Risks and Challenges of Being a Woman Entrepreneur

On paper, things have never looked better for our female entrepreneurs. South Africa is one of only 12 economies where women’s entrepreneurial activity rates have increased with 11.1% of working-age women engaged in early-stage entrepreneurial activities. Even in spite of the gender gap and the impact of the Covid-19 pandemic, women in South Africa have continued to make progress as entrepreneurs. But these numbers only tell part of the story.

Women-owned businesses are still in the minority, and the hurdles faced by women who have embraced entrepreneurship are vast and often very different from those experienced by their male counterparts. To shed light on a few of these dissimilarities, here is some research on the five big risks and challenges that hinder the growth for women-owned businesses – and some tips on how to overcome them.

Funding

Money makes the world go round, and that’s especially true in business. Yet study after study proves women entrepreneurs have a harder time securing business funding than their male counterparts.

Funding is, historically, the largest barrier to entry for women, and there are many reasons for this. With less access to capital and fewer assets than men, getting a loan to start a business can be difficult. Moreover, even in light of a growing sense of independence amongst South African women, many of us still do not own property, leaving us with no collateral in the loan application process.

Our advice?

Network. The more platforms you use to expand your network, the better. Use your social platforms and email list. You have to be incredibly proactive to get funding. The more you spread your message, develop credibility, and establish the “know, like, and trust” factor, the more likely it is that people will be ready to invest when you ask.

Additionally, research suggests that men are more confident in their pitching techniques than women. In fact, men are more likely to oversell their business’ potential turnover whereas women are more likely to undersell. Yet studies show that women manage credit better than men, and when invested in, women achieve a 27% credit turnover, compared to 8% in businesses run by men. We have a few suggestions on how to overcome this issue:

· Know all the facts and figures and focus on the finances when pitching;

· Work on a confident presenting style;

· And create a compelling pitch deck.

Networking and mentorships

You hear the adage “It’s not what you know; it’s who you know” all the time, and for good reason.

In 2019, a global study mentioned in Forbes found that three in four women can’t name a successful female entrepreneur. Interestingly though, the study found that women in South Africa can name female and male role models in equal percentages. This is heartening for our nation.

That being said, research also shows that it is still more difficult for a woman to build her network, especially in male-dominated communities. Many women entrepreneurs often bemoan a lack of available advisers and mentors. This may keep some from pursuing the entrepreneurial path altogether, but even for those who do, the lack of direction and connections can limit occasions for professional growth.

Our advice?

There is a rise in networks in South Africa for women to find role models and support through connection, inspiration, and collaboration, such as Future Females, Women in Business Accelerator, and Entrepreneur Organisation. Find the one that best fits your goals and start networking with smart, like-minded women.

Lack of Training and Education

Empowering a woman with knowledge is just the beginning of a long journey to business success.

Many women in South Africa are illiterate and unskilled. Because of this, operating a business in either the formal or informal sector is a challenge that is unlikely to be overcome any time soon. Lack of resources and training is an obstacle to women starting their own businesses because few banks want to fund people who have no trade or other skills.

The good news, according to MIWE, is that women are making progress in this area, and South Africa now ranks 23rd in the ‘Knowledge Assets and Financial Access’ component. This measures where women find themselves academically in tertiary education enrolment. It is not anywhere near where we would like to be, but change has got to start somewhere, right?

Our advice?

Check out empowerment programmes that offer training in various areas, helping women to educate and empower themselves.

Some include:

· South African Women Entrepreneurs’ Network

· B’avumile Skills Development Initiative

· The Social Makeover

So yes, when it comes to the challenges and risks of being a woman entrepreneur, there are more than a few. Society has witnessed a huge shift in terms of woman entrepreneurship, but there is still a long way to go. That being said, struggle is not a foreign concept to us. Women have a long and proud history of overcoming, persevering, and making meaningful change happen in the world. There is a lot that needs to be done to reduce barriers to women’s entrepreneurship - supporting equal access to finance, ruling out discrimination, encouraging women’s business and financial education, and so on.

In spite of these challenges, and possibly even because of them, a successful woman entrepreneur needs to stay curious, give way to innovation, and be ready to shatter all the barriers and always look beyond the status quo.