Igniting Women Entrepreneurship: Who and How?

The Economic Times - March 8, 2007

The new buzz in the conference circuit is the arithmetic argument that there could be a big GDP boost if more Indian women became economically active (77% of urban housewives, 60% of rural do not work outside the home). To me, a more compelling pay off of women earning is the resultant increase in their self esteem and negotiating power with family and society and the resultant social and human development benefits. More importantly, if we could get the poor and the ill educated women to earn their own money, we would have more warriors in the fight against poverty, and more champions of the girl child.

The only problem, as always in India, is HOW do we make this happen? Conventional job creation will not happen as fast as we need it to, and poor and less educated women will find it increasingly tough to have a shot at those fewer jobs. The only way to fix this is entrepreneurship, enabling them to become economically active at an income level that makes the effort worthwhile.

It is this that is the focus of TIE women's initiative. TIE is an Indian diaspora originated, global network, committed to fostering entrepreneurship. The TIE model for action is based on Awareness creation (to spark desire and spur action) - Advocacy (to create systemic enablers and remove systemic road blocks) - Assistance (mentoring through a semi formal process to get high potential entrepreneurs off the ground).

As a first step to understanding how best to deploy this model for fostering grass root entrepreneurship for women, a group from TIE women and UTI Bank collaborated on a baseline study (GEM: Grass root Entrepreneurship Movement for women) to map the structure and conduct of women entrepreneurship as it exists today. The study was conducted by India Consultancy Group, and mentored by two volunteers from McKinsey. I think today would be a good day to share the study findings, for use in any which way, by all who are concerned with women entrepreneurship,

Is there a desire for entrepreneurship among middle class urban Indian women who are currently not working?
A survey to measure the NQ or the Entrepreneurial Quotient was conducted (1200 middle class urban women -excluding the top 20% of households and the bottom 30% in terms of social class - in six diverse cities - Ahmedabad, Mumbai, Coimbatore, Chandigarh, Hyderabad and Indore.)

The heartening answer was that about one in every four women wanted to have a business of her own. Half of these potential entrepreneurs already are running some money making activity from home and are ready to convert it to a formal business. The other half have so far been solely home makers, but have given a fair degree of thought to visioning their business.

What is their profile?
Forget images of Kiran Shaw or Vandana Luthra. 40% of these women had less than 9 years of education, another 40% were standard tenth pass, and only 20% had an education beyond that. The reasons for not studying further were forced on them in 75% of the cases, "family said enough", "financial constraints", and "got married off". The touching statistic was that women with high NQ also had more educated mothers - relatively speaking, of course.

95% of them were married, almost all had children, and 67% had nuclear families. Obviously the strategy to stimulate such entrepreneurship has to take these constraints into account.

What stops them?
Just about everything - lack of know how, lack of space, lack of family support, lack of finances (interestingly that was not the first and last item on the list. It isn't just about money. It is about support in many more ways, because they have fewer role models to learn from)

Part 2 of the study
was to know more about what motivates and frustrates existing women entrepreneurs, and how they can be taken to the next level.

4 segments of women entrepreneurs exist:
Self Help Groups who are well served and mentored by microfinance institutions,
Grass root entrepreneurs who are driven by a need to augment the family's finances especially to secure their children's future - tailors, flower sellers, STD booth owners, paan shops. Turnover aspiration of 5 lakhs a year, they are very work focused, as they can see any increase in their earnings as directly impacting their childrens' lives. They are hungry for formal skills and training, can clearly articulate what they want to learn that will help them earn more. Domestic family support, financial support and better infrastructure and mechanization is what they ask for.
Mid rung entrepreneurs: they are driven by a need to build reputation, become known, and improve quality and satisfy creative instincts . Mostly graduate +, they typically have garments shops, poultry farms, export businesses etc., with turnover aspirations from Rs. 50 L to 1 crore. Fairly well supported by the family, their biggest need is for know how to take the 'quality of their business' to the next level. However they do not want to scale too much, because to them, there is an optimal level beyond which, they believe their children will get neglected.
Upper Crust: Drawn from the topmost social class, very well educated, with businesses like export houses, travel agencies, traders in pharmaceuticals, often adjuncts to their husband's businesses , they aspire to turnovers of more than Rs 5 crores.

Where are the bankers for the grass root entrepreneurs?
The mid rung can get bank loans if she makes an effort to, but prefers friends and family funding, while the upper crust leverages her family balance sheet to get loans for her business. However the most potent and hungry segment, the grass root entrepreneur is stuck in the middle with no access to finance - below the nose of the bank, and beyond the ken of micro finance.

A segmented strategy, customized for the mid rung and grass root entrepreneurs is being working on: Awareness to help take the leap with family blessing, Advocacy relating to school curricula and new banking offerings, and Assistance to hand hold them to the next level.