Chapter 7. Women’s entrepreneurship in Canada
This chapter assesses policies to promote entrepreneurship and small business development by women in Canada. It presents evidence on gender differences in the scale and nature of business start-up and small business ownership and on differences in previous management experience, access to markets and access to finance. It also assesses existing policies aimed at overcoming barriers to women’s entrepreneurship. It covers the measures to improve the institutional context, enterprise financing, business internationalisation, supplier diversity, and management skills, to offer awareness-raising for entrepreneurship as an option for women and to offer mentoring for women entrepreneurs. It also examines the co-ordination of women’s enterprise support policies across different providers. The chapter points both to significant gender gaps in entrepreneurship activity in Canada and active federal government policies to reduce the gaps.
The performance of women’s entrepreneurship and women-owned businesses in Canada
Entrepreneurship and business ownership
According to the Global Entrepreneurship Monitor (GEM), both the male (16%) and female (10%) Total early-stage Entrepreneurial Activity (TEA) rates are comparatively high in Canada. Canadian women’s GEM TEA rate ranks in the top ten among similar innovation-driven economies.1 At the same time, the female TEA rate was only two-thirds of the male TEA rate in 2014 (Figure 7.1), notwithstanding the progress made since 2003 when the female TEA rate was only one-half of the male TEA rate (Langford and Josty, 2015).
Note: This graph is also shown in Figure 1.9.
Source: OECD based on data supplied by the Global Entrepreneurship Monitor (GEM) research consortium.
Most women’s entrepreneurship in Canada is opportunity-driven, although there are minor gender gaps in this dimension, too, with 19% of early-stage women entrepreneurs who are necessity-driven (i.e. driven into entrepreneurship by lack of paid employment) compared with only 14% of early-stage male entrepreneurs. Canadian women in early stage entrepreneurial activity are also far less likely than men to believe they have the skills to succeed, but more likely to report that fears of failure would prevent them from setting out a business (Hughes, 2015a).
In the 2000s, similarly to most other Organisation for Economic Co-operation and Development (OECD) countries, self-employment rates have dropped in Canada, notably from 10.6% in 2000 to 9.2% in 2010, and 8.8% in 2013. However, Canada’s male self-employment rate declined more sharply than Canada’s female self-employment rate. The male rate dropped from 11.8% in 2000, to 10.2% in 2010, to 9.5% in 2013, whereas the female rate dropped from 9.2% in 2000 to 8.1% in 2010, where it has since then stabilised (OECD, 2012; OECD 2015).
On the other hand, while women have been entering self-employment at a higher rate than men in the last thirteen years for which data are available, fewer of them incorporate (31.3% of women vs. 50% of men) or use paid help (22.3% of women vs. 35% of men), which means self-employed women often lack scale in their business (Canada Works, 2014).
Moreover, majority female-owned small and medium-sized enterprises (SMEs) comprise only a small proportion of total Canadian SMEs (Table 7.1).2 In 2011, majority female-owned SMEs accounted for only 15.5% of the total, while equal-ownership SMEs were 18.1% of the total. Two-thirds of SMEs in Canada were therefore majority male-owned. Majority female-owned SMEs also tended to be smaller than majority male-owned SMEs (Table 7.2). In 2011, nearly 60% of majority women-owned SMEs were micro-enterprises employing less than 5 people, while the proportion of sizeable companies with between 20‐99 employees was nearly twice larger among majority male-owned businesses (12.3%) than among majority female-owned businesses (6.8%), although this last proportion more than doubled since 2007 (3.1%). Finally, majority female-owned SMEs tended to report lower growth rates in annual revenues than their male counterparts (Table 7.3).
While there are therefore evident gender gaps in entrepreneurship activity and performance in Canada, it should be borne in mind that women can deliberately choose to keep their ventures small, for example for family-related reasons, and this can explain some of the gender variation in business performance (Orser and Hogarth-Scott, 2002).
There are also relevant provincial differences in women’s entrepreneurial activity and business ownership (Hughes, 2015a).3 Women’s early-stage entrepreneurial activity (i.e. the GEM TEA rate) is above the Canadian average in the provinces of Alberta and British Colombia, whereas it is below the average in Ontario, Quebec and Nova Scotia. With respect to women’s established business ownership rate, Alberta shows a particularly strong performance both in the absolute rate and in the relative narrowness of the gender gap in this rate, which is as small as one percentage point.
Management experience
Female SME owners tend to have less managerial experience than male SME owners. The proportion of managers in majority female-owned SMEs with managerial experience of less than five years was around double (8%) that of other SME owners in 2011. By the same token, only 68% of owners in majority female-owned SMEs had managerial or ownership experience of over 10 years, compared with 79% in majority male-owned SMEs.
On the other hand, a larger proportion of owners in majority female-owned SMEs had postgraduate qualifications (18%), compared with majority male-owned SMEs (12%), while only 7% of owners in majority female-owned SMEs had less than a high school diploma (10% in male-owned SMEs).
Access to markets
Slightly more than one-fifth of Canadian majority female-owned SMEs were found in the retail trade sector in 2011 (21.4%), compared with only 11.7% of majority male-owned firms. Overall, service industries accounted for 62.5% of majority female-owned SMEs in 2011. Women were also under-represented in high-tech manufacturing and knowledge-intensive sectors, where growth opportunities tend to be stronger and where most business leaders have university degrees in sciences and engineering (Institute for Competitiveness and Prosperity, 2012). This is partly linked to women being under-represented in science, technology, engineering and mathematics (STEM) qualifications. In 2011, for example, only 39% of people aged 25-34 with a university degree in STEM fields were women, compared with 59% in all fields (Hango, 2011).
Canadian women entrepreneurs are also less likely to operate in international markets (Orser et al., 2010). Only 5% of majority female-owned SMEs exported in 2011, compared to 12% of majority male-owned SMEs. The prevalence of women in service industries is likely to contribute to the low export propensity of women-owned businesses. Furthermore, compared with majority male-owned SMEs, majority female-owned SMEs anticipated lower growth prospects and reported higher expectations of declining or no growth for the upcoming three years, 2012-14.
