Understanding Enterprise

Entrepreneurship and Small Business, fourth edition

by Simon Bridge and Ken O'Neill

Case study: chapter 16

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This case study examines the attempts by government to tap into the potential for female-run businesses to contribute to economic growth. The following describes the national initiatives that have been formulated, concentrating on the experiences of one local region in particular as it attempts to evaluate its outcomes. Students are asked to evaluate the schemes using the general principles discussed in the text
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The underrepresentation of women in the economy at both regional and national levels had prompted the government to probe into the issues facing women in enterprise. It had long been appreciated that there was a significant potential contribution to economic growth to be made by facilitating female entrepreneurs to start businesses and by assisting existing female-run enterprises to grow to their full potential. A secondary objective was to reduce the number of people receiving benefits by helping them to achieve employment and it was decided that measuring the number of individuals going into employment was how the impact of the initiatives would be measured. In order to identify the obstacles faced by women, the government task-force entered into a lengthy consultation period with representatives of the local enterprise agencies and identified access to finance and insufficient business skills as the key factors that needed to be addressed in order to assist potential female entrepreneurs.

As a result the Women into Business initiative was launched with the aim of providing business training and support to meet the specific needs of female entrepreneurs. It was envisaged that up to ten thousand women would attend the course with at least a quarter going on to establish their own businesses throughout the region. Training was to be delivered in the form of the existing programmes that were on offer through enterprise agencies with an emphasis being placed on the day-to-day running of the business as well as marketing and strategic planning for future growth. It was envisaged that this programme would meet the needs of both women interested in starting their own businesses and those that were at the stage where they needed assistance in growing their enterprises. This was believed to be the most cost efficient way of providing business support as, among other things, it would reduce the number of trainers required to deliver the programme.
Once the feedback forms had been received from participants and the data regarding business start-up and growth had been collected, the findings proved to be at odds with the initial projections. Uptake of the programme had been relatively low in the region relative to national statistics. In order to investigate this further, a sample of the general public were asked why they had not participated on the programme. The majority of those questioned stated that they had not heard that the programme was on offer and those that were aware of it felt that they did not meet the criteria that had been set out, adding that most women in the local area didn't either.

The profile of those women that did go on to establish their own business was also not what was to be expected. Many of them were working part-time and a significant number, well above the national average, were working in the childcare industry. Another area from which the programme drew many participants was the retail sector as many mothers found this to be one of the only sectors that could offer them the flexibility that they needed to be able to be at home in time for their children arriving back from school as childcare was too expensive for many. The profile of women-owned businesses seeking to grow was extremely heterogeneous and provided little help in the way of enabling the funders to selectively target participants in the future. Representation of this group was extremely disappointing as very few participated on the programme.

In terms of the feedback provided it appeared that participants, who did not run a business but had a concept in mind, benefited most. They described the training as useful but stated the true benefit came from being able to talk on an informal basis with their counterparts who had already taken the first steps into self-employment and were now seeking advice for growing their business. The latter group of women also benefited from the programme although they were unanimous in their condemnation of the content of the sessions. Carrying out market research, producing management accounts and marketing were all areas that they felt they already understood and believed that product/service development or strategic management would have been areas of greater benefit for them. They did believe however that the business contacts they made with other female entrepreneurs were invaluable and many cited an increase in turnover due directly and indirectly to the network that they had made - although few announced an increase in employees. The final group of participants were those at the stage of investigating self-employment. According to the feedback provided, this group benefited least from the experience. While they tended to agree that the content of the course seemed to be helpful, they thought that it was aimed too much at individuals further on than themselves and felt a workshop in ideas generation would have been more beneficial for them.

The second intervention that was running simultaneously was the Access to Capital initiative aimed at assisting female entrepreneurs secure the funds necessary to either start a business or grow one. The measure of the initiative's success was the number of businesses that were started as a result of receiving funding. In order to be eligible, applicants must have completed a Business Plan Workshop and presented the complete business plan to the bank. Again the figures showed mixed results. The number of business start-ups was up on the previous quarter and indeed was also higher than for the same time in the last year. The feedback from individuals who took the loan was generally positive although there were a number of issues that had been surprisingly unforeseen in the programme development stage. Most women who attended the Business Plan Workshop said that while they would recommend it to a friend, many of these friends would find it hard to find childcare facilities in order to attend. Finally, in terms of the proportion of women starting businesses, the figures demonstrated that women still accounted for a relatively small percentage of the new business starts for the period.

