While there are thousands of success stories as more women take their marbles and start their own game, the phenomenon is not as widespread as it is claimed to be. The perception of the women's entrepreneurial trend is more hype than hide.
One of the most misunderstood figures being toted in the '90s is the one suggesting that "women are starting new businesses at twice the rate of men. " The Census Bureau and Labor Statistics often quotes the 4.5 million women entrepreneurs as the new trend. However, they fail to point out that ' about half of these "business owners" are merely commissioned representatives of companies such as Mary Kay or Avon. Many other women in this classification are those who categorize themselves as "independent contractors" to accommodate a shorter work week with flexible hours as part-time corporate employees.
The source of the data supporting this misperception is the filing of tax returns as "self-employed." In fact, many of these "entrepreneurs" populate the new women's ghetto of low-income employees with no benefits. The home-based piecework of the '20s was replaced by home-based businesses of the '90s as women now buy computers instead of sewing machines to produce income-earning work.
The danger in glorifying these "enterprises" is that it lures women from the security of steady employment with health benefits, paid vacations, workers' compensation, and retirement plans into the uncertainty of being on their own. With the long hours invested, often they end up working at far below the minimum wage.
When thousands of these women fail to find either the hoped-for earnings or the yearned satisfaction in their new "ventures," they may sink into depression, believing that they are losers in a world perceived as full of winners.
Business failure almost always means sinking into debt. Many women borrow from family and friends ("Liz Claiborne started by borrowing as little as $5 from each of her friends, neighbors, and family members," Working Woman magazine tells its readers.) But as bankruptcy numbers show, the acceleration of the trend toward personal and business bankruptcy outstrips the pace of new business launching. Anecdotal stories tell us also about suicides as a result of business failures.
Who is behind this hype, standing to benefit from propagating this myth?
* Avon spends $500,000 each year for its Women of Enterprise Award, a sumptuous event at the Waldorf Astoria in New York. Avon spends at least an equal amount on advertising the event and on sending the winners around the country as motivational speakers to help recruit more "entrepreneurs" to sell its products.
* The Small Business Administration has a separate Office for Women-Owned Businesses. The larger the number of women-owned businesses, the better the office can justify its budget, while its employees preserve their jobs.
* The National Association of Women Business Owners is a tiny organization with less than 5,000 members - half of which are located in New Jersey. Yet, it attracts top corporate sponsors as no other women's organization does. A few years ago NAWBO established a research Foundation with the above-mentioned SBA's Office of Women-Owned Businesses. The survey results were published with media trumpets and drums and have become the figures most often quoted. When I examined some of the numbers and found mystifying, logic-defying statements with no statistical basis, but was nevertheless unable to get a satisfactory explanation from the head of this NAWBO Foundation. (Yes, another job created to run it, but unlike other NAWBO's jobs, this one is paid for by tax dollars.)
* Magazines such as Fortune and Business Week magazines profit directly from their special advertising sections focusing on women's business ownership. To lure new advertisers as sponsors, they promise marketers that reaching this swelling, fast-growing segment will put them on the cutting edge of the new trend. The fierce scrambling for these incremental advertising revenues got a new twist in the early '90s as Fortune magazine led advertising agencies to believe that by advertising in its special section they supported women's small-businesses financially, implying that some of the advertising dollars would go to this noble cause. While the SBA often lends its name to such projects, this, of course, was not its intention. After I exposed the deception-which appeared in Fortune magazine’s promotional material - the SBA forced Fortune magazine to change some of its printed misleading claims. Nevertheless, the impression still lingers, and it is to Fortune’s benefit that it should.
* After Entrepreneurial Woman magazine failed to attract enough readers, its owner, Entrepreneur magazine, absorbed it into its own pages. Entrepreneur perpetuates the perception that "an entrepreneur" and "a business owner" are interchangeable terms. However, real entrepreneurs, individuals who have a vision, who are independent thinkers, and who can plan and structure a business while taking risks, disagree. It is interesting to note that many of the magazine's advertisers are franchisors, and the magazine promotes buying a franchise as a safer way to own a piece of the trend toward independence. But a franchisee works for the franchisor and is entirely bound by its detailed blueprints for running the business. A closer look at some stories reveals that former corporate executives, failing to get hired, buy themselves a job by purchasing a franchise. Since women tend to be more disenchanted with the corporate environment and the opportunities for promotion, they tend to buy themselves a better employment in the form of a franchise. Yes, they are business-owners, but in the eyes of many, this is not "entrepreneurialship."
* Working Woman magazine, which until a couple of years ago was owned by Time Inc., is always on the lookout for a niche wide enough to appeal to both readers and advertisers. In the past several years, Working Woman's promotional budget has been mostly spent on positioning the magazine as the voice of entrepreneurial women. They have sponsored events such as the annual conference of The American Women Economic Development, a joint corporate and SBA not-for-profit organization that teaches women entrepreneurial skills. (I have been teaching business planning there as a volunteer and have represented AWED on a trip to Russia to teach Russian women entrepreneurial skills.) Working Woman's readership figures do not bear even closely its claim to represent the entrepreneurial women's segment, but the promotion material promotes this segment's power.
* And finally, the White House. Several years ago, under President George Bush, an Oversight Committee was assigned the task of unveiling the hidden data in the Census reports. The problem was clear: S-Corporations (smaller companies whose owners can combine the company income with their own personal income to offset start-up costs or losses) were identified by the owner's gender. Regular corporations, which tend to be bigger and therefore more influential, were not identified in this manner. As a result, the most successful business enterprises owned by women were left out of the count. In addition, around 1990, I was instrumental in getting the Office of Labor Statistics to identify partnerships by gender as well. Until then, husband and wife partnerships were assumed to be male-owned. Eventually this lapse, too, reached the Oversight Committee and was put on its agenda.
Nevertheless, the "self employed" category is still too sensitive an issue for the U.S. government to analyze. Opening the "business owner" definition to scrutiny might blow in its face, for regardless who the president is, the White House has a vested interest in showing the economy buzzing with activity, optimism, and new business start-ups. A president who wishes to be favored by women has an interest in promoting a myth that points to speedy empowering of women.
No independent group has ever embarked on an objective review of the statistics -- including the assumptions behind each survey and its methods. Further researching the real story behind the trend is long overdue.
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