A pound invested in women’s enterprise provides a greater return on investment than a pound invested in another type of enterprise.
That’s according to Martin Wyn Griffith, Chief Executive of the Small Business Service.
The RBS calculates that a boost in female entrepreneurship could deliver £60 billion extra to the UK economy, making it easy to see the benefit for both individual businesses and the wider economy.
The number of US women-owned companies has grown by 45% in the past 10 years, while in the UK women have become accountable for 80% of new business growth since 2008, providing ample opportunities for increased ROI and economic growth.
These figures speak for themselves, yet a survey from the Global Entrepreneurship Monitor suggests that a third of the female population cite fear of failure as a reason for not starting a business.
In a world where a greater level of female enterprise could only benefit the economy, we need to ask what we can do to support women-owned businesses on their journeys to success, directly increasing ROI and encouraging aspiring entrepreneurs to take the plunge into a diversity-focused future.
More women than ever have the funds they need to get started in the business world, with the UK government investing £12.5 million in the Aspire Fund for women-led businesses. However, women worldwide still have only 60% of the economic opportunities that men do.
In order to address this uneven playing field and look toward an inclusive, thriving economy, we need to take a closer look at the way we select and support women-owned suppliers.
Why is diversity in procurement important?
According to research, 85% of CEOs cite diversity as a crucial factor in driving innovation.
A diverse group of innovators from different backgrounds not only opens up more opportunities, but ensures a greater pool of employees and suppliers, from which employers and procurers can choose top-level coworkers who share their values.
Partnership with women-owned or minority-owned businesses also gives a unique glimpse into perspectives that we might not have considered before. For example, a female business owner will have faced different challenges, been targeted by different media, and joined different networks to a male supplier. By tapping into her unique experience, a procurer can open up new markets and new facets of their company culture.
On a grander scale, working with a diverse range of suppliers is a driving factor in creating a truly equal business environment.
Far from promoting an uneven playing field, in which reputable businesses are overlooked in favour of more diverse suppliers, diverse procurement is laying the foundation for true equality, in which hard work and big ideas are the only deciding factors when it comes to procurement, pay and promotions.
In the USA alone, nearly 50% of the workforce is now employed by SMEs. By swapping some of our more established suppliers for a diverse range of smaller businesses, we can ensure future stability by directly contributing to job creation.
Opening our businesses to a wider range of suppliers is not just key to individual business growth, but to supporting the economy as a whole, and building a brighter future for suppliers, procurers and consumers alike.
What value do women-owned businesses offer?
If the UK supports female entrepreneurship at the same level the USA does, 900,000 more businesses can be created, adding £23 billion gross value to the country’s economy.
Furthermore, research from Forbes estimates that women drive 70-80% of global consumer purchasing, through both their own buying power and their influence over the decisions of others.
This means actively including women-owned businesses in procurement decisions allows access to this significant new market, thanks to partnership with the women who are experts in representing and reflecting it.
This extends to accessing networks which drive diversity, including the Women’s Business Enterprise National Council and the National Minority Supplier Development Council. Affiliation with these organisations can help a business appeal to clients with a similar ethos, and open up interactions with a new level of forward-thinking professionals.
What is holding us back from diverse procurement?
While female entrepreneurs account for more than 126 million new businesses across 67 economies, breaking into the supply chains of larger corporations is proving to be a significant barrier.
While commitment to diversity in a general sense is becoming an increasingly vital aspect of corporate social responsibility, many businesses are still slow to make supplier diversity a key part of their business strategy.
Part of this comes down to corporations’ reluctance to replace established suppliers with start-up companies and SMEs on their rise to success. Many companies have worked with the same vendors for years, building stable relationships.
However, many of these relationships come from the same pool of similar-sized companies, meaning economic instability could pull apart the entire supply chain. Small businesses are increasingly being recognised as the lifeblood of the global economy, hungry for new ways to grow and survive. Forming relationships with these companies could ensure new levels of stability, despite the constantly evolving business climate.
On the other hand, the slow rise of women-owned businesses could be seen as an indirect result of women’s capability perception and fear of failure. The Global Report on Women and Entrepreneurship found in every single economy, women have a significantly lower estimation of their own abilities than men do. This can be seen as a result of social conditioning which, while predominantly rejected by modern society, still has long-lasting effects.
We need to combat this by changing dialogues around women in business, and ensuring more capable women experience success, becoming empowering role models for the next generation of businesspeople.
What can be done to combat this on a global scale?
The key to global change is reassessing procurement choices in our own businesses.
Women-owned businesses currently earn less than 1% of the money large corporations spend on vendors. In order to achieve the kind of economic stability a truly even playing field could provide, we need to be active in our support.
The majority of established companies have set processes for procurement, calculated with return on investment at their core. However, by adding diversity as a key performance indicator, companies can benefit from a far greater ROI in the longer term, with more sustainable supply chains and greater market reach.
It can feel like a gamble to replace well-known suppliers with relatively unknown businesses. However, a commitment to diversity can be an ideal chance to assess long-standing supply chