What women want ... and the suits who stand in their way
by Margaret Heffernan

At the end of last year, a visiting American business woman, Linda Tarr Whelan, dropped a quiet bombshell at the DTI. In the last five years in the U.S., businesses owned by women have enjoyed an average growth rate of 11per cent - compared to 6per cent for other businesses. Women-owned businesses have also been staying in business at twice the rate of other companies. They had increased revenues faster and created more jobs - to the extent that Tarr Whelan could claim that, in the American recovery, it was not the Fortune 500 companies that had increased jobs; it was women-owned businesses that had. In other words, though women's firms received less funding and support - they were doing better and driving a much needed economic turnaround.

You could see everyone around the table thinking: why can't we do that? Why is Britain missing the boat? And why isn't anybody doing anything serious about it? When you have an economic miracle staring in your face, what is about us that makes us turn away? Why do we keep embracing bureaucratic, feel-good initiatives instead of doing what works?

In part, it's because we just don't have enough businesses owned by women. Whereas the U.S. has seen women starting new businesses at twice the rate of men, here it's the reverse: far fewer women than men start their own businesses - and last year, the gap actually widened. Why? Well it's not for lack of competence, education or ambition on the women's part. Close to one million women-owned businesses have a turnover in excess of £1 million. Companies like Penny Streeter's Ambition24Hours, Sue Hunter's PSI Global and Betty Thayer's Exec-appointments are experiencing double- and triple-digit growth. We have women founding successful manufacturing, high tech, engineering, employment, finance and property companies. They aren't baking cakes; they aren't making pin money - and they aren't thinking small. "From Day 1, I said we would not be a cottage industry," insisted Sally Preston of Babylicious. "This was not going to be a scrubbed farmhouse table business selling to local delis. It was going to be a proper factory with accreditation and licensing." Not only did she set out to build a large, mainstream business; she also aimed to create a new category - frozen baby food. As a food scientist for Marks and Spencer, she knew just how hard was the task she had set herself. "I set my sights high. There would be no faffing around. People like my mum thought I was mad but I had a plan that this would be a nationwide brand in five years." Her products currently sell in Sainsbury's, Asda, Iceland and Ocado - and will reach further still if enthusiastic parents get their way.

Angela Maxwell shares Sally's optimism. Although advised at school to become a secretary, Angela had already had one flourishing career as the Commercial Director of Sheffield Theatres and was on the brink of joining McKinsey & Co. when she decided she'd rather join Fracino, her family's manufacturing business. One of the country's fastest growing inner city enterprises, Angela has more than quadrupled the company's turnover in the last 9 years. She's done this by turning the business into a vigorous exporter, and by an obsessive dedication to quality. " What I want is to keep the quality and make it an international company. Both goals are equally important: to be world class manufacturers and keep innovating. In particular, when we stabilize the export experience, we could enter North America and double in size with relative ease."

Nothing Angela or Sally says would rattle Liz Jackson, Managing Director of Great Guns Marketing. Even being blind has not held her back. She started the business-to-business call centre company five years ago, has four branches and blue chip clients like Johnson and Johnson, Wella and Norwich Union. That's just the beginning. "We want to have 14 branches around the UK, each with a maximum of 50 people before we do North America and Europe. I don't see any limitations really." Just like Angela and Sally, she's obsessive about quality: quality people building a great reputation. "We did team leadership training recently and the person who did the training said it was the best made up team he had ever seen. You feel it when you walk through the door. The people are great, they are global in their thinking about the business and they're not selfish. We just want to be really good at what we do with a good reputation."

An unstinting dedication to understanding their business from top to bottom is one key to the success of these businesses. Every founder started in sales and they all still see selling as the central function of their job and their business. That means getting very, very close to the customer - closer than perhaps some men might be comfortable with. When she worked with Whitbread on the massive rebranding of Swallow Hotels to Marriott Hotels, CEO Jacqueline de Baer spent days as a maid and receptionist to understand how well the existing uniforms worked and to gain the trust and understanding of her clients. She's perfectly comfortable being the servant of her clients and the servant of the business itself. "You have to do what's right for the business - not what's right for yourself. If I'd wanted a lifestyle business, I wouldn't have brought in other investors. Now I can't make decisions alone any more but I had to put the business first. You are not the boss; the company is the boss." That attitude has fuelled a 40per cent growth rate and a successful M&A strategy.

