Thinking of Starting a Business? Are you an Entrepreneur? - Take Stock

Why Women Start Businesses?

If you're working for someone else right now, how does that figure into your decision? Let's look at why other women in the United States leave their workplaces to start businesses.

It's not necessarily because they lost their jobs and can't find employment. Business owners are more likely to spring from the ranks of those who are working full time or part time for someone else. The Kauffman study, which included both genders and all ethnic backgrounds, shows 8 percent of full-time workers and 7 percent of part-time employees start businesses, compared with 5 percent of people who are not working for someone else, including the unemployed, students and homemakers. The rate drops to 1 percent for retirees over age 65.

But what about women in particular? According to the Center for Women's Business Research, an overwhelming majority of women who start businesses - 45 percent - say they're seeking independence. They want to be their own boss.

There are other reasons, too, the Center says in its research posted at www.womensbusinessresearch.org: 22 percent believe they can fill a need in their industry; 19 percent want to earn more money to support their families; 16 percent inherit a business; 14 percent are seeking personal growth; 12 percent start by collaborating with a relative or friend; 10 percent capitalize on an opportunity; and 8 percent say they need more flexibility. Only 7 percent are trying to replace a job they lost.

The truth is, many factors go into a woman's decision to start a business, our experts say. In an economy dragged down by the burst of the technology bubble and then the September 11, 2001, terrorist attacks on the United States, thousands lost their jobs and vowed they'd never again depend on someone else for their financial security.

Others simply have taken advantage of advances in technology. Going into business for yourself was more complicated before the 1980s. But today the Internet makes it possible to create virtual workplaces and conduct transactions all over the world. It's so easy to start a business today that more and more people are doing it.

And as more women make inroads into entrepreneurship, they pave the way for those behind them to gain easier access to bank loans, angel investments, venture capital and other sources of financing for emerging and growing businesses.

Are You Ready?

What does it take to be an entrepreneur? As assistant state director of Maine's eight Small Business Development Centers, John Entwistle at the University of Maine has addressed this question quite a bit in recent years because of layoffs in the thousands at paper mills and high-tech firms. With no real employment opportunities in sight, hundreds of unemployed workers have come to SBDC offices to explore the idea of starting their own businesses.

"What I look for initially," Entwistle says, "and what I consider a primary indicator of success in starting a new business, is that people start off in an arena they're familiar with. That means it has something to do with their prior work experience."

For instance, if you worked in a billing department before, it may make sense for you to start a billing company. If you worked in a marketing department, it would be logical for you to start a marketing consulting firm.

"Having worked in that arena and had that experience, they're more likely to be able to identify opportunities that might exist and may know better how to take advantage of those opportunities. They also know the structure of the industry, who the players are, what the costs of operation are, who the suppliers are. That's very important."

If that's not an option, Entwistle says, then look for an industry that sparks your interest.

"With all the effort and sacrifice required in starting a business, people are unlikely to stick with it unless they have a passion for what they're doing," he says. "We look for that fire in the belly, that thing that is going to carry them through the difficult times they're bound to encounter."

Difficult times? Yes, Entwistle says. Make sure you enter entrepreneurship with realistic expectations. Don't consider self-employment as a last resort because you've been laid off. You won't be happy unless you go into business ownership for positive reasons.

"People come in with a few goals in mind," he says. "They want to be their own boss, they don't want to work for somebody else. They want to have control over the hours they spend. They want to have the upside of the lack of a ceiling in terms of compensation. I counter those thoughts by pointing out that you may be exchanging one boss for many bosses in that your customers, your vendors, your suppliers all become people who demand things from you.

"Typically the hours an individual puts in are 20 or 30 percent more than one might work in a 40-hour-a-week job. People who are self-employed generally put in 50, 60 and sometimes 70 hours a week. There is the downside of often not being able to pay yourself at the rate you're accustomed to being paid, not being able to take advantage of fringe benefits and health insurance. Often there's no safety net of unemployment insurance because you're not paying into the system if you're working for yourself. The downside is substantial.

"What I do look for people to say is, 'Well, this is something I've always wanted to do,'" Entwistle says. "Those words suggest the fire in the belly."

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