Access to finance
In 2011, a smaller percentage of Canadian majority female-owned SMEs (29.3%) sought external finance (including debt, leasing, trade credit and equity financing) than majority male-owned SMEs (37.5%). In particular, only 19.9% of majority female-owned SMEs sought debt finance compared with 26.5% of majority male-owned SMEs, while the loan approval rate (i.e. the ratio of the amount of authorised debt finance to the amount requested) was significantly lower for majority female-owned SMEs than for majority male-owned SMEs. Significantly, much larger proportions of majority female-owned SMEs had loans rejected because of insufficient collateral (66.6% vs. 35.7%) or because of the operating industry (65.7% vs. 24.8%). Finally, a greater share of majority female-owned SMEs (4.2% vs. 2.7%) was discouraged from seeking external loans, on the assumption that their application would be rejected (i.e. discouraged borrowers).
A recent analysis by the government department Innovation Science and Economic Development Canada (ISED) reveals that female entrepreneurs are more likely than male entrepreneurs to be discouraged borrowers and to have their loan requests rejected, although this mainly reflects women’s insufficient collateral and operating industry (ISED, 2015). Similarly, an older study finds that women, the youth and Aboriginal people are less likely to be served by commercial banks due to the prevailing industries in which they operate (Heidrick and Nicol, 2002).
Among Canadian business owners with growth intentions, women are more likely than men to consider sharing equity to raise capital for business growth (Jung, 2010). However, women are typically underrepresented in industry sectors that attract venture capital. Furthermore, the venture capital industry in Canada is male-dominated, and this makes it complicated for women to obtain venture and angel equity funding (Brush et al., 2004).
Women’s entrepreneurship policies in Canada
The institutional context
Recent federal policies in support of women’s entrepreneurship include measures to encourage mentorship and championing (i.e. the “It Starts with One – Be Her Champion” campaign), foster networking (i.e. an online platform to bring together women entrepreneurs), enhance access to international markets through trade missions (i.e. the Business Women in International Trade Program), and improve access to finance (i.e. CAD 700 million in additional lending by the Business Development Bank of Canada over three years since 2015). These measures all respond to the Recommendation of the OECD Council on Gender Equality in Education, Employment and Entrepreneurship adopted in May 2013 (OECD, 2013).
Women’s entrepreneurship policy in Canada sees the active involvement of women’s enterprise organisations. These are not-for-profit locally-based organisations that offer programmes and direct services to women entrepreneurs. They often receive public funding from federal and provincial/territorial governments for some of the activities they carry out. Women’s enterprise organisations are an important asset in Canada’s women’s entrepreneurship policy thanks to the context-specific knowledge and expertise they have matured over years of work on support of women entrepreneurs.
Some Canadian women’s enterprise organisations are part of the umbrella association Women’s Enterprise Organizations of Canada (WEOC), namely: Newfoundland and Labrador Organization of Women Entrepreneurs (NLOWE), the Réseau des Femmes d’affaires du Québec, the Women’s Enterprise Centre of Manitoba (WECM), Women Entrepreneurs of Saskatchewan Inc. (WES), Alberta Women Entrepreneurs (AWE), and the Women’s Enterprise Centre of British Columbia (WEC British Columbia). However WEOC is not completely representative at the national level, especially in Ontario and Atlantic Canada where several women’s entrepreneurship organisations are not members. Support of women’s entrepreneurship is also uneven across regions, being stronger in Western and Atlantic provinces than, for example, in Ontario.
In 1995, Western Economic Diversification Canada (WD) established the Women’s Enterprise Initiative (WEI), based on research and consultations that identified significant barriers faced by women entrepreneurs in Canada, and in recognition of the increasingly important role that women play in small business growth. This created women’s enterprise organisations (AWE, WEC British Columbia, WECM, and WES) in each of the four western provinces (Alberta, British Columbia, Manitoba and Saskatchewan) to provide information and services to women entrepreneurs. These organisations receive ongoing funding from WD to offer advisory services, training, networking opportunities, business loans and referrals to complementary services that are tailored to women entrepreneurs.
An internal evaluation of WEI points to favourable results. WEI organisations created 5.3 jobs for each loan disbursed over 2008-12. This compares with 2.5 jobs per loan created by ISED’s Canada Small Business Financing Program (i.e. the federal loan guarantee scheme) and 3.6 jobs per loan under the Community Futures Program. Clients of WEI also estimated that 44% of their existing revenues would not have been generated without aid from the programme (Western Economic Diversification Canada, 2014).
The experience of the Women’s Enterprise Centre of Manitoba (WECM), the first location of the Women’s Enterprise Initiative, is briefly presented in Box 7.1.
The Women’s Enterprise Centre of Manitoba (WECM) was the first location of the Women’s Enterprise Initiative, opening its doors in Winnipeg in 1994. The programme is based on three major supports for women entrepreneurs: training, advice and lending. Since inception, the loans have been one of the most successful aspects of the initiative, lending out approximately CAD 25 million. With terms up to five years, loans are available in any amount up to CAD 150 000 and can be used for start-up, expansion or the purchase of an existing business. The Centre is considered to be a higher risk lender than most financial institutions.
Over the course of its existence, the WECM team has developed a variety of training options. The services are delivered in both the Centre’s Downtown Winnipeg office and in various locations throughout Manitoba. The six-part Business Plan Development Workshop Series is a proprietary, licensed curriculum that has provided the foundation for many successful business start-ups.
One of the specialised programmes developed by WECM is “My Gold Mine”. The programme consists of a comprehensive financial template and in-depth, one-on-one coaching using the entrepreneur’s own financial information to create a diagnostic analysis of the business. The programme has been applied to a variety of industries and to businesses at different stages of growth.
Source: Women’s Enterprise Centre of Manitoba, www.wecm.ca.
