Why the right contacts can make all the difference for women entrepreneurs
I
n an age when women around the world are
increasingly gaining access to the same career
opportunities as men, it is no surprise that we
are also seeing a rise in the number of women
entrepreneurs.
Women have become important drivers of economic
growth as we see the number of new female-led
entrepreneurial ventures across the world increase.
Yet despite the rise in the number of women-owned
enterprises, they tend to under-perform in a number of
areas, such as revenue, profit and
growth, when compared to maleowned businesses.
Women Entrepreneurs
by Dr Muhammad Azam Roomi, Senior Lecturer in Entrepreneurship and Business
Growth and Director of the MSc Management and Entrepreneurship
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Management Focus
Women entrepreneurs often make the mistake of
employing personal contacts, such as relatives or friends,
who can be hugely influential on their decision-making,
but who often lead them to make bad decisions for their
business. Becoming reliant on a small network of people
you know can be fatal for a business. Surrounding
yourself with the right people and resources is crucial in
order to grow.
However, I have found from my
research that one of the main
reasons women entrepreneurs struggle is because all too
often they embark upon their entrepreneurial journey with
a lack of social capital (key contacts and networks).
Social capital is critical for
entrepreneurs but it is important to
understand that the concept of social
capital is more than just ‘networking’.
It involves identifying key players
who can provide access to
resources or provide valued advice
and developing relationships with
them. Social capital includes the
resources available through personal
and business networks, including
ideas, advice, leads, business
opportunities, financial capital
and emotional support. A key way that social capital
is acquired is through networking because successful
networking is all about building and maintaining solid,
professional relationships.
One of my recent studies of women-owned enterprises
in the UK confirmed that women entrepreneurs with
higher social capital showed significant growth in terms
of revenue, and profit compared to those with less.
The results of the study confirm a need for women
entrepreneurs to focus on building and using the right
Women-only networks can play an important role in the
early stages of small enterprises; but you must be open
to all networks. Interaction with experienced business
owners from all sectors and demographics is important,
especially during the early stage of a business and
through growth phases.
There are many theories for this,
including the different approaches to
business that women take and the
fact that female-owned businesses
tend to be concentrated in lower
margin sectors such as retail or
service.
Why the right contacts
can make all the difference for
social capital if they want their business to be a success.
Social capital
should be carefully
built and nurtured
over time.
Management Focus
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Why the right contacts can make all the difference for women entrepreneurs
Those entrepreneurs who believe they can
get along without social capital are mistaken.
Women entrepreneurs must look beyond local, regional
and professional networks and look strategically at
which groups they should nurture in order to build their
social capital. Joining mixed-networks adds value to the
creation of social capital for those providing services or
products to clients irrespective of gender. Similarly, for
women entrepreneurs running enterprises in the hightech and manufacturing sectors, connecting social capital
is more crucial in the growth stages.
Social capital is not a ‘wonder drug’ or miracle for curing
all the problems faced by women entrepreneurs; however,
it can act as a catalyst to facilitate and accelerate the
growth process leading to success for their business.
The following are recommendations for entrepreneurs
looking to develop and use social capital:
Developing Social Capital
—— Before you start attending networking events, identify
what skills you already have, and the areas you need
to build on. Once you have identified your strengths
and weaknesses, you can select the most suitable
networking groups for you. Remember social capital
should be carefully built and nurtured over time.
—— Never put all your eggs in one basket. Connect
with sources from a range of different backgrounds.
You never know ‘who knows who’ in the world of
business.
—— As well as formal networks, informal groups such
as the health club, the gym, or the school governing
board can be very valuable. Look outside the sector
or industry you are in, explore different groups, make
new contacts, and mix old and new groups. It will
pay off in the long run.
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Maintaining Social Capital
—— Invest time, energy and resources to maintain your
social capital. Maintaining existing social capital
improves the chances of using it more effectively and
efficiently when you need it.
—— Maintain your contacts without the expectation
of always benefiting from them. Don’t start out by
talking about what you need. Listen to them to see
what they may have to offer and also what you can
offer them.
—— Always honour your word. People trust you if you
fulfil your commitments.
Using Social Capital
—— Word of mouth is the best way of marketing your
business, especially in the services and trading
sectors. If a contact is happy with your service, ask
them to recommend you. Advertising increases
awareness of products and services but personal
referrals and recommendations lead to actual
decisions to purchase them.
—— Keep building your social capital, you never know
when you might need it! If you build the right
networks then you will have a wealth of resources to
call upon as and when you need to.
Those entrepreneurs who believe they can get along
without social capital are mistaken and are setting
themselves up for failure. Don’t wait until you actually
need something, start building your social capital now
and continue to do so for as long as you are in business. MF
Management Focus
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