A recent study (PDF) by Jennifer Merluzzi, Tulane University, A.B. Freeman School of Business and Ronald S. Burt, University of Chicago, Booth School of Business tried to determine why women choose to be entrepreneurs. They wanted to know what paths women took to get there. They found three:
- Full-time entrepreneurs who remain entrepreneurs after first entry
- Full-time entrepreneurs who left to be an employee, then returned to full-time entrepreneurship
- Women who continued in a full-time job as an employee while pursuing their ventures.
They also studied the reasons women gave for pursuing entrepreneurship versus a corporate career, and compared the relative happiness of female entrepreneurs to women who held management positions in corporations.
Why do women become entrepreneurs?
They found that “while exceptions exist, a more common conclusion is that female entrepreneurship has either become the newest way for women to escape workplace discrimination or, that women are largely selecting into an entrepreneurship career path as a way to achieve work-life balance and flexibility.”
Average age and income
They asked female entrepreneurs their ages as well as their income and found: “On average, the women were 34.2 years old when they began their first entrepreneurial activity, and in their best year employed 6.7 full-time people including themselves with a gross income of $322,000. The negligible test statistics show that activities vary as much within, as between, the six business categories. There are within each category women who had dramatically successful ventures of many employees and a large income, and women whose best year was negligible.”
“More often, the ventures involved no more than the entrepreneur (61% “just self”), but these independents varied in gross income during their best year from some losing money, to one woman earning $500,000. Employees are no guarantee of income. Entrepreneurs with employees other than themselves had from two to 600 full-time employees, and earned from $2,000 to $14 million of gross income during their best year.”
Types of businesses
They found that “almost all of the entrepreneurial activities are services. The manufacturing ventures are varied, including a Massachusetts company that produces golf apparel (Avid Diva), a printing business in Ohio (Print All), a vineyard in Virginia (Abingdom Vineyard &Winery), a gourmet pet-food company in Illinois (Thompson’s Pet Pasta), and a confectioner in California (Robin Rose Ice Cream & Chocolate). Variation notwithstanding, rarity is the most conspicuous feature of the manufacturing. Of the 213 involved in entrepreneurship, only eight are in manufacturing.”
“Entrepreneurs came from all industries, but there are concentrations from management consulting, other consulting (especially accounting), and education.”
Does being married, having children, or getting a divorce make a difference in choosing entrepreneurship? Not necessarily, but it can. The study revealed that “Over the course of their lives, entrepreneurs and non-entrepreneurs are equally likely to be married, have children, get divorced, or re-marry. However, as a woman goes through one of these events, the odds of her becoming an entrepreneur go up.”
What about the trade-offs?
“With respect to trade-offs made for success, senior managers felt that they had given up
personal time, a balanced life, and meaningful relationships. These are all at the bottom of the
list for entrepreneurs. Entrepreneurial work is inherently personal time and meaningful
relationships are the substance of their work, at the top of the entrepreneur’s list of what it
means to be successful.”
“What bothers entrepreneurs is the stress of their work: entrepreneurial work is fulfilling, but stressful. Entrepreneurs cite happiness and emotional calm as the things they trade for success, which is interesting because they report the highest levels of satisfaction with their work.”
One thing is clear. While this studies’ focus was the path women took to entrepreneurship, it also revealed how far women have come since the days when women entrepreneurs had few choices. “Avon® Calling” was just the beginning.
Until later …