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Why Do Entrepreneurs Shy Away From Women-Centric Businesses?
By Quiet Light
The dearth of women not just in tech but in tech leadership has been an ongoing theme in news, blogs, and conferences for several years now. As technology has become more integrated in our lives, the number of women studying computer science has decreased dramatically, from 37% in the mid-1980s to just 18% today.
I’ve observed a similar phenomenon in Web entrepreneurship, particularly with regard to women-centric businesses. What I’ve found is that because the industry is so male-heavy, women-centric businesses tend to have a more difficult time finding buyers. Why is this? There seem to be two factors at work here.
Male Entrepreneurs Are Hesitant to Buy Women-Centric Businesses
Male entrepreneurs seem to naturally avoid buying a business where they don’t feel as though they have a sense of the market.
For example, we had a listing a few years ago that sold original women’s plus-sized clothing. From a business standpoint, the business was fantastic. Great clothes, great and growing audience, and in a niche that was fairly well protected. Buyers loved the business—but no one wanted to buy. Nearly every (male) buyer who gave feedback expressed hesitation at needing to have a sense of style for women’s plus-sized clothing.
We’ve seen the same thing happen with a fabric business listing, and a maternity T-shirt business. Fantastic businesses doing very well, but finding a buyer was extremely difficult.
Women May Be Limiting Their Entrepreneurial Opportunities
I get the sense that a lot of women in the work-at-home-mom (WAHM) space tend to maintain their careers at crafter/contractor/blogger-type status rather than going for full business ownership.
But great business ownership opportunities exist for women because there are businesses that the majority of the entrepreneur community won’t touch—like one that sells plus-sized women’s clothing or maternity T-shirts.
Two Main Questions Come To My Mind
- How can we encourage entrepreneurs of both sexes to see the benefits of a business, niche notwithstanding?
- How can we encourage women to pursue entrepreneurial opportunities?
First, Boring Business Can Be Good Business
If you’ve ever bypassed the chance to buy a business because you weren’t particularly interested in the niche, you felt you didn’t have enough knowledge of it, or you thought it was a boring space (pesticides, anyone?), you may have denied yourself a tremendous entrepreneurial opportunity.
To be a little more specific, men shouldn’t discount women-centric businesses just because they’re uncomfortable with the niche. If you’re truly uncomfortable, you can usually find someone to assist and give consultative services to help fill any deficit.
But even if you know nothing about, say, women’s plus-sized clothing, take a moment to look past the niche and evaluate the business fundamentals:
- future viability
- stability and growth
- ease of management
- demand for the product or service
For example, I had a client who bought a website that helped people get through the DUI process. He told me he wasn’t so concerned about the niche, but he knew people would have DUI’s and would be seeking help. The fundamentals were solid and provided a great investment opportunity.
It is rare for a buyer to find a business that they are intimately familiar with the niche. There is always a learning curve. But many buyers, in my opinion, place too much of a premium on their personal affinity for the niche. Smart buyers know how to identify a business because its fundamentals are solid. The niche simply becomes another metric to be measured.
Secondly, Women Have Great Opportunities as Entrepreneurs
The hesitation of most (male) buyers to pursue women-centric businesses represents an opportunity for women entrepreneurs. Because many men in the industry turn down opportunities to buy women-centric businesses, women can often find those businesses at lower prices, yet that still have fundamentals equal in strength to nearly any other niche that is not women-centric.
Let’s consider for a moment that part of the reason many WAHMs start at-home businesses or blogs is because they want something that will generate income, but will allow them to devote time to their families. While women like Gottlieb and Armstrong are certainly role models, the fact of the matter is, not every blogger hits it big, and some don’t even make enough from their blogs to cover their hosting.
By buying an established business—especially one founded by a woman and/or in a woman-centric niche—women can forgo the long hours it may take to build a business from scratch, and generate enough revenue to gain the freedom they seek. In fact, businesses owned by women often do better than those owned by men.
Vivek Wadwha has written extensively about the lack of women entrepreneurs, particularly in the tech sector, and makes an excellent argument for women-run businesses:
Firms founded by women are more capital efficient than those founded by men. Women-led high-tech startups have lower failure rates. Venture-backed companies run by a woman have annual revenues 12% higher than those by men; and organizations that are the most inclusive of women in top management positions achieve a 35% higher return on equity and 34% higher total return to shareholders.
I realize many online businesses available for sale may not fit squarely in the tech sector. But I think these stats demonstrate more reason for women to look beyond the traditional at-home businesses, personal interests, and fears related to a lack of time and resources to consider running a business—or more than one business—and pave the way not only for more women-centric businesses, but more women entrepreneurs.