There’s something dramatically different about the face of today’s small business owner: it’s that of a woman. According to the Small Business Administration, the number of women-owned businesses increased by nearly 90 percent in the past 10 years and is expected to exceed 7.1 million by the end of 2002.1 Also interesting is the fact that the field drawing these women is technology, whether involving the development of high technology products or processes or the use of the Internet as a major business component.2
In October 2001, with the support of Korn/Ferry International, we set out to analyze the experiences of women who left corporate environments to start their own businesses or to work for a small business in the field of technology. Why did so many women make these career decisions? What qualities of ownership or small business appeal to these women? What can large companies do to retain their best female talent? How can the experiences of these women help others who are considering making a similar move?
To be included in our survey, a woman must have had at least three years of experience in a corporation before moving into her current work situation. Four hundred twenty-five women responded to our survey, of which 272 were entrepreneurs and 153 worked for small businesses. In addition, we personally interviewed 32 women who either worked in small-business environments or who founded their own companies.
On average, these women were 41 years old. One-quarter of the owners and one-third of the non-owners had MBAs. Another third of the total group had completed at least a four-year degree. More than half were married and half the women in the sample had at least one child. Eighty-seven percent of the married women earned more than 50 percent of the total family income. The women worked for another company for about five years before their current position.
Advanced technology was the industry of choice for most of these women, claiming 36 percent of owners and almost two-thirds of non-owners. More than four-fifths of the sample of business owners used their personal capital or funds, including credit cards, to finance their firms. Only 14 percent used VC funding to start their businesses. The women reported that they work about 55 hours per week. For business owners, this was fewer work hours; non-owners did not report a shorter workweek. Many of these women reported traveling fewer days per month than before.
We were interested in learning why these women chose to leave their prior companies. Opportunity was the chief reason. Viewed as essential were opportunities to (1) take risks with new ideas and test personal limits, (2) create wealth and (3) have an impact on strategic issues. Interestingly, when all of the women’s reports are considered, work-life balance issues ranked at the bottom of the list in terms of reasons for leaving. We decided to take a closer look.
Did women with children leave their prior companies for different reasons than women who weren’t mothers? Entrepreneurial mothers were much more likely to say they left so that they could have more time for family and personal interests than were entrepreneurs without children. However, most of the non-owners with children did not cite work-life balance as a key factor in their exits.
While the majority of respondents reported being very satisfied with their current job situations, owners expressed more satisfaction than non-owners. We asked the women to review a list of 20 ways in which their current lifestyles were more or less satisfying than their prior work experiences. Owners were much more likely to report greater satisfaction than non-owners with the “pace of work” (88 percent vs. 66 percent) and “working with a minimum amount of disruption” (65 percent vs. 38 percent). Three-quarters of owners (75 percent) said their life was satisfying in terms of personal interests, while less than half (39 percent) of the non-owners agreed.
For owners and non-owners alike, such factors as marital status, presence of children and age had no effect on whether a woman was very satisfied in her current job. When asked to compare a position’s non-tangibles in their current workplaces to those received in the conventional corporate environment, both groups overwhelmingly reported greater satisfaction in terms of: (1) recognition for accomplishments, (2) opportunity to learn new skills, (3) opportunity to develop objectives and strategies, (4) authority to make decisions that impact the entire organization, (5) working with novel ideas and (6) opportunity to realize a personal dream or vision.
How likely were these women to stay in their current positions? Not surprisingly, owners were more committed to their current businesses than were non-owners. Almost two-thirds of the owners said they were not likely to leave their current businesses in the next year or two, compared with one-third of the non-owners.
What would they do if they sold or left their businesses? One-quarter of owners would start another one, and one in ten of non-owners would launch their own enterprise. Another 22 percent of the owners and 29 percent of the non-owners would join another group of entrepreneurs. Only 5 percent of the owners, but as many as 11 percent of the non-owners, would return to corporate life.
It is noteworthy that owners with children reported that should they sell their current company, they would be more likely, compared to owners without children, to open up a new business.
Unlike women in previous decades, today’s businesswomen do not consider a large corporate environment the ideal place to pursue their dreams of innovation and creativity. In fact, many are taking the skills they learned in the corporate setting and applying them to new positions in the small-business world, either as owners or non-owners.
In addition, women with children are viewing entrepreneurship as the ideal way to blend their family needs with the ability to launch creative business ideas. If they hope to retain talent, corporations would be well advised to offer women more control over the strategic process and reduce constraints on creativity.
Ann P. Bartel is the A. Barton Hepburn Professor of Economics, Columbia Business School. Anna Duran (Principal Investigator) is President of the Duran Group and former Adjunct Research Scholar, Eugene M. Lang Center for Entrepreneurship, Columbia Business School.
1 U.S. Small Business Administration, Office of Advocacy, The Facts about Small Business 1999, p. 3.
2 The National Foundation for Women Business Owners (NFWBO): Research Summary, Women as Focused on Technology Benefits as Men, December 1, 1996.