These women are pretty typical of a whole generation of female entrepreneurs who are smart, disciplined, expert in their field - and prepared to try something tough against all the odds. And those odds are high. Not just because the majority of businesses fail. But because there's little in the business climate to give women optimism or encouragement. According to the Global Enterprise Monitor, men are two and a half times more likely than women to become entrepreneurs. They know more fellow entrepreneurs, see more opportunities, have a higher perception of their own business skills and fear failure less. They are also a lot more likely to seek some kind of institutional or external funding - and men are a lot more likely to be taken seriously when they do.

Women are reluctant to seek investment because they've heard that venture capitalists operate an Old Boy Network and it is only the men who get the money. They are right - most VCs are male and they can be pretty macho at that. While the U.S. provides more venture funding to businesses overall, it still gives only 2.2 per cent of institutional and venture dollars to women. While there are no data for the U.K., the smaller growth of women's businesses here would suggest the same problem - if not worse. Where the U.S. and U.K. are aligned is in having very few female V.C.s or female partners within established funds. So when our female entrepreneurs go in search of funding, they're unlikely to meet kindred spirits or experienced advocates who know just how much women deliver.

Venture firms aren't alone in failing to see the opportunity. Many banks make the same mistake, assuming that, because the business is run by a woman, it must be a lifestyle business. Last year, Pauline Christie spent 6 months looking for venture finance for her technology communications business. "We were up against another company and were told that "they needed it more than we did. It was difficult to establish whether we were a lifestyle business or not." You think this is a lifestyle anyone would want??? All the investors I talked to were male and we lost out to a company run by men." The assumption persists that women's businesses are small, unambitious, designed to produce pin money for women who only really want to work part-time. In just the same way that corporations regularly assume men, but not women, are the breadwinners, financial and business institutions patronize and belittle the business efforts of women. They somehow find it hard to imagine that women are very serious indeed about making money, or building serious businesses, or making serious contributions to the economy.

Heather Mansfield runs a risk management business for investors in the film industry. "We went to a meeting in the City just before Christmas. One of the companies we work for had a fund manager who had performed appallingly - so we could see dark clouds gathering. It was clear they couldn't meet their interest payments last year. So I wrote to them to say we should get together to discuss our role and outstanding fees. They wrote back saying, "As a small company, you will undoubtedly welcome a cash lump sum. I propose to provide one in exchange for a substantial discount." We went into the meeting with a room full of suits and as gentle leaves of complacency came floating down, I got angry. "You are saying this is a small company run by women, let's offer them a reduced fee. Do not patronize me. The answer is no." I honestly do not think they would have dared make such a proposal if I had been a man."

While some of the banks - notably HSBC - have initiatives aimed at women, they have so far failed to convince their erstwhile market that they can, and will, take women seriously. "Women are viewed with a bit of caution," says Penny Streeter. Since 1996, when she started her business, it’s grown at a rate of 131 per cent per annum, and now has 19 offices. "I've had meetings with bank managers who've certainly viewed women with a bit of suspicion. One asked me whether my husband ought to be present for the meeting, even though he had nothing to do with the business." According to Adele Lawe at Manchester's Institute of Science and Technology, even small business guarantee funds are pretty unfriendly to women. "I've known women who were refused and felt it was due to gender. And women who've been asked whether they had a partner. When the answer was 'no', she was asked to put her home up for collateral - the inference being that, had she had a partner, the house wouldn't have been required."

But although cash is critical, it isn't finance alone that women have to fight for. British entrepreneurialism remains pretty laddish in nature. Every week, business events - whether organized by The Sunday Times or Real Business - parade panels comprised exclusively of men, clearly targeted at men. Entrepreneurial networks are seen as old boys' clubs that neither welcome nor encourage female entrepreneurs. "Entrepreneurial Exchange is a very male dominated organization, full of male egos," comments Jackie Brierton who runs Prowess, a trade association for organizations providing business support to women. "Women are seen as not worth bothering about. A lot of successful male entrepreneurs are just completely unempathetic to women starting out." Prowess members have built programmes aimed at changing this culture and at building effective business networks for women entrepreneurs. Women Into the Network (WIN) is a networking initiative based at Durham Business School aimed specifically at helping women build the networks they need to blast through the financial and social barriers that stand in their way. They are trying to address what the Global Entrepreneurship Monitor found: that the lower rate of female entrepreneurship is due, at least in part, to the fact that women are less likely than men to know an entrepreneur. Who they know really does make a difference to women's choices and their sense of what they can achieve.