The federal RDA Atlantic Canada Opportunities Agency (ACOA) also actively supports women’s enterprise organisations located in the Atlantic Provinces – namely NLOWE, the Centre for Women in Business (Nova Scotia) and the Prince Edward Island Business Women’s Association – through the Women in Business Initiative. In addition, ACOA fosters women’s entrepreneurship through some of its regular programmes, such as the Business Development Program and the Atlantic Innovation Fund.
Finally, the institutional context of women’s entrepreneurship policy in Canada also includes other representative women’s organisations. There are, for example, not-for-profit organisations which represent Aboriginal women. The Native Women’s Association of Canada (NWAC), which is an aggregate of thirteen organisations from across Canada, received in 2014 federal funding from Indigenous and Northern Affairs Canada (INAC) to develop the Aboriginal Women’s Business Entrepreneurship Network (AWBEN) with the aim to “connect, strengthen and give a voice to Canada’s Aboriginal women entrepreneurs’ community”. Industry-specific networks are also working to increase women’s representation in non‐traditional women’s fields, such as Canadian Construction Women and Women in Communications Technology.
Enterprise financing policies
The Business Development Bank of Canada (BDC) has earmarked an additional CAD 700 million over 3 years for women-owned businesses. This financial support will cover both working capital loans and investment loans and will allow for 300-400 additional loans to majority-owned women’s businesses seeking financing over the period of the intervention. As part of its renewed focus on women-owned business, BDC will also aim to increase the share of its specialised financing (e.g. Growth and Transition Capital Offering and Venture Capital) and consulting services accessed by female entrepreneurs and has designated “a national champion” to lead and progress initiatives that positively impact on women-owned businesses (OECD, 2015).
While these are all positive developments, there are some further changes which could help the BDC play a stronger role in support of women entrepreneurs. First, BDC could make women-owned small businesses an explicit target of its policies, for example through specific new programmes or by setting aside minimum quotas for women clients in existing programmes. Second, women entrepreneurs could be offered an integrated package of financial and non-financial products and services, based on evaluation evidence that BDC clients who use both consulting and financial services show superior performance in sales, employment and productivity performance than those who only use one of the two (see Chapter 5). Third, BDC could collect and analyse gender-disaggregated data more often; for example, the recent impact analysis of BDC’s lending and consulting activities did not break down the analysis by the gender of the business owner (BDC, 2013). This would have helped understand the extent to which women receive support from the BDC and whether women clients are more or less successful than male clients. Finally, the BDC could expand its institutional partnerships, which at the moment include the non-governmental organisation Futurpreneur Canada (youth entrepreneurship) and hundreds of Community Futures Development Corporations (rural development), to include women’s enterprise organisations that play a key role in the delivery of public support for women entrepreneurs.
Beyond the work of BDC, there is also scope to increase the provision of microfinance in Canada. It has been observed that more female business owners than male business owners are discouraged borrowers and see loan applications rejected. In some sectors, such as retail trade, small financing requirements could be met through the tools of microfinance. In Canada, the peer lending circles promoted by the PARO Centre are a good micro-lending practice (see Box 7.2).
PARO is a not-for-profit, grassroots women’s community development organisation that fosters business development among women and people with disabilities. Founded in 1995 as a small peer-lending project for enterprising women, over 20 years it has grown its reach and services to help approximately 10 000 women “to start or grow businesses, through training, counselling, access to grants/loans, marketing and mentoring” (PARO Centre, 2015).
PARO is involved in a number of programmes, although it is best known for catering to the networking and microfinance needs of female micro enterprises through the PARO Peer Circles. Through this scheme PARO encourages 4-7 like-minded enterprising women to form a group which meets regularly, shares experience, supports each other and expands networks. Members of the circle also provide access to microfinance with peer loans ranging from CAD 500 to CAD 5 000. Women in peer circles may find a peer loan more suited to their needs for a variety of reasons, such as a poor credit history, lack of trust of mainstream lenders like banks, need for a loan that is too small for banks to consider, or lack of acceptable collateral. PARO also conducts peer circle lending workshops, so that women can learn how to form their own group.
Other initiatives include PARO on Wheels, a mobile business advisory service that offers business-coaching, employment advice and training services to women close to home; Biz Clusters, which supports businesses to work together to build their competitive advantage through reduction in production costs or taking on large procurement contracts; and SENO’s Co-Starter, which is an accelerator for social enterprises run in partnership with Social Enterprise Northern Ontario (SENO).
The Minister of Innovation, Science and Economic Development recently announced a FedNor investment of CAD 2 million in the PARO Centre of Women’s Enterprise for their Women’s Enterprise Initiative project which focuses on activities under the three pillars of: Industry Growth; Financing Growth; Productivity, Profitability, and Procurement. The project activities would provide enhanced skill development, training, counselling, and access to information and resources to help women throughout Northern Ontario develop innovative growth businesses, improve productivity, and increase competitiveness.
Source: PARO Centre for Women’s Enterprise Website http://paro.ca/2013/; Paro Centre (2015) Paro at a Glance 2013-14. http://paro.ca/2013/files/6214/2852/4815/PARO_AGR_2014-ENG-web.pdf (accessed 31 August 2015); Northern Women in Business Report, July 1‐September 30, 2013.
Dedicated microloan funds which also provide mentoring services are another approach that could help women entrepreneurs unlikely to approach banks and who only need small sums of external finance. This group could include Aboriginal women, which is a significant target group considering that the number of Aboriginal self-employed people has increased considerably in the 2000s (by 38% between 2001 and 2006) and that half (51%) of Aboriginal-owned SMEs are either fully or partly owned by women (CCAB 2014; TD Economics, 2012). Māori4 Women’s Development Inc., from New Zealand, illustrates the approach of a microloan fund that combines financial and mentoring services (Box 7.3).
Description
Māori Women’s Development Inc. (MWDI) “is a an indigenous financial institution formed by Māori women, controlled, managed and operated by Māori women, for the economic development of Māori Women and their Whanau; i.e. their extended family” (www.mwdi.co.nz/). MWDI was established in 1987. It currently extends finance and mentoring services with loans between NZD 30 000 and NZD 50 000. Māori women who wish to start or expand their business, as well as Māori men who wish to start or expand a business and have Māori women as part of their core business operation, are eligible to apply and must meet specified requirements, such as preparing a business plan and providing security which is of a flexible nature. MWDI may be described as a lender of last resort because its loans are only provided to applicants who can show that they have been unable to receive a loan from any other financial institutions.
