Do women in business underestimate their worth? Georgie Rogers, a senior manager with MGI explores why female entrepreneurs and women in business are often far more successful than they believe.
Female business owners tend to be more cautious in their predictions about their business’s performance than their male counterparts, but this tendency may make women a better bet to back.
The word entrepreneur tends to conjure up ideas of a self-confident, risk-taking, passionate individual.
But how about ‘female entrepreneur, or (heaven forbid) ‘mumpreneur’ or ‘fempreneur’? Do these terms – aside from implying a female at the helm – have a different connotation in terms of self-confidence, and taking risks?
Network television recently provided a great example of the discrepancy in how male and female entrepreneurs are perceived. On a recent episode of Channel 10’s Shark Tank, panellist Steve Baxter questioned a female business owner over her company’s falling revenue figures in the past couple of years. After the business owner explained that she had suffered burn out due to too many business and family responsibilities, Baxter criticised her failure to keep pursuing her goal, saying “You’re not filling me with confidence at all, right?”
He went on to say “You’re sort of saying ‘I’ve tried and I can’t’. You’ve got to not take no for an answer and get in there. It’s unfortunate but females tend to do it that way.” To this he later added, “You need to show more aggression, and especially for a female.”
While the other panellists rebuked Steve for being sexist, I wondered whether Steve’s opinion was based on truth, or merely perception. And in the search for truth, data inevitably plays its part.
Earlier this year, MGI Australasia released its My Catalyst business benchmarking tool, which helps business owners understand the opportunities and risks associated with their business, as well as generating powerful data about financial performance of SMEs in Australasia.
Recent findings from the My Catalyst for Financial Success data demonstrate that female business owners may underestimate their success and their knowledge of their business.
When asked whether they had a clear idea of their business’s financial performance, only 35 per cent of women responded positively. On the opposite side of the coin, one in five shared that they did not have a clear idea of how their business was performing financially. Interestingly, on the other hand, 61 per cent of men said they had a clear idea and only 7% of men responded they had no idea. In other words, almost double the number of men responded positively to having a clear idea of the financial performance of their business compared to the female respondents!
Women also express greater dissatisfaction with returns from their businesses than their male counterparts.
Only 44 per cent of women are happy with the financial returns of their businesses, compared with 65 per cent of men. This finding is likely linked to the lack of certainty regarding how their business is performing financially, but may also be attributable to women having a lower perception of their own success, relative to their expectations – in psychological terms, this is commonly referred to as impostor syndrome, which tends to be more prevalent in women than men.
Overall, the My Catalyst data suggests that women may be more conservative in their financial projections therefore display less confidence regarding how their business is tracking, compared with men. So, in that sense, Steve Baxter may have a point (I hate to say it) regarding female business owners having less confidence in themselves.
However, when female business owners are given an opportunity, they produce better results for their investors.
Last month, Boston Consulting Group’s report on research into women-owned start-ups demonstrated that businesses founded by women deliver more than double the return, per dollar invested, than those founded by men. And this result is in spite of the fact that these same start-ups garner less than half the investment funds than men.
So why the disparity? Boston Consulting Group didn’t stop at the statistics. They dug deeper, speaking with women founders, business mentors and investors to discover three explanations. Two of these explanations are particularly relevant to the perceptions mentioned above.
Firstly, women founders (and their presentations) experience more challenges and pushback than men: women are often asked to establish that they understand basic technical knowledge, or are assumed not to have such knowledge. And when women are called on to respond to criticism, women will tend to accept feedback and potentially agree, whereas men are more likely to challenge the criticism and explain why it is wrong. Evidence of this discrepancy is pretty obvious after watching a few episodes of the Shark Tank.
Secondly, male founders are more likely to make bold projections and assumptions in their pitches – men often overpitch and oversell, whereas women are more conservative in their projections and may be asking for less than men. The My Catalyst data gathered by MGI Australasia regarding financial certainty, expectations and confidence between the genders certainly backs this up.
So what now? As an investor, the figures in favour of investing in female-founded businesses certainly stack up.
Butt how do we convince investors that women know what they are doing, and convince women to trust their instincts and their abilities?
Companies like Elevacao, based in NYC but operating in the USA and Australia, help empower women entrepreneurs to build successful and innovative tech businesses, with the support of both women and men. They offer ‘pitch-ready’ training programs to women to give them confidence to secure funding, customers and employees. Elevacao have nailed the discrepancy, focussing on confidence and assertiveness as the keys to help bridge the gender investment gap.
On a day-to-day level, business consultants also have a role to play. As a tax consultant, my role is to help unpack complexity and uncertainty for my clients, and give them a roadmap for how their business is tracking and where they are going. In my experience, my female clients are usually more cautious when it comes to tax planning and strategy, so ensuring their understanding of the risks and benefits is paramount to ensuring everyone moves forward together – particularly in businesses co-founded by men and women. By being prepared to listen and understand where each client is coming from, we gain client trust and deliver confidence.
To wrap up, if women are provided with the evidence that they can be successful (data is powerful), and the confidence to move their ideas forward, then the returns for investors (including themselves) in their businesses should be fruitful.