A recent report from Ledbury Research confirms a stereotype: women business owners don’t like risk. They wouldn’t say they’re risk adverse, per se, but just like to take “educated risks.” But this global tendency is costing their businesses.
The research shows that fewer women start business than men in every country except Ghana. This gap is exaggerated in the tech industry, with women starting only 10% of businesses in Silicon Valley. Women may be starting more businesses than ever, but even once started, they’re making decidedly different decisions than men.
Women and men approach risk and failure differently. Men are used to taking more risks, which makes risk taking less intimidating, creating a cycle of risk taking. Many women like to think of themselves as taking only educated risks, but this can be lead to risks that aren’t very, well, risky.
So what is a risk? If “educated” means knowing it’ll work out, it’s not a risk. If the decision requires waiting “to be sure,” it’s not a risk. If it’s not a little crazy, it’s not a risk.
The goals women set contribute to this environment. “Women are taking risk consistent with their goals but their goals aren’t big enough,” says Sharon Hadary, former and founding executive director of the Center for Women’s Business Research in Washington, D.C. This has a huge impact on whether women even face risk in their businesses. Goals should demand risk. But many women’s goals just aren’t big enough. Women have a long-term vision, one that often serves them well, but can be limiting.
The reasons why women start their businesses also contribute to this risk aversion. When compared with men, women may start with completely different business motivation, with more of a focus on passion and balancing work and home. Some women want to make a lot of money and want to do it themselves. But this mindset is much more often attributed to men than women. The research confirms a discrepancy in thinking.
So what if women take fewer risks? Avoiding risk may limit their business growth for women-owned businesses. Women need to set grander goals that force them to confront risk on a regular basis. This is the first step to addressing this issue. And then they need to stop calculating and start doing.
Have you taken any big risks in your business? How did you decide to jump in?
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Elizabeth McCumber, marketing maven and freelance writer, focuses on providing quality creative content for entrepreneurs. She also specializes in email marketing and social media planning. Connect with Elizabeth on LinkedIn.