More recently, MWDI has strengthened its capacity-building scope through a programme called He Oranga, which has a major focus on financial literacy and is built and delivered in partnership with the Financial Education and Research Centre (Fin-Ed Centre). MWDI also sponsors a secondary school programme called MaiBiz, that offers a three-day hands-on team based business experience for all students, not only Māori.
Factors for success
MWDI has received ongoing government funding. Over the period 2010-15 its government funding was budgeted at NZD 1 867 000 annually. Strong leadership and advocacy by Māori women and for Māori women has ensured its sustainability over more than twenty-five years. The ability to broker partnerships to progress capacity building in the community has enabled MWDI to widen its scope beyond being merely a micro-lending entity.
Obstacles and responses
Financial literacy and personal financial management shortcomings can be a major obstacle to business success in certain communities. As a result, MWDI partnered with the Fin-Ed Centre (i.e. a joint-venture between Massey University and Westpac Banking Corporation) to develop a pilot project (He Oranga) in which it trained 18 community workers in a northern region of the country as Personal Financial Literacy Facilitators able to teach and assess financial literacy in participants. The He Oranga training programme has also been regionally scaled through a tri-way partnership between MWDI, the Auckland City Council (local government) and Te Rūnanga o Ngāti Porou (i.e. the governing council, i.e. Rūnanga, of a Māori sub-tribe, i.e. hapu, in the region).
Lessons for Canada
Small, dedicated pools of funding together with mentoring services have the potential to go a long way in supporting particular sub-groups of women entrepreneurs. Widening the scope of the activities of micro-lending organisations to include capacity-building initiatives that recognise the special cultural needs of the community, understands the importance of developing basic financial literacy skills, and is based on a partnership model is an effective approach. Regional scaling of the He Oranga training programme, by including partnership with local government is a good example.
The 2009 Canadian Roundtable on Aboriginal Women and Economic Development also highlighted the need for financial literacy training for Aboriginal women. The He Oranga programme shows how this need can be addressed through a culturally sensitive partnership.
For further information
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MWDI website www.mwdi.co.nz/;
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“New MWDI course to boost Māori women in business”, available: http://mwwl.org.nz/new-mwdi-course-boost-maori-women-business/;
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Kaupapa whakaritenga – business criteria Available: www.mwdi.co.nz/wp-content/uploads/2013/02/BusinessCriteria1.pdf, accessed August 11, 2015.
There is also scope for further initiatives to support financial literacy and “investor readiness” among female entrepreneurs, including the promotion of equity capital for female high-growth potential entrepreneurs.
Finally, financial inclusion can also be strengthened by extending eligibility criteria in certain mainstream enterprise financing programmes. For example, certain target groups such as Aboriginal women entrepreneurs often run part-time businesses that are typically ineligible for public support (Diochon et al., 2014). Greater flexibility in eligibility criteria in public programmes could be justified if the social inclusion of certain target groups is a policy priority.
Business internationalisation policies
Internationalisation support for women entrepreneurs is strong in Canada and includes a number of initiatives at both the federal and provincial/territorial level. The main initiative is the Business Women in International Trade (BWIT) programme of Global Affairs Canada (GAC)’s Trade Commissioner’s Service (TCS). This programme provides targeted support to Canadian women entrepreneurs working in multiple sectors to pursue opportunities abroad and grow new international markets, including through business-to-business meetings and other matchmaking opportunities. Through these trade missions, Canadian women-owned firms gain heightened credibility through the on-the-ground support from the government of Canada and thereby easier access to the supply chains of leading international companies. BWIT has led several trade missions to the United States. There has also been a past mission to Brazil and future missions are planned to Mexico and possible to Europe.
In addition to trade missions, BWIT helps to assess the international trade readiness of women business owners, produces a variety of products and tools relevant to women in trade (e.g. a comprehensive website, blogs, and an annual newsletter), and works closely with the women’s enterprise organisations across Canada, supplier diversity certifiers and other government departments in attempt to better coordinate women specific programmes. For example, in 2014, BWIT partnered with ISED to launch a specialised directory for women-owned businesses within ISED’s Canadian Company Capabilities database. This database showcases products and services from over 50 000 Canadian businesses, attracts over 5 million visitors and procurement professionals annually from around the world, and has proved a valuable online marketing tool towards both a domestic and international audience. As part of the effort to increase the number of internationally active women-owned businesses, BWIT also engages in outreach efforts to increase awareness and understanding of its programme offering among women entrepreneurs.
Canadian business women are also well represented in GAC’s advisory boards, such as the national “Small and Medium-Sized Enterprises Advisory Board”, which provides advice and recommendations on commerce-related priorities, programmes and services of GAC in support of SMEs, and the Proactive Sector Advisory Boards, which provide advice on five key strategic sectors involved in international trade (e.g. Aerospace, Sustainable Technology, Information and Communications Technology, and Life Sciences).
The internationalisation of businesswomen is also supported at the provincial level. In March 2015, AWE, the women’s enterprise organisation of Alberta, received CAD 1.4 million of funding from the RDA Western Economic Diversification Canada (CAD 1.2 million) and the federal department Indigenous and Northern Affairs Canada (INAC) to help women-owned businesses across Western Canada to access new international markets (Government of Canada, 2015b). Similarly, NLOWE prepares local women entrepreneurs to access foreign markets and encourage supplier diversity in Newfoundland and Labrador (Box 7.4).
Newfoundland and Labrador Organization of Women Entrepreneurs (NLOWE) provides a one-on-one advisory service to women who want to grow their business. NLOWE’s Business Growth Advisors are based in four regions of the province and travel to meet businesswomen and provide them with business diagnostic assessment, business plan development, financial analysis, growth analysis, human resource strategy development, and management training assessment.