Evaluate the schemes using the general principles discussed in the text.

Suggested solution

  1. Clearly understand the objectives of the initiative

    The objectives of the initiatives are relatively straight-forward in that the main aim is to increase economic growth. The strategy for achieving this was to tap into a previously ignored resource by encouraging more women to either start businesses or grow the existing enterprises that they run. It is easy to see however how the actual outcome of the planned intervention could be mistaken with providing members of the female population with employment rather than measuring to see how they contribute to overall economic growth.
  2. Look for and record the effects

    An intended effect for the initiative was to increase the number of economically-active women by making entrepreneurship a more feasible aspiration. It was envisaged that a number of participants would be in the receipt of benefits as a result of being unable to secure employment in an ultra-competitive labour market. This proved not to be the case and as a result the reduction in benefits paid in the region, attributable to the initiative, would be minimal. The Women into Business programme did ultimately increase the number of female entrepreneurs although it appeared that in terms of facilitating the growth of existing businesses, it was unsuccessful. Offering a one-size-fits-all programme for individuals with very different needs was always going to be ambitious although, despite the negative feedback regarding its content, the programme had arguably some success as a number of existing businesses recorded increased revenues as a result of networking. Had revenue been incorporated into the 'growth' measurement rather than simply 'individuals employed', the programme would have fared better. Another unanticipated benefit from the programme was the mentoring that some individuals received from business owners. The experiences of these individuals proved to be beneficial to others although it was not possible to record a useful quantitative measure of this effect.

    In terms of other businesses affected by the initiative it would perhaps be of benefit to explore how the gap left by participants starting a business was being filled. As the case study pointed out, many were employed at least part-time in the childcare industry which in itself allows other women to enter employment. There was also the retail sector that may have lost a number of workers that covered shifts during the day. This can be a traditionally difficult time for businesses to find cover in the form of part-time staff as students and other weekend workers are either in classes or at their primary jobs.
  3. Record the effects as they have impacted the various stakeholders

    Taxpayer - the fact that the majority of actual business start-ups were by women already in part-time employment at least will mean that the amount of money saved on paying out benefits in some form or other may not be as significant as first hoped. These savings by the taxpayer must be measured against the real cost of developing and delivering the programme, in part to determine whether or not the programme should be offered in the future.

    Women in existing businesses - many reported a growth in revenues although whether this was taken into consideration in terms of determining whether their firms had grown is unclear.

    Women with business ideas - gained invaluable mentoring from counterparts already in business and found the programme content to be useful.

    Women exploring enterprise - little impact was made on this group and alternative initiatives must be investigated, potentially relating to the ideas-generation stage.

    Local Enterprise Agencies - need to target individuals in a more focused manner rather than trying to cater for everyone at once with a standard product.
  4. Have common measures of the effect

    There is no way of comparing the effectiveness of the two initiatives as Women in Business measured the number of individuals starting and employed by a business while the Finance Scheme examined the number of enterprises established. This makes it difficult for analysts to advise on which initiative provided the most value for money.
  5. Determine the basis upon which the effect of any initiative is to be judged

    As there is no information regarding the results of previous initiatives it is perhaps best to consider how many of these businesses would have started in its absence. There appears to have been an overall increase of business start-ups although the proportion of female entrepreneurs is still relatively low. There are a number of variables that could be further examined in order to determine why this is, although looking at the figures as they stand, it could be argued that had the proportion of female entrepreneurs accounted for approximately half or slightly fewer of the new start-ups, the intervention could have been classified a success. As the proportion shows little difference from pre initiative figures, it appears that it has been a failure.
  6. Determine the effects of more or less expenditure on the initiative might be

    It is not possible to examine the effects of changing the levels of expenditure on the initiatives as the financial data necessary for this analysis is not provided.
  7. Determine whether the policy initiative would be more effective

    There are a number of alternative delivery vehicles that could be explored to try to make the initiative more effective. Could the private sector have offered a more effective formula, e.g. chambers of commerce, small business associations or women's groups instead of local enterprise agencies? Should only one segment of the female population be targeted until a successful formula has been developed? Thus an Exploring Enterprise Programme would aim to benefit women at the earlier stages of exploring self-employment and the key success factors fed into subsequent programmes aimed at different segments. E.g. individuals at a more advanced stage. Moreover, could mentoring and networking, form the core of the programme as, according to the feedback gathered, these features offered unanticipated benefits and could prove to be the most effective forms of assisting women in enterprise.