It's even worse if you are a mother - as approximately half of Britain's female entrepreneurs are. I've lost count of the number of people who assumed that running one's own business was largely driven by a need to find a work style compatible with childcare -- as though we only build businesses in order to have more time off. While it is certainly true that running their own businesses has helped many business owners to gain a flexibility traditional corporations prohibit, this way of business is a far cry from an easy option. Sally Preston is divorced with two young children. "I get up in the morning, make lunch boxes, and leave for school at 845. I am back at 905 and the day starts in earnest. I collect them at 3.15 and I keep working. I work again after they've gone to bed. I work til midnight and they go to their father's at the weekend so I can work then too." Penny Streeter started Ambition24hours while sharing homeless accommodation with her four children. "They're fine about it. They accept that this is what I do and this is what I am."

The men who think that business norms are male can't help but see motherhood as an anomaly. To them, it just looks like a problem: something that stands in the way of full time dedication to the business. It never occurs to them that it might be an asset. But successful business women do see it that way. Jacqueline de Baer has built her PLC at the same time as being a mother of four and sees parenting as great management training. "It puts you under time constraints so you just have to manage. You have to communicate well. You have to delegate. When you do that, it allows other people the freedom to perform without being hounded all the time. And it goes further. Although employees are certainly not children, you still need to coach and develop and encourage them in many of the same ways. You develop them, their skills. You know they'll probably leave you one day and that you can only keep them if you keep developing them." Being a mother is just great management training. "It's made me much tougher and more focused," says Penny Streeter. "It's also made me more patient at work, calmer and less volatile because you just have to fix the problem and think: how do we move forward."

Faced with low levels of investment, little cultural encouragement, and a patronizing environment that equates female entrepreneurs with Dr. Johnson's dancing bears ( "you are surprised to find it done at all") it is hardly surprising that fewer women than men start new businesses. But looking at the American experience, where the opposite is the case, it's easy to see a huge economic win if the situation could be improved. Patricia Hewitt estimates that "if women started businesses at the same rate as men, we'd have 100,000 new firms every year - which would have a tremendously positive effect on the economy." And if, as in the U.S., those firms were more successful, the effect could be a tectonic shift in the economic landscape. What Hewitt and the rest of us can see is that female entrepreneurs represent a vast natural resource that, if it could be tapped, could transform the commercial life of the country.

So government has started pouring money into the area of female entrepreneurship. Nine months ago, the DTI, working through the Small Business Service, launched "A Strategic Framework for Women's Enterprise" which identifies barriers to women's success and strategies for overcoming them. But the scale of the remit it’s set for itself is enormous: everything from getting unemployed women into self-employment; to helping existing businesses expand. No single strategy or approach can address effectively so diffuse a challenge. Moreover, the DTI can't do much more than agitate internally. Within the Small Business Service, Steve Michell is the civil servant at the centre of what he calls "the influencing process". The policy lead for women's enterprise, he himself has no business background and has to enlist other governmental agencies to support female entrepreneurs. He works with the Women & Equality Unit, with the Treasury, with Regional Development Agencies, with Business Link and with any number of other groups to try to persuade the agencies to influence the service provider. It's a long, narcissistic chain of bureaucrats talking to bureaucrats, lobbyists cajoling lobbyists. What would success look like to him? "We'd hope that all those involved through the implementation of the framework would have a better understanding of what customers need." Because the money is in the regions, Steve has to work through the RDAs, hoping to persuade them to put money and resources behind women-owned businesses. Inevitably, the quality and success of regional advice and support are patchy, with areas like the North East and East Anglis flourishing as other areas languish. I asked Steve what single thing would transform his mission. "I would hope that the positive fire of enthusiasm would take hold and sweep across the country." I'm not quite sure what any of this means or looks like but I think he means well.