As part of its business growth initiatives, NLOWE runs export-readiness and supplier-diversity interventions. In the first case, free export consulting services are offered thanks to the support of the Provincial government. In the second case, NLOWE proactively encourages local corporations and the local government to use diverse suppliers, that is, more female-owned business suppliers within their procurement chains.
Source: www.nloweWBE.org/grow.
Supplier diversity initiatives
Improved access to corporate and government contracts are a highly valuable market opportunity for the growth of women-owned businesses. In Canada, institutional structures are already in place to facilitate this opportunity. There are certifying bodies to confirm that businesses are majority (at least 51%) owned and managed by women while providing programmes and services to enable supplier diversity, such as Women Business Enterprises Canada (i.e. WBE Canada) and Women’s Enterprise Connect International in Canada (WECI). These organisations have a strong presence in the domestic market and offer assistance in accessing international markets as well. The BWIT programme in the TCS also assists with connecting Canadian women entrepreneurs to supplier diversity opportunities in the United States and other markets, including through dedicated trade missions.
Canadian women’s enterprise organisations are also actively involved in supplier diversity. First, they are partners of the abovementioned certification assessors (WBE Canada and WECI) in their respective regions. Second, many of them run their own supplier diversity initiatives. The involvement of NLOWE in supplier diversity has been mentioned (Box 7.4). In addition, the WEC British Columbia manages Supplier Diversity Canada, an initiative which encourages Canadian businesses to implement supplier diversity strategies, while AWE has received funding from the RDA Western Economic Diversification Canada to undertake a supplier-diversity initiative which aims to expand the access of women-owned SMEs to global supply chains across all four western provinces (Alberta, British Columbia, Manitoba and Saskatchewan).
Despite these ongoing efforts, women-owned businesses are still much under-represented in public and private procurement contracts. Increased awareness and understanding of supplier diversity principles among government procurement officers and private-sector businesses could help build new market opportunities for this target group. In particular, supplier-diversity programmes in government procurement could send a strong signal about the commitment of the government to increase the share of public contracts assigned to women-owned businesses.
For instance, the Canadian government could follow the example of the United States, which has in place set-asides for women-owned businesses in federal public procurement. Other possible federal actions would include further support of the existing supplier-diversity initiatives across Canada or encouraging provinces and municipalities to establish their own set-asides in public procurement for majority women-owned businesses. This would be in line with the proposal by the WEB Alliance of Women Business Networks in British Columbia which has suggested allocating 5% of the volume of provincial procurement contracts for women-owned businesses (WEB Alliance, 2015). Finally, government buyers could be asked to include diverse suppliers when receiving quotes in order to make better-informed decisions that take into account not only economic but also social considerations. This is, for example, at the core of the social procurement strategy being implemented by the City of Toronto.
Management support
Canada hosts a number of valuable “niche” initiatives which intend to boost management skills in women entrepreneurs who have the ambition and potential to grow. These initiatives typically combine training, mentoring, peer-to-peer learning and, in some cases, finance. They are important to the extent that small, established women-owned businesses are often underserved both by formal entrepreneurial education and training and by informal mentoring through peer networks (Womenable, 2007). By the same token, Status of Women Canada (SWC) found that growth-oriented businesswomen have particular capital, risk management and mentorship needs that are not currently adequately met (SWC, 2015).
Two examples of management upgrading programmes run by women’s enterprise organisations in Western Canada are the Grow to Greatness Excelerator Program of AWE and the My Gold Mine Program of the WEC Manitoba. The former is an accelerator programme which offers training, mentoring and growth finance to businesses which have the potential to scale annual revenues from CAD 1 million to CAD 10 million (see Box 7.5). The latter consists of a comprehensive financial template and in-depth coaching with the aim of producing a diagnostic analysis of the business. The WEC Manitoba developed this programme based on the evidence that many of its clients fell short of using financial information to guide management decisions. The aim is, therefore, to enhance the financial acumen of women entrepreneurs who want to grow their business (see also Box 7.1).
The Grow to Greatness Excelerator Program started in 2012, and is aimed at scaling established businesses in business-to-business sectors with potential to grow from CAD 1 million to CAD 10 million in annual revenues. It is an intensive business acceleration programme delivered over a 10-month period. Formal and informal learning on specific topics of relevance to business growth (e.g. strategy, growth finance, leadership, and human resources) is combined with leadership development and mentoring from industry leaders and experts from the Alberta Women Entrepreneurs (AWE) programme staff. Additionally, AWE is well connected with other intermediaries and is able to draw on its own networks in the local enterprise ecosystem to assist with the programme.
The programme is competitive through strict eligibility criteria and a rigorous application process that takes into account the growth prospects of the business. Participants pay CAD 5 000 to enrol in the programme, which ensures the commitment of entrepreneurs.
The annual revenues and number of employees of graduating businesses have increased significantly (AWE 2014), and a high level of satisfaction with the programme has been recorded among participants (Hughes, 2015b). Moreover, the programme has been successful in establishing an on-going peer learning and support network. Many participants acknowledge that the programme has been a confidence booster and has effectively built their social capital, in addition to the benefits stemming from the formal learning process. Even after the conclusion of the programme, participants are able to draw on AWE’s connections, and many of the participants in each cohort continue to support each other, periodically meeting on an informal basis or at special events. Programme alumni in turn become role models and usually provide expertise to new participants. On the whole, the programme contributes to the development of a female-friendly and growth-conducive local entrepreneurial ecosystem.
Source: AWE (2014) Growth Excelerator Programme 2014 Final Report. Alberta, AWE; Hughes. K. (2015b), Building Ecosystems For Growth: Women’s Experiences of the ‘AWE Growth Excelerator Programme, Paper presented at the 2015 DIANA Conference on ‘Women’s Entrepreneurship and Ecosystems’ Babson College, Wellesley, MA, June.
