Businesswomen still lacking the backing

By DITA DE BONI

Women head the country's political and judicial systems; women are running households and rearing tomorrow's citizens; bras have been fished out of yesterday's cinders and adorn today's body-conscious career femme. But after the revolution, are the country's budding female entrepreneurs taken seriously?

While the successes of venture capitalist Jenny Morell and PC Direct co-founder Sharon Hunter have provided a welcome dash of yin to the largely yan world of entrepreneurial success, the experiences of the average female go-getter suggest that the new world of entrepreneurship is heavily littered with old-fashioned stumbling blocks.

A lack of business savvy, condescending bank managers, a concentration in service industries and a lack of self-confidence are factors hampering women's quest for successful self-employment, according to those who have ventured into the area. Anecdotal evidence suggests Maori women face an even harder time from traditional lending institutions.

Despite these barriers, Kiwi women are embracing business ownership at more than 50 per cent the rate of men. According to a study by Judy McGregor and David Tweed of the Massey University human resources management department, 20 women go into self-employment every working day. Forty per cent of new businesses are started by women, and they outnumber men two to one in the statistics for entrepreneurs aged under 34.

Radical changes engendered by the Employment Contracts Act 1991 and rapid technological change in the 1990s are thought to have led to a large-scale squeeze of women from the fulltime workforce. Self-employment is just one option alongside part-time and seasonal work that, being more flexible, allows women the opportunity to combine personal and professional pursuits.

It is possibly for this reason that women repeatedly say the most significant challenge they face is being taken seriously.

Christchurch-based entrepreneur Rebecca Matthews says: "A common snippet we hear from our membership is male bank managers asking women [who have applied for start-up capital], 'Where is your husband? Why isn't he here supporting you?' And worst of all, 'Does he know you're here?' "

Ms Matthews - who recently established a nationwide corporate network for women called Women in Business NZ - says one of her most popular seminars has been on how to influence bank managers.

Without naming the banks involved - "every manager is different and it is hard to say one whole bank is worse than another" - she says the banks represented at the session told women that they should have a good business strategy, have done their homework well, and come in with a team approach, i.e. the support of lawyers and accountants.

"But when it comes down to it, the overriding consideration for a bank is security, regardless of what they say," Ms Matthews says. "And women, who often do not have much in the way of collateral, are definitely disadvantaged."

While the concept of venture capital is gaining currency alongside a desire for a knowledge economy, actual venture capital grants, while usually much bigger than bank loans, make up a small proportion of money lent to budding Kiwi entrepreneurs each year. In addition, the estimated $400 million in local venture capital goes overwhelmingly to "sexy" high-tech-based businesses, while women's startups tend to be service-oriented, says Ms Matthews.

"For example, my business [Women in Business NZ] is a company dealing in intellectual property, and a lack of tangible assets would have less sway with bank managers. I used to own a medical clinic, and it was great. I had a building!"

Karen T'eo, national coordinator of the Women In Self Employment [Wise] Network, representing 6500 small-business women New Zealand-wide, agrees that a woman who cannot submit a house as collateral is unlikely to get a bank's assistance.

"I would say most women would get money from family and friends. The problems they face at banks is a lack of information about sources of capital, a lack of information about how to put a proposal together properly, and yes, there is a lot of prejudice still out there, like banks requiring women to have their husband act as guarantor."

Rotorua-based Fiona Powell, who started Her Business magazine five years ago, is like several other female entrepreneurs who did not even bother approaching a bank with her seedling idea. Ms Powell points to a mid-1990s study by Sir Michael Fay and Leslie Williams in which 200 branches of four major retail banks were sent loan-application forms identical in all respects apart from the gender of applicants. The female applicants were refused startup capital at three times the rate of men.

A common statistic quoted by women's organisations, although hard to verify, is that women provide around 60 per cent of startup capital from private sources, including their own savings.

"I don't think any female I know has gone to a bank for startup capital," says Ms Powell. "It's usually down to friends and relatives. But problems can arise when the families want a say in how the business is run."

Predictably perhaps, the banks say there is no longer any prejudice applied to judging business loan applications.

Hugh Burrett, ASB Bank general manager (sales and service), says men would also be asked about the involvement of their wives if they came in for startup capital, as security for loans is often covered by the family home.

"Husband-and-wife teams tend to be roped in together in a first business," he says. "Really, it is each applicant on his or her merits, but I have found the women coming in with startups generally very good. We believe in women entrepreneurs and employ lots of women."

WestpacTrust spokesperson Jan Anderson agrees that banks in general have changed. "When we loan to a new venture we are interested in the ability of the business to repay the money, and gender is irrelevant to the way we make our decision."

There are other options for women entrepreneurs, although state assistance now tends to take the shape of advice and/or upskilling. The Business Development Boards, which were scrapped under National, used to lend money to quite a few women, says Ms Matthews, but the replacement BIZinfo service offers only free training and advice.

The Ministry of Economic Development will implement Labour's $2 million small-business incubator scheme, but again, this is focused more towards "new-economy" ventures such as bio-tech and agri-tech startups.

For Maori women, Te Puni Kokiri (the Ministry of Maori Development) offers assistance, as does Work and Income NZ through its Wahine Pakari programme. Winz also offers an enterprise allowance scheme for unemployed people wanting to be self-employed.

Outside Government, the Maori Women's Development Incorporation, Pacific Business Trust and Women's Loan Funds give substantially lower levels of assistance, with the latter scheme funded through "angels" who support the fund with interest-free loans.

But women entrepreneurs maintain that it is banks which can lend a business credibility and confidence and it is important that they come around to the idea of female-led business. And indeed, insolvency experts the Business Herald spoke to say they notice that businesses run by women generally have a lower rate of failure, although Statistics NZ does not collect the figures that would back that.

Ms Powell says women look at risk differently.

"They are more careful in their approach to setting up a business and possibly don't ask for as much money."

It may come down to a matter of motivation.

As the Massey University study states: " ... for many women money may be less important for a variety of reasons than notions of creativity and personal freedom."

Ms Matthews says business for women seems to be overwhelmingly about passion. "Every woman I've ever met has had a dream. If they have enough confidence and motivation they only need the right environment to make it really happen."