female entrepreneurs can make to support economic growth and to help women who leave the corporate world to set up their own businesses.

“Not every female entrepreneur sets out to make mega bucks, although some have. Many are building their businesses incrementally but are sustaining them. Rather than focusing exclusively on high-growth businesses, government policy needs to acknowledge the contribution to the economy that this level of activity provides.”

Inspiring Female Entrepreneurs is the CIPD’s second report in a three-part series on entrepreneurial practices