Awareness-raising and mentoring campaigns
The It Starts with One – Be Her Champion campaign is the main awareness-raising and mentoring initiative of the government of Canada. Through this campaign, the government of Canada reaches out to successful leaders in all fields “to make a difference in a woman’s career by being her champion”. Champions provide advice and support, but also promote their mentees in their networks and expose them to new opportunities.
This recent initiative of the federal government of Canada could draw inspiration from a similar policy in Germany, which has established a network of ambassadors with the view to increasing the profile and visibility of women entrepreneurs in the country (Box 7.6).
Description of the approach
Frauen unternehmen is a programme initiated by the German Federal Ministry of Economic Affairs and Energy (BMWi), to raise visibility of successful female entrepreneurs by establishing a network of ambassadors for female entrepreneurship. The programme started in October 2014 and is part of a joint initiative of the BMWi and the Federal Ministry of Family Affairs, Senior Citizens, Women and Youth.
The network itself is composed of 180 ‘model’ female entrepreneurs from all over Germany including sole-owner operated businesses as well as female entrepreneurs who employ several hundred staff. A jury initially selected the women from 360 applicants from all over Germany who had to present their motivation for taking part in the programme.
Those selected engage in events with female trainees, students, graduates and women with entrepreneurial intentions. At these events, the ambassadors inform the female participants about entrepreneurship and share their success stories. The objective is to provide realistic and personal insights into a life of a female entrepreneur and to highlight the contribution that female entrepreneurs make to economic growth and competitiveness.
Female entrepreneur role models can be booked for events in schools, other educational institutions, chambers, business associations and local/regional offices, unions and media. Moreover the initiative provides access to a database that lists all ambassadors, including their curriculum vita and contact details. Additionally, ambassadors engage in different activities, including workshops that cover certain aspects of entrepreneurship and are well-tailored for specific target groups.
As a point of contact, a national coordination office has been established, with the support of the federal women entrepreneurs’ agency (Bundesweite Gründerinnenagentur) (see Box 7.8). The coordination office is responsible for the organisation of the aforementioned events and has also set up a website that contains all relevant information for anyone interested.
Obstacles and responses
This initiative is ultimately dependent on the passion, dedication and willingness of the women role models to give up time to engage in ambassadorial functions. There also needs to be a sufficient diversity of ambassadors so as to effectively inspire distinct cross-sections of the population and target groups.
Promoting women role models (ambassadors) is a popular policy in several countries, especially since the European Commission has promoted the ambassador concept in order to make women’s entrepreneurship more visible in the EU and raise the profile of entrepreneurship as a viable career option for women. The European Network of Female Entrepreneurship Ambassadors was inaugurated in 2009. Sweden, Norway, Denmark, Iceland, Germany, Poland, Norway, Slovakia, Italy and Ireland are among countries that established ambassador initiatives. Germany’s latest national Frauen unternehmen initiative, which has established a dedicated coordination mechanism for the associated range of events and activities of the initiative together with a website, is a good practice model that augurs well for success.
Relevance for Canada
A nationally co-ordinated ambassador initiative that showcases and utilises the expertise of a diverse range of successful women entrepreneurs from a variety of sectors, will be useful for advancing women’s entrepreneurship especially by inspiring and building confidence in women to become entrepreneurs. Such an initiative can also help change attitudes among the general public to women entrepreneurs. This attitudinal change can be especially useful in acceptance of women entrepreneurs in less traditional sectors, for example the natural resource industries.
The formulation and governance of women’s entrepreneurship policy
The importance of policy coordination in the design and delivery of women’s entrepreneurship support measures cannot be overstated, given the involvement of several government departments in this field (e.g. ISED, BDC, GAC, RDAs and FedNor, etc.). Nonetheless, coordination has not always been satisfactory, with several thematic roundtables and taskforces that have stressed how better coordination of support and business services for women entrepreneurs is needed in Canada (Canada Works, 2014).
With this objective, ISED, GAC’s BWIT programme and SWC have partnered to create an Interdepartmental Committee on Women Entrepreneurs, with the aim of consulting with the government, private sector, non-governmental organisations and academia to understand the major development challenges that face women entrepreneurs and how policy can help address these challenges. The Committee held its first meeting in 2016.
An additional tool that would support policy co-ordination in this area would be the preparation of a national strategy for women’s enterprises. To reflect the different needs of women entrepreneurs and women business owners, the strategy should build on a policy dialogue that includes businesswomen and their representatives from different sectors, firm sizes and stages of business development.
The creation of the Interdepartmental Committee on Women Entrepreneurs can facilitate the development of the strategy by bringing together the organisations involved in the Committee to prepare its drafting. These organisations can also make use of and update their regular dialogues with women’s enterprise organisations, businesswomen representative associations and other non-governmental organisations for the purpose of obtaining inputs and feedback for the development of the strategy.
There have also been parallel efforts to reach out to larger populations of women entrepreneurs, for example through a cross-country consultation of 400 female and male entrepreneurs by an Expert Panel on Championing and Mentorship for Women Entrepreneurs, which reported to the Minister of Status of Women Canada, or the consultations on the text of the Trans-Pacific Partnership, which have also involved women’s enterprise stakeholders.
A strategy for women’s enterprises, however, should also make an effort to reflect inputs from the grassroots level. It is important not only to listen to successful women entrepreneurs, but also to those who are disadvantaged or who have found it difficult to benefit from existing policy support, for example with respect to access to finance. In the context of Canada, explicit inclusion of minority voices from the Aboriginal and immigrant communities are essential, given the very specific challenges facing the former, especially when they live in remote areas, and that one-quarter of women entrepreneurs in Canada are born outside the country (RBC, 2013).
An international example of a strategy which has adopted a similar bottom-up approach is the Scottish Framework and Action Plan for Women’s Enterprise (Box 7.7). Its key areas of action, including harnessing the potential of the co-operative or collaborative model, pinpoint multidimensional policy arenas that would also be applicable to Canada.
Description of the approach
Launched in March 2014, the Scottish Framework and Action Plan for Women’s Enterprise specifies actions for increasing and mobilising the contribution of women’s enterprise to the Scottish economy. It involves all the key stakeholders in the enterprise ecosystem and was developed in consultation with government, private, public and third sector organisations, women business owners and associations.
