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Ernst & Young Report Focuses on Driving Economic Growth Through the Expansion of Women-Owned Businesses Around the World
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PALM SPRINGS, Calif., Nov. 12, 2009 / -- Ernst & Young released the second report in its "Groundbreakers" series today during the annual Strategic Growth Forum in Palm Springs, California. The report, titled Scaling up: why women-owned businesses can recharge the global economy, details how women entrepreneurs are critical drivers of economic growth and provides resources and insights for private sector, government and NGO leaders who are seeking to close the gender gap.
Worldwide, women own or operate 25-33% of all private businesses, according to the World Bank. Ernst & Young's Scaling up report highlights key barriers to growth and unique characteristics of women-owned businesses, which historically do not reach the size and scale of businesses owned by men. The report notes several key barriers that must be overcome -- including addressing issues of employment, opportunity, lack of role models and access to financing, among others.
In the US, for example, women are starting businesses at nearly twice the rate of men -- if these women entrepreneurs started with the same capital as men, they would add 6 million jobs to the economy in 5 years, according to research from Babson College referenced in the report. The report also notes that, according to a new study by the Center for Women's Business research, women create or maintain more than 23 million jobs, or 16 percent of all US employment.
The global recession could cause the loss of 25 million jobs worldwide by the end of 2010 and could reach 57 million if the recovery doesn't achieve momentum, reports the Organisation for Economic Co-operation and Development (OECD).
"We have seen good progress with microfinance in helping women start and grow their businesses - this success is in the early stages," said Beth Brooke, Global Vice Chair of Ernst & Young. "We must focus and accelerate our efforts to scale women entrepreneurs into the global economic growth engines that they are. It's not only about gender equity, it's about job creation and growth."
The "Groundbreakers" report, which analyzes data and research from organizations including the World Bank, the OECD, and The World Economic Forum, details targeted support and initiatives that can accelerate the growth of women-owned businesses and add millions of jobs to the struggling global economy. These recommendations include:
Ensure that women entrepreneurs are not hampered by discriminatory laws
Although women represent 40-50% of businesses in developing countries, the World Bank/IFC's Doing Business project has identified several legal and regulatory barriers facing women. Women are prohibited from working after 8 p.m. in certain Gulf States and in other parts of the world women require the permission of husbands or fathers to open a business, a bank account, obtain a passport or enforce a contract.
Help women-owned companies scale their businesses by meeting their distinctive needs
These needs include lack of access to capital and business networks. While women own about 30% of US businesses, only about 5% of all equity capital investments in the US go to businesses headed by women and just 3% get investments from venture capital, according to Babson College research. Women appear more reluctant to apply for loans -- more than 10% of men seek external equity financing, but less than 2% of women do the same.Most programming offered through both public and private sectors is dated and focuses on starting, rather than growing, a business. Few programs instruct women on accelerating business growth, according to the Center for Women's Business Research.
Improve women's access to the global supply chain
At present, global spending on supplier diversity is largely undocumented, according to WEConnect International. However, only a fraction of governments and large corporations actively source from women-owned businesses. With the exception of members of the Billion Dollar Roundtable, which spend more than US$1 billion on purchasing from minority and women-owned businesses, less than 2.2% of large corporations' procurement budgets and only 3.4% of federal government contracts go to women-owned businesses.
Scaling up highlights several successful public and private initiatives geared toward helping women entrepreneurs such as: The World Bank's Gender Action Plan; American Express' OPEN initiative; Goldman Sachs' 10,000 Women initiative; The Nike Foundation's investment in girl's education; Vital Voices Global Partnership; the US State Department's Pathways to Prosperity program; and Ernst & Young's Entrepreneurial Winning Women program.
The "Groundbreakers" report series can be downloaded at www.ey.com/groundbreakers.
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
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|SOURCE: Ernst & Young |
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