The National Women’s Business Council Uncovers the Reasons That Drive Women to Become Necessity Entrepreneurs

On Women’s Entrepreneurship Day, and every day, NWBC is dedicated to understanding what drives women entrepreneurs and to helping them succeed

Washington, DC – This November, National Entrepreneurship Month, the National Women’s Business Council (NWBC) celebrates our nation’s entrepreneurs, and, specifically on November 19 — Women’s Entrepreneurship Day — celebrates women entrepreneurs. The number of women entrepreneurs in America continues to grow, fostering increased employment and economic development. According to the American Express State of Women-Owned Businesses Report of 2016, it is estimated that there are now 11.3 million women-owned businesses in the United States, employing nearly 9 million people, and generating over $1.6 trillion in revenues. These women business owners are a heterogeneous population, differing along demographic and industry lines, as well as motivation. While some entrepreneurial endeavors are born out of the desire to exploit a market opportunity, others arise when an individual discovers that traditional labor force options are not working for her. NWBC introduces stakeholders to the importance of this demographic of women entrepreneurs and seeks to expand the definition of necessity as a driver of entrepreneurship through its two recently released studies:  Necessity as a Driver of Women’s Entrepreneurship and Necessity as a Driver of Women’s Entrepreneurship: Her Stories.

The latter report uses case studies of nine diverse women to examine whether and how women turn to entrepreneurship to address potential market failures that limit their ability to maintain or attain economic self-sufficiency, or, alternatively, to overcome flexibility bias and potential stigma in balancing work-life conflict assumed in traditional gendered roles and social norms. While traditional “necessity entrepreneurship” definitions largely focus on the concept of “survival entrepreneurship” or “emergency entrepreneurship,” where a woman starts a business to meet basic economic needs for survival, there are also necessity-based reasons for starting a business that reach beyond immediate financial need. In looking at these nine women’s stories, several key themes emerged, including:

• Entrepreneurial motivations exist on a continuum. Four of the women who were interviewed and met the broader necessity definition that was being tested also displayed characteristics traditionally associated with opportunity entrepreneurs, such as realizing a vision and capitalizing on an opportunity.
• Women may choose entrepreneurship due to gender-specific issues. Eight of the nine women interviewed cited gender-specific issues as critical motivators for starting their businesses, and several women cited multiple gender-related issues, including discrimination, childcare challenges, and restrictive workplace policies.
• Entrepreneurship is unlikely to fully resolve concerns motivating business ownership.Multiple women reported that while the flexibility inherent in entrepreneurship provided relief from restrictive traditional employment environments, entrepreneurship does not equate to more free time. However, entrepreneurship allowed the women to control when they worked and to achieve what they defined as success while balancing their personal lives and professional careers.

“I can relate to many of these women because I’m a prime example of a necessity entrepreneur,” said Kari Warberg Block, NWBC Council Member and Founder and CEO of EarthKind®. “I was fresh out of alternatives with no job options, and I had to do something, anything, to take care of my family. I had an idea to create a safe, natural option for pest control, and 10 years later that has turned into a $20 million-dollar business.”

Findings of the report provide a roadmap for examining key areas for policy considerations in greater detail and defining future avenues of research to pursue, including:

• Addressing deficiencies in workforce policies that have a disproportionate negative impact on women. Several case study participants faced restrictive workforce policies with respect to issues such as maternal leave or vacation and sick time when balancing caretaking responsibilities. If the remedy is to stay in the current employment situation, then policy directives should be explored that can alleviate flexibility issues such that no woman has to “choose” between employment and caring for a child or elderly parent.
• Identifying areas of greater accountability with respect to gender discrimination in the workforce. Several case study participants identified instances of gender discrimination and harassment, although none filed a formal complaint. In these cases, the women often continued to work despite facing discrimination because at that juncture in their professional lives, “being employed” superseded the resolution of the work conflicts.
• Focusing on resource deficiencies, including the inability to readily identify available resources (both needed and available) for the entrepreneurial effort. Case study participants identified Women’s Business Centers, incubators, mentors, professional networks, and even friends and family as key resources to help with starting and running a business. Therefore, regulation and funding adjustments to Women’s Business Centers should strengthen their capacity to provide high-quality programming.

“Although entrepreneurial motivation may exist on a continuum, a line of demarcation does exist between those who prefer the entrepreneurial lifestyle – intentional entrepreneurs – and those who would rather return to the traditional labor force, but who start a business because the traditional route is unavailable or not meeting their needs – consequential entrepreneurs. Because intentional entrepreneurs are more likely to succeed, more likely to create jobs, and more likely to meaningfully contribute to the economy, it is in women’s, and the nation’s, best interest to pave the way for their success,” said Carla Harris, Chair, National Women’s Business Council.

To learn about necessity entrepreneurship and read each of the nine women’s stories that led them to become necessity entrepreneurs, check out the full report on the NWBC site.