Actions are set out in five areas: mentoring and networking; role models; markets and finance; gender specific support; and other various activities. For each of the proposed actions, the leader(s) and collaborators for implementation are specified. Thus for example, under “markets and finance”, finance-related actions focus on increasing the number of women angel investors and the amount of equity investment in female-led businesses. Implementation of this action is led by Investing Women, an association of women business angels and women entrepreneurs supported by the Scottish Government, in partnership with the Scottish Angel Capital Association (LINC Scotland), private sector retail bank Royal Bank of Scotland (RBS), and local authorities. A market related initiative focuses on “raising awareness and development of the collaborative (or consortium co-operative) model” and is implemented by Co-operative Development Scotland, the arm of the RDA Scottish Enterprise which supports company growth through co-operatives and employee-ownership business models, which works in collaboration with Women’s Enterprise Scotland to investigate how they can most effectively support women-led businesses.
The implementation of the Scottish Framework and Action Plan for Women’s Enterprise is supervised by the Women in Enterprise Implementation Group. Core members of the group include: Business Gateway, Highlands and Islands Enterprise, Scottish Chambers of Commerce, RBS, Scottish Enterprise, Investing Women, Association of Scottish Businesswomen, Enterprise Research Centre, Community Development Scotland and Women’s Enterprise Scotland. The functions of the group includes ensuring that the strategy is coherently linked to the Scotland CAN DO Action Plan, which is Scottish government’s strategy for becoming a world-leading entrepreneurial and innovative nation; prioritising objectives, activities, timescales, and milestones for each of the five areas of the Framework and Action Plan; and overseeing the delivery of actions. The overarching coordination of the Implementation Group is assured by Women’s Enterprise Scotland, while individual group members remain responsible for their respective activities in delivery of the Framework actions.
Factors of success
While is too early to assess the impact of the Framework, there are several elements that augur well for its success.
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The Framework sets out a series of on-going and sustained activities with assigned private and public sector partners responsible for implementation. This should guarantee the ownership of the activities by the relevant stakeholders.
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The formulation of the Framework and its various actions has followed a robust process of consultation, so that it is likely that there will be ‘buy-in’ from the multiplicity of involved stakeholders.
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Responsibility for leading delivery and implementation of each action and the partners involved are clearly specified at the outset.
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There is firm political commitment, with the Scottish Government which retains a key role in catalysing the actions to close the gender enterprise gap. There is also a process for linking the actions of the Framework to the Government’s overall strategic policy for driving competition and innovation in the economy, i.e. Scotland CAN DO.
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There was informed academic leadership and input throughout the development and formulation of the Framework and Action Plan.
Obstacles and responses
Ongoing leadership by key individuals and commitment by key partners will be necessary for success and may prove a challenge. Ensuring adequate resourcing for effective implementation will ultimately be critical.
Relevance for Canada
In Canada there is not a concerted plan on closing the gender entrepreneurship gap, nor is there a mechanism for the overarching coordination of existing measures. The Scottish Framework and Action Plan for Women’s Enterprise can provide useful insights on the value of having a clearly articulated strategic direction accompanied by actions and implementation pathways.
For further information
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Carter S., J. Brierton and J. Muldoon (2014), Women in Enterprise: A Framework and Action Plan to Increase the Contribution of Women’s Enterprise to the Scottish Economy, Women’s Enterprise Scotland.
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https://wescotland.files.wordpress.com/2014/11/wes-action-framework.pdf.
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http://wescotland.co.uk/influence/women-in-enterprise-implementation-group/.
A strategy for women’s enterprise should also build on the evidence on the state of health of female entrepreneurship in Canada and what policy experiments in support of businesswomen have or have not worked in the past. However, at present, there is a shortfall in gender-disaggregated data about entrepreneurship activity, SME performance, and the impact of government support. Calls for more gender-disaggregated data have been expressed in the past, among others by the 2011 “Canadian Taskforce for Women’s Business Growth” and the 2009 “Roundtable on Aboriginal Women and Economic Development” (Government of Canada, 2009).
One option to improve data on women entrepreneurship would be through a regular survey on the determinants of business success which would also collect anonymous information on the profile of the entrepreneur. In 2006, for example, 16 EU countries carried out a harmonised survey on The Factors of Business Success, which included personal information on the respondents such as age, gender and level of education. This allowed for an analysis of differences in performance between male and female entrepreneurs, young and senior entrepreneurs, and high- and low-educated entrepreneurs for example. More specially, the Factors of Business Success survey featured four sections: i) identification of the enterprise (here the entrepreneur was only asked to confirm or amend information already given, based on business registry information); ii) profile of the entrepreneur (demography, motivation for start-up, business experience as well as a filter question to ensure that only companies born three years before the time of the survey were taken into consideration); iii) the enterprise’s situation at the time of the survey (i.e. employment, turnover, access to finance, barriers to business growth, etc.); and iv) future plans (i.e. future expectations of the entrepreneur).5 Although the survey has not been repeated, its information has proved a useful tool to investigate entrepreneurship dynamics in socially disadvantaged groups (OECD/EC, 2014a; OECD/EC, 2014b).
Another option to strengthen gender analysis would be to collect gender-disaggregated data in the evaluation of public programmes for entrepreneurs and SMEs. Major federal programmes are already subject to five-year evaluation studies which assess the performance and continued need for these programmes. On these occasions, information could be collected on the gender of programme recipients to assess the extent to which women entrepreneurs benefit from public support and the extent to which they outperform or underperform their male peers.
Finally, the strategy for women’s enterprise should make clear the existing offering of public support measures available to women entrepreneurs. Currently, this is achieved through the Canada Business Network (CBN), which offers information about specific measures for women entrepreneurs through its one-stop offices, call centres and website. In particular, the CBN website has a landing page of information tailored to women entrepreneurs across Canada. A more ambitious plan, which could also be the final outcome of the strategy for women’s enterprise, could be the establishment of a specialised government agency taking the lead on women’s entrepreneurship policy, with technical support from government partners such as ISED, BDC or GAC. The National Agency for Women Start-Up Activities and Services in Germany provides an international example of a specialised agency for women entrepreneurs (Box 7.8).