One problem he faces is that he doesn't have the basic ammunition: data. In the U.S., having gender data about businesses has allowed both federal and state governments to construct such powerful economic arguments that states now compete to attract women-owned businesses. But the DTI doesn't have this kind of data. That means that no one knows exactly how many women-owned businesses there are, what their revenue is or what the overall growth rate is. We can look at the U.S. and see that women-owned businesses are growing faster than others, but we can't tell if that is true here. To Steve and his colleagues falls the daunting task of trying to persuade a myriad of government departments (including the Treasury) to collect and integrate this data. This is a tough thing to do within the most efficient companies.

Without the data, it's impossible to make the economic case. And the economic case is crucial because, without it, many people assume the only real argument is the social justice one - that we should help women because it is the right thing to do. However strong this argument may be, it preaches only to the converted and does nothing at all to break down the barriers of prejudice, exclusion and ignorance. In fact, if anything the social justice argument itself trivializes women, casting them as helpless maidens in distress.

That the DTI is also focused on getting unemployed women off benefits and into self-employment confuses the picture even further. There is a world of difference between the support needed to grow an existing business and the help required by a single parent trying to get started as a self-employed hairdresser. Even in these cases, where the economic and social argument seem pretty obvious, old attitudes die hard. "I worked with one woman who was a single parent and a qualified beautician. She'd put a business plan together and she applied for a Business Link loan. But the advisor held her application up (for all of £500) because he didn't think she should be able to claim the grant when she was still on benefit. He just didn't think she deserved it!" Changing these kinds of attitudes is hard - and it is just one small part of the DTI's remit.

It depends who you talk to whether the social justice argument or the economic argument is uppermost. Steve Michell's clear that the economic argument leads the way - but if that were entirely true, the focus would be on the larger growth businesses. The members of Prowess, who provide support services to female entrepreneurs, cover the entire spectrum - from social workers to highly experienced business women. Much of their work is outstanding but it's hard for Prowess to be a single strong, authoritative lobbying voice when it represents such a broad, heterogeneous constituency.

Business women fundamentally need two things: to be taken seriously and to gain access to capital. The first part of this involves changing mindsets, a task that is inchoate, endless and tricky to measure. The second part, one would think, should be easier. And indeed, the DTI is starting to see some successes here. Innovative micro-lending schemes are getting money to women on the brink of starting businesses. Bolton Business Ventures has devised one such scheme in partnership with Barclays Bank. Women in the area can borrow up to £20,000 in the form of an unsecured loan at 4per cent over base rate. With that, they also get a lot of support, advice and access to networks that build confidence and expertise. In East Anglia, WEETU (the Women's Employment Enterprise Training Unit) has launched a micro-credit programme with smaller amounts (up to £1,000) but similar provision of networks, advice and support.

What is most striking about these micro-loans schemes is the repayment rate: 100per cent. This mirrors U.S. experience where lending schemes (usually capped at $40,000) have launched thousands of successful businesses with a microscopic default rate. Many of the companies emerging from micro-loan programmes have never had to seek subsequent finance. Everywhere you find these schemes you find the same story: successful companies, low default. Why don't more banks pay attention to this and see that women are a fantastically good investment? U.S. banks likes Wells Fargo have experienced runaway growth in both their business and their share price through targeting women and women-owned business specifically. Why aren't U.K. banks learning from that success?

The DTI is currently doing a study on bank attitudes to women. They claim that financial providers are not enthusiastic about such lending programs and have to be prodded even to consider them. "We are," says Steve Michell, "ten to fifteen years behind the U.S." Where the government might be expected to have some direct impact is procurement. Again, looking at the U.S. example, the Small Business Administration there has been aggressive in training small businesses to qualify and apply for government contracts. They run training sessions so that women-owned businesses can qualify for federal and state contracts. In a partnership with Hewlett Packard, the SBA has set out with the explicit agenda to increase from the current 2per cent the amount of government business that goes to women. Here in the UK, Paul Boateng is still working on two pilot schemes for improving access for all SMEs to government work. At some later stage, the DTI would like to include women-owned businesses but when we are still at pilot stage, it's hard to imagine that this will make a significant impact to anyone's business any time soon.

