Risky Business: How, Why Women Entrepreneurs Take Chances to Succeed
Women entrepreneurs are not risk-averse, but approach risk and innovation differently, a new study shows.
Years ago I interviewed author and life coach Gail Blanke on her book, “Between Trapezes,” advising those who are in the space between life phases to take a leap off the diving board and “invent the water on the way down.”
That can be terrifying, risky advice for anyone who has rent or a mortgage, insurance, tuition, childcare or medical bills to pay. But such a risk to dare something new can also be tempered with the understanding that taking risks doesn’t mean risking it all.
A new comprehensive report, “A Force to Reckon With: Women, Entrepreneurship and Risk” from The Beacon Agency and Carleton University funded by BMO Bank of Montreal, shatters myths about women in business avoiding going out on a limb. The study breaks down the factors contributing to innovation and success for women. And while this was a study of Canadian women business owners, the findings apply to women in the U.S. and all over the world.
First, the authors found that for women entrepreneurs a key difference is, “Risk is a means to achieve social and economic goals and not an end in itself.” What they mean is women are less likely to take a business risk for risk sake. It is not the thrill itself, but the thrill of the end game.
They continue, “There is a growing body of evidence that challenges the assumption in the literature that women entrepreneurs are risk-averse. This is significant because the number of self-employed women with an incorporated business has increased by 15 percent since 2007, prior to the recession, and it has more than doubled since 1996.”
And what about the notion that men are more innovative and bigger risk-takers than women leaders?
“The survey highlights that female entrepreneurs were at least as innovative as their male counterparts between 2008 and 2011. Forty-four percent of companies with majority female ownership and 38.9 percent of companies with full female ownership introduced at least one type of innovation (e.g., pro-innovation, process innovation, market innovation, and organizational innovation).”
The report also touches on motivation and vision in the process of launching a business for women. “Many women start a business to be in control, to experience challenge, to create something and to gain financial independence; many start a business because they need to generate income; and some take over their family business to better manage the operation. These different motivations are likely to influence their assessment and calculation of risk. Women who start and run businesses for independence, challenge and to create something of value often make decisions that involve risk easier than the women entrepreneurs who start their business because they need an income.”
Also addressing the popular challenge to take more risks in your career either at the start of your professional journey, transitioning during a new phase mid-career or in embarking on the third act, Jenna Arak writes in The Muse that specific strategies to manage risk and pay your rent at the same time are advisable.
In The Muse, she writes: ‘“You have to manage those risks,’” says Rachel Kim, Career Strategist and Coach at leading online lender and modern finance company SoFi. ‘But we do think the career trend is moving toward people taking their own risks, before they risk losing their job in an unstable market.’”
Four considerations may help in assessing next steps, according to Kim. Those include networking, designing the job you want, experimenting with a “shadowcation,” and weighing the risks. A shadowcation is taking time off from your job to follow a mentor for a specified period of time so you can see firsthand what might be involved before you take a leap into a new field.
Finally, be judicious about the risk by taking into account all factors, not just financial. “But there is also, perhaps, an even more important number than money to consider when planning for a career risk: what’s your ‘ROR’ or ‘Return On Risk’?”
Again, Arak quotes Kim: “There’s so much more to consider than salary,” says Kim. “More often, people take career risks to find more happiness and meaning, not more money. Remember what you’re giving up if you don’t take this risk—why did you consider it in the first place? Even if you failed, what do you gain? If you don’t even take the risk, what have you lost? That’s the real cost.”
Risk and daring was also part of the conversation at CBC News “Early Edition” with psychologist Jennifer Newman. She says this biased notion that men and women have different values toward work—including ideas toward risk and innovation—is holding so many women entrepreneurs back from reaching parity and also reaching the top.
These stereotypes are harmful, she says. “Women aren’t motivated to exert power and influence. But men are,’ or ‘Women don’t feel like leading. But, men like it.’ ‘Women favor relationships over having freedom and autonomy. Men don’t care about relationships.’ and another: ‘So, if women were interested in power, liked leading more and focused more on freedom than their relationships, they’d move up.’”
Newman continues: “These ideas about what men and women value creates a self-fulfilling prophecy. If either gender believes these stereotypes it has ramifications for women’s career advancement. Men who believe this stuff are less likely to encourage women to lead. And, they’re less likely to support women’s exercise of influence and power. And, if women believe this about themselves, they are less likely to do things that make them feel like leading.”
Writing in Inc., Diane Gottsman, owner of The Protocol School of Texas, offers 12 specific sabotaging behaviors to avoid in order to be successful women leaders. Her clever and helpful dozen also speak to the idea of taking risks.
“To many, success equals money, fame, a corner office, or a fancy car. People who truly thrive dig a little deeper when considering their own success as a mixture of many elements.”
Gottsman suggests people do not “limit themselves to other people’s definitions of success.” She explains: “To many, success equals money, fame, a corner office, or a fancy car. People who truly thrive dig a little deeper when considering their own success as a mixture of many elements: the satisfaction of making a difference, fulfilling a long-held desire, blazing a trail, and investing in important relationships.”
Creative and innovative leaders also know not to, “Wait until conditions are perfect to take action,” Gottsman writes. “These individuals know that if they wait until the stars align to pursue their ambitions and dreams, they will never get started. The best time to begin is usually now, learning as they go.”
Risk taking in business is what Barbara Corcoran does as a real estate mogul and founder of The Corcooran Group, with $18 billion in annual sales. She is also the no-nonsense member of ABC’s “Shark Tank” team telling entrepreneur hopefuls like it is and giving them a thumbs-up, thumbs down and money to back it all up.
According to CNN, Corcoran raised quite a bit of ire and backlash from women leaders last week for this advice to women entrepreneurs to succeed: “I wear bright colors, yank up my skirt + get attention,” she tweeted on Tuesday.
According to CNN: “She said in the tweet that she finds that being a woman running a business in a man’s world is a ‘huge advantage,’ and used the hashtag #womeninbusiness.”
Less controversial perhaps at the Circular Summit run by the Circular Board in Houston recently, was keynoter Jane Wurwand , founder of Dermalogica, a $250 million business, who advised women entrepreneurs on risk and more.
Wurwand told Jylee McIntyre of Tech In Asia: “Don’t let anyone tell you, ‘If that was such a good idea, someone else would have done it.’ The reason that no one else has done it is because no one’s done it yet.”
Wurwand “also helped found FITE (Financial Independence Through Entrepreneurship), which has helped fund and grow the businesses of 73,000 women internationally.” McIntyre writes that Wurwand “warned women not to diminish themselves in the process of building up their business with excuses like lack of funds, lack of connections, and several other excuses. All of it, she said, can be figured out.”
It may be a bigger risk, then, to play it safe and not experience what may lead to success.
About the Author
Michele Weldon is editorial director of Take The Lead, an award-winning author, journalist, emerita faculty in journalism at Northwestern University and a senior leader with The OpEd Project. @micheleweldon www.micheleweldon.com