Description of the approach
The National Agency for Women Start-ups Activities and Services (Bundesweite Gründerinnenagentur) is a one-stop nationwide facility for the support and promotion of women entrepreneurs in Germany established in 2004. The Agency’s tri-level organisational structure comprises the nationwide umbrella organisation and head office located in Stuttgart at the Ministry of Economic Affairs, regional offices in all 16 German Federal States, and a widespread partner network of over 2 000 partners which includes women’s business centres, specialised consultants, and relevant business institutions.
A key facet of the Agency is its comprehensive web portal www.gruenderinnenagentur.de. The portal hosts up-to-date information on events such as trade fairs, workshops and seminars, links to available mentoring and training for women entrepreneurs, and collect research on women’s entrepreneurship. Specialised sections of the web portal also provide valuable resources. For example, the “Online Training” section has several e-training modules, while the “Business Transfer” section hosts information on all matters relating to business succession. In this section, the Agency seeks to encourage more women to become interested in business succession, more family business owners to recognise the potential of female employees and daughters as successors, and more advisers to catalyse support to women in relation to business transfers.
As a centralised agency, it bundles all relevant competencies and services together and ensures that there is a regular flow of information and knowledge on women’s entrepreneurship in Germany.
Factors for success
A critical success factor of the Agency is its broad coverage of women-specific activities and services. The Agency’s tri-level organisational model additionally ensures the effective coordination of a national agenda for women’s entrepreneurship, as well as its nationwide acceptance by main federal and regional stakeholders.
Obstacles and responses
The Agency and its partners have received positive feedback from women entrepreneurs and have contributed to increased awareness of women’s entrepreneurship and related policies in Germany. However, a high degree of political commitment across all levels of government, willingness of a wide network of stakeholder partners to co-operate, and substantial financial resourcing is necessary for the model to be sustainable.
Relevance for Canada
Prior to the establishment of the National Agency for Women Start-Up Activities and Services, promotion of women’s entrepreneurship in Germany was shared by different ministries. However, the joint ministerial funding of the Agency now means that there is a single institutionalised agency dedicated to women’s entrepreneurship in Germany. Such a model could also be useful if the government of Canada wishes to focus attention and resources on women’s entrepreneurship support in the coming years.
For further information
Conclusion and recommendations
Women’s entrepreneurship in Canada is healthy and mostly driven by market opportunities, rather than by necessity caused by lack of paid employment, and the number of women self-employed has more than doubled over the last thirty years. Nonetheless, major gender gaps in entrepreneurship remain. Majority female-owned SMEs are only a very small proportion of all SMEs in Canada and tend to be smaller and report lower growth rates than majority male-owned SMEs. Moreover, majority female-owned SMEs are disproportionately found in retail industries, are less export-oriented than majority male-owned SMEs and experience more difficult access to finance than majority male-owned SMEs.
Existing women’s entrepreneurship policies include measures that encourage mentorship and championing of women entrepreneurs, foster networking, and enhance their access to international markets and sources of finance. However, programmes are currently rather scattered, whereas the design of a comprehensive national strategy for women’s enterprises could help identify the major causes behind the gender gaps in entrepreneurship activity and business performance and build institutional consensus on the policy package required to help narrow these gaps. The strategy process would benefit from better collection of gender-disaggregated data on entrepreneurship activity, business performance and access to and impact of government programmes. A national agency for women’s entrepreneurship with involvement of all the relevant government departments and agencies could also help promote and co-ordinate the women’s enterprises strategy.
Based on this analysis, the following policy recommendations are offered to strengthen entrepreneurship by women in Canada:
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Consider the creation of a dedicated BDC programme for women entrepreneurs and quotas for the participation of women entrepreneurs in other BDC programmes, backed up by gender disaggregated data on the use of BDC programmes.
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Step up the provision of microfinance to accommodate for the needs of women entrepreneurs operating in sectors of the economy where external finance requirements are small.
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Remove unwarranted restrictions on the eligibility of part-time entrepreneurs to public enterprise support programmes.
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Explore the possibility of set-asides for women-owned enterprises in public procurement and undertake a federal initiative to raise awareness of supplier diversity principles among government and private sector procurement officers.
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Extend successful local women entrepreneurship support programmes (e.g. Women’s Enterprise Initiative) to other regions outside of Western Canada.
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Formulate a national women’s enterprise strategy setting out the main objectives, support measures, implementation mechanisms and government responsibilities for promotion of women entrepreneurship together with procedures for coordination among federal and provincial/territorial governments.
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Consider creation of a specialised government agency to take the lead on women’s entrepreneurship policy.
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Improve the availability of gender-disaggregated data on SME and entrepreneurship activities, obstacles and programme use in order to support policy formulation.
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Notes
← 1. The GEM TEA rate provides estimates of the proportion of the adult population (aged between 18 and 64) who have either been involved in a start-up process for less than three months (i.e. nascent entrepreneurs) or who have been business owners for less than three-and-a-half years (i.e. new business owners).
← 2. Hereafter, unless otherwise specified, statistics are drawn from ISED (2015) Majority Female-Owned Small and Medium-Sized Enterprises. Special Edition: Key Small Business Statistics, May, and comparative data are between the 2007 and 2011 Statistics Canada’s Survey on Financing of Small and Medium Enterprises. Majority ownership is 51-100% ownership by one or more males/females and equal ownership is 50:50 male and female ownership.
← 3. Sufficient data for disaggregation is available only for five provinces.
← 4. Māori are the indigenous people of New Zealand. There were 598 605 people or 14.9% of those usually living in New Zealand in 2013 that identified as belonging to the Māori group. Like the Canadian Aboriginal population, the Māori population is youthful with 33.8% under 15 years in 2013.
← 5. For further information: http://ec.europa.eu/eurostat/cache/metadata/en/fobs_esms.htm.