Of course it makes a difference that the SBA is fronted and staffed by experienced, committed members of the business community - while here, many insiders comment that most of the DTI doesn't really empathize with small business people. But perhaps what is most striking about the government's well intentioned initiatives is how little they've engaged the business community itself. When I suggested that this might help him get some real traction, Steve Michell responded with silence and puzzlement. While he finds it normal, I find it bizarre that ambitious attempts to transform the business landscape are being attempted without much direct interaction with business itself.

Patricia Hewitt recently signed a tripartite agreement with the U.S. and Canada to work together to advance female entrepreneurship. Initiated by Tarr Whelan and her associates, it's an encouraging sign because it means she, and the DTI, can learn - hopefully fast - what has worked and what hasn't. It isn't rocket science. Women need access to capital: this means that banks need to understand the economic argument which means the government needs to mandate data collection. Data should be used to highlight regional differences and drive regional competition for great business services. Micro-loan programmes should become so widespread that they compete with each other for great businesses - instead of being regionally patchy and over-subscribed. Government procurement should not just become quickly and easily accessible to SMEs but be monitored so that it does not become the old boys' network of a kind that the U.S. government is currently trying to unpick. The DTI's good intentions need to be far more focused and targeted, measurable and demonstrable. Somebody needs to give Steve Michell some clout, rather than asking him to effect a sea change with a spoon. And all of this requires the active engagement of the business community which needs to start seeing female entrepreneurs as an opportunity rather than a joke.

The good news is that so many women are doing what women always do: just getting on with it. When Betty Thayer went to Business Link, she says "This was a guy, semi-retired, sitting at a desk, just a bureaucrat. He could not put himself in my shoes. So what I've found out has been on my own. He didn't tell me about the University of Bath's placement scheme; I found it for myself and got several great employees that way. He didn't tell me anything about grants but I found www.j4b.co.uk which is a well organized, easy to read bulletin about grants." Her business has doubled this year.

Sally Preston has started raising private investment to take Babylicious to the next level. "The people at Business Link are in the departure lounge, waiting to retire. My business advisor - who tried to charge me a lot! - sent his son to me three months later because he was setting up in the food industry. I ended up advising him!" She's just moved into new offices and, with immense relief, brought in a professional marketing director to win the market penetration her mould-breaking product needs.

Jacqui Withnell combines being Managing Director of Work Inc. with completing her MBA. She's also joined TEC, a global network of CEOs and directors who come together regularly and one-on-one with the Chairman to discuss their business issues and share solutions. "It is just the best forum for professional people - like having thirteen non executive directors that you aren't paying!" Her business has grown 28per cent year on year since her MBO in 1999, growth fuelled both by acquisitions and joint ventures.

Jacqueline de Baer brought in a chairman in 1997. "We were growing 40per cent per year and I needed more money. So I went for angels and gave away 23per cent of company. One of the angels took a 7per cent stake and became chairman. He was Chief Executive of a big property company in the City, he had been around and I felt he would add value. And he did. In things like suggesting I join the Association of Chief Executives. When you're growing that fast, it's really exciting but you have to keep learning."

Every one of these women cites friends, family and fellow entrepreneurs as their greatest sources of advice. But they all actively seek out lively networks of informed, experienced peers who can keep their personal development one step ahead of their business growth. Glenda Stone's Aurora Gender Capital, runs monthly seminars for female entrepreneurs - to whom they are free. They're sponsored by BT who have seen that this is an important and profitable market. Glenda is typical of all the female entrepreneurs I've met: seeing an opportunity, she's gone for it full throttle, more afraid of missing out than messing up. I wish, of course, that we could see some of that same spirit inside the banks and inside the DTI. In both institutions, the fear of stepping on toes is a severe impediment when you're trying to race ahead.

