What's Behind the Surge in Women Entrepreneurs
A talk with Ernst & Young's Gregory Ericksen, author of Women Entrepreneurs Only
America is experiencing an explosion in women-owned businesses. The number of women entrepreneurs is increasing at twice the national average, and women-run businesses employing more than 100 persons are increasing at six times the national average, says Ernst & Young's Gregory Ericksen, National Director of Entrepreneurial Services, in his new book, Women Entrepreneurs Only. What has caused this explosive growth? Joanna Smith Bers recently sat down with Ericksen in New York to discuss this surge of estrogen into the once male bastion of entrepreneurialism.
Q: Let's be candid here, you're a man. Where do you get off writing a book about the woman entrepreneur?
A: We kicked that around when we thought about the concept for the book. But at the end of the day, most people in our organization felt that because of my role as chairman of the Entrepreneur of the Year Institute and the fact that my primary responsibility in writing the book was telling the stories of successful entrepreneurs, I should write it. And the fact that I wasn't female wasn't as significant as that I was closest to the stories and the people.
Q: So why are we seeing such a "startling" influx of women into the entrepreneurial community, and what accounts for the success they've found there?
A: This development appears to have started in the early '90s. It has been seven years since a lot of the women-owned businesses started, and we're just starting to see them blossom now. We're just at the very beginning of the expansion of women-owned businesses in America. There are 9 million women-owned businesses today. They'll represent 50 percent of all businesses by 2005. And why is that? The environment is shaping up to be very accommodating to the strengths of women-owned businesses. By that I mean the skills that are required to communicate, to create networks -- not hierarchies -- that are very powerful. Not only can women lead a team but they can also be part of a team with employees. They understand the nurturing that that takes because they understand that every person has their own individual needs that have to be dealt with. All those issues, because they're becoming more important to the success of any company, are playing to the strengths of women-owned businesses.
Q: How does "nurturing" translate into business success?
A: In the "one-on-one economy," you have to understand the unique needs of the customer you're working with to be successful. Mass manufacturing, mass marketing doesn't play out any more. Even mass customization doesn't play out anymore. But customization on demand does. And that takes an entrepreneur who can sense what the customer wants and how that's different from other customers. An example is Ruth Fertel, of Ruth's Chris Steak House. She had a customer who came in to her restaurant who had had surgery on his gums and teeth. He couldn't chew the steak. So when he came in to the restaurant, she would chop up his steak [into little pieces] and then put them back in steak form. That way when he was with guests, he could sit there and eat his steak and not be embarrassed. She created a very loyal customer because she was tuned in to the needs of her customers.
In a high-tech, high-touch world, the high-touch element is becoming more and more important. And that is playing into the strengths of the woman entrepreneur.
Q: OK, so what you characterize as female leadership qualities are necessary ingredients for success in today's entrepreneurial landscape. But what is driving women from corporate careers -- or at least steady nine-to-five jobs -- into entrepreneurship?
A: The whole issue of work-life balance continues to be a theme that the most successful women entrepreneurs have dealt with. Part of that may be because that's why they started their companies and the way they set up their businesses. They wanted to make sure that work-family issues were dealt with up front, so they created a model around that, one that is very desirable for any gender.
Q: What's the model?
A: It's a model of sharing with employees, understanding that the people who contributed to your success have to be paid attention to, that family issues are important -- they do affect the work environment, and they have to be dealt with.
Q: Do you think such supportive efforts will become a driving force in all businesses?
A: I think this is really a foreshadowing of the way you'll see most companies operate. And I think it's a necessity to deal with the important issues that your employees have, which is dealing with their families and the relationships that they have. It's creating the teamwork. It's getting people motivated and engaged. We live in an environment where there is a shortage of talent, so it's a pretty important model to have.
Q: By your analysis, women seem to have the upper hand going forward. What are the challenges that remain for them?
A: Financing. I've never seen money hold back a good entrepreneur. There is money out there, ultimately. But the one thing you don't see is women accessing the capital markets. In some cases, the types of businesses they have don't demand the large dollars or offer the rapid growth [that the mostly male E-commerce companies promise]. Women tend to run service-intensive businesses, which require less equity financing. We'll see more women involved in public markets and venture capital as they see other women establish themselves in this environment.
The greatest issue that businesses face going forward is being able to attract talent. And with the business models that we see being created with women entrepreneurs, they actually have a leg up.