Female entrepreneurship: the post-pandemic landscape - Brought to you by NatWest

Thursday, 18 February 2021

They faced tough circumstances when building a business before coronavirus, but has the coronavirus pandemic created a perfect storm for female business leaders?

 

Even before the Covid-19 pandemic, female founders faced tougher circumstances when building a business. But with lockdown disproportionately impacting traditionally female-led sectors, mothers and carers taking on childcare and homeschooling, and a lack of investment money to fall back on, many entrepreneurial women have debated whether or not to shut up shop entirely.

 

Juggling homeschooling two primary-age children, looking after a toddler, and running her events business has made for an “intense” 11 months for Deby Rainnie. “There’s no transition time from mum mode to work mode, no break from my girls to clear my head before making an important work call,” says the Lothian-based entrepreneur, who founded the Bonnie Bairn event in 2016. “I’m often up until 2am getting through my work. My husband’s amazing, but he works away quietly in his office with no interruptions.”

 

Even before the pandemic, the odds were seemingly stacked against female-led start-ups. Bank CEO Alison Rose’s 2019 Rose Review of Female Entrepreneurship estimated that up to £250bn could be added to the UK economy if women started and scaled new businesses at the same rate as men. However, only 5.6% of women do run their own businesses, and access to funding, risk awareness, primary care responsibilities and perception of skills were among the barriers to female entrepreneurs, the review found. Despite these challenges, women are just as successful at sustaining a business as men, once they are established. Female-led businesses currently contribute £105bn to the UK economy each year.

 

A (gender) gap in support

 

“There’s great inequality around how female and male businesses perform. It’s not Covid-19 that created this inequality, but it has made those existing inequalities even worse,” says Dr Natasha Mwila, senior lecturer at De Montfort University’s Leicester Castle Business School

 

Dr Mwila has been looking into the impact of the pandemic on female founders, and says the shift to homeworking in particular

has “influenced this perception that [women are] indefinitely available for domestic work, which is taking time away from enterprise activity”.

 

“It’s not Covid-19 that created this inequality, but it has made those existing inequalities even worse”Dr Natasha Mwila, senior lecturer, De Montfort University Leicester Castle Business School

In a survey of almost 20,000 women, the campaign group Pregnant Then Screwed discovered 74% of self-employed mothers have had their earning potential reduced because of a lack of access to childcare.

 

Lockdown has also disproportionately impacted sectors such as hospitality, health and beauty, the arts and retail, which tend to be female led. Europe-wide research in August 2020 found 23% of women-owned businesses were still closed following the first lockdown, compared to 14% of firms owned by men. That’s already affected Rainnie, who is holding her first virtual pregnancy and baby show in March. “A lot of our exhibitors have shut up shop – there are dance schools, swim schools, and childcare providers that no longer exist,” she says. “It’s heartbreaking.”

 

The International Monetary Fund (IMF) predicts the pandemic could roll back 30 years of economic progress for women if action is not taken. There has been criticism that existing government support packages overlook the inequalities women currently face. The Self-Employed Income Support Scheme (SEISS), for example, is based on a percentage of average earnings in recent tax years, without accounting for periods of maternity leave. The Future Fund, which is now closed to new applicants, was only accessible to firms that had already received equity investment of at least £250,000 in the past five years, despite the fact that women still receive less than 1p in every £1 of venture capitalist funding in the UK, according to a report for the Treasury. And Dr Mwila observes that female founders may not have the formal documentation to prove their “viability” before applying for a “bounce back loan”, or have the confidence to call themselves entrepreneurs.

 

Courage in the face of adversity

 

In Northern Ireland, solo entrepreneur, author and business coach Ava Brown thought she had an investor lined up for her skin and haircare brand, The Mango Girl. “They loved our product, we went through the whole process, then they decided they were only investing in technology companies at the moment,” she says. The pandemic hit just as Brown was in negotiations with a major retailer, which subsequently backed out. “It’s been family, friends and a shoestring, but I’m a fighter and I’m hopeful,” she says about surviving over the past year. Brown is now back in the lab, developing a new line of products around homeschooling her nine-year-old son, and is in talks with a number of new potential partners.

 

Like Rainnie, Screen With Envy founder Sophie Birkert, also has three young children. She started her garden screen business in 2017 when she decided her then career in finance wasn’t compatible with family life. She’s worked around her kids at home before, but the past year has been a challenge. “The homeschooling element has almost killed me,” she says. “You can’t run a school and run a business. I think there have been massively unrealistic expectations placed on women.”

 

Against the odds, Screen With Envy’s annual sales actually tripled in 2020, and Birkert grew her team to 30. When the orders from landscapers, hotels and hospitality clients dried up, she took advantage of the DIY boom by focusing on lower-cost garden screens and trellises that customers could install themselves. She’s changed distribution channels, added a chatbot to the website, and staff are providing design advice directly to the end customer while the business’s showrooms in London and Buckinghamshire remain closed. “It’s helped us to be much closer to our customers,” Birkert says. “It’s pushed us to be bold and forced us to be better. And we’re still here, so I view that as a success.”

 

Rebuilding, fairly

 

As well as heartbreak, the pandemic has also been full of inspiring stories of female founders succeeding against the odds says Sarah King, co-founder of We Are Radikl, an online community and growth accelerator for female founders. “The first six months was all crisis management,” says King of 2020. “But we’ve seen some real innovation come through in the second half of the year.”

 

Figures from female networking club AllBright show one in four women are now considering starting their own business (up from one in eight in 2019). “There’s a real opportunity here to support those women in the early stages of their start-up journey so we can fuel their confidence,” King adds.

 

She believes one initiative that would have a real impact is an extension of the Seed Enterprise Investment Fund (SEIS), which has to be taken within the first two years of trading. “If you’re a woman founder, you’re more likely to be juggling childcare responsibilities,” King explains. “Actually getting to the point where you’ll seek angel investment can take a bit longer. It’s not to say your business model isn’t as good or you’re a riskier investment.”

 

Thus would align with one of Alison Rose’s recommendations to increase the funding directed towards female founders and help them to scale faster in the longer term. That targeted support will be key to any post-pandemic recovery, Rose explained in January as the bank launched an additional £1bn funding to support female-led businesses. “If women find themselves at even more of a professional disadvantage on the other side of this crisis, then we’ll be attempting to build an economic recovery whilst ignoring a huge area of potential,” she said.