Moreover, when the Chancellor wants to know how to spark and sustain innovation, he could do a lot worse than look at the mould breaking that seems to characterize the way women do business. Jacqueline de Baer has built her business by challenging the whole concept of what a uniform is and what it is for. Sue Hunter's company continues to invent, patent and manufacture engineering devices with a global market. Pauline Christie is building cutting-edge technology to transform corporate communications. Heather Mansfield brokers new and original relationships between the film industry and international bankers. Sally Preston has built an entirely new food category. Jacqui Withnell is taking a completely fresh look at how to used the workplace as an asset rather than an overhead. Penny Streeter is in the process of transforming medical and educational recruitment while Betty Thayer is doing the same for executive search. As if it weren't hard enough to start your own business, these women are pioneering new products, creating new markets and managing their work forces with originality, nerve and commitment.

"A few years ago," says Heather Mansfied, "I went to the States on an exchange program with a whole bunch of women. We all piled into a lift and when we stopped, the door opened and this chap looked at the lift full of women and asked, "What's this?" And one of us shouted, "The future!"

Resources

www.prowess.org.uk

www.j4b.co.uk

www.auroravoice.co.uk

www.projecttsunami.org

www.womens-unit.gov.uk

!!!!!!!www.sbs.gov.uk/content/consultations/womensframework.pdf!!!!!!!!!

www.bbvonline.net

www.weetu.org

TEC: http://www.managingdirector.org/

Thumbnails of Business Owners

Sally Preston
Company: Babylicious Ltd
Produces fresh frozen baby food
Distributed through Sainsbury's, ASDA, Iceland and others
Location: London
Employees: 8
Finance: Mortgage and family

Angela Maxwell
Company: Fracino Ltd.
Manufactures wholesale coffee machines
Exports to Germany, Denmark, France, Australia and South East Asia
Location: Birmingham
Employees: 17
Finance: Family

Betty Thayer
Background: Automotive consultant for Ernst and Young
Company:Exec-appointments.com
executive recruitment for executive, director and senior management jobs
Location: Bath
Finance: Private investors

Heather Mansfield
Company: Mansfield Associates
Risk management for banks investing in films
Location: City of London
Finance: Bank loans and private investors

Jacqueline de Baer
Company: Jacqueline de Baer PLC
Produces corporate clothing for global clients
Clients include: Eurostar, Marriott, Cosmos, Boots
Location: London
Employees: 55
Finance: Private and corporate investors

Jacqui Withnell
Company: Work Inc.
Designs and manages office interiors
Clients include GE, HBOS, Nissan, McDonalds
Location: Leeds, Newcastle, Nottingham
Employees: 130
Finance: MBO with VC backing

Liz Jackson
Great Guns Marketing
Business-to-business call centers
Clients include O2, Document Express, Xera Logis, Norwich Union
Location: Basingstoke (headquarters)
Employees:70
Finance: Family, DTI loan, Prince's Trust loan

Pauline Christie
Corporact Ltd
Technology for corporate communications
Clients include: Comet, Kesa Electricals plc, Institute of Directors
Location: London
Employees: 10
Finance: Cash flow

Penny Streeter
Ambition24hours
Personnel recruitment and management for the health, care and education sectors
Location: 17 regional branches
Employees: 179
Clients: everything from NHS trusts to private individuals

Sue Hunter
PSI Global
Manufactures patented filtration and separation devices
Location: Durham and Taunton


DOS AND DON'TS OF FEMALE ENTREPRENEURS

• Sue Hunter, PSI Global: Make lots of mistakes and don't be beaten by them.
• Jacqueline de Baer: Be passionate about what you do - it will be much harder than a job!
• Pauline Christine: Get great people around you. Think about your exit strategy. Reach for the skies.
• Jacqui Withnell: Feel the fear and do it anyway. Don't pay yourself too much. Get enough funding.
• Sally Preston: Think big at the outset. Get enough money for marketing.
• Betty Thayer: Get more money and more time than you think you will need.
• Liz Jackson: Stay focused to keep yourself first in your market. Get diverse people to hire diverse people. Think you can.
• Penny Streeter: Don't buy leather chairs; keep it cheap. Be prepared for three years before it takes off. Work like hell.
• Zena Everett: Don't be afraid to ask for help. Build your networks.
• Heather Mansfied: Keep your ethical standards high and don't be patronized.
• Angela Maxwell: Keep innovating. Keep growing. Don't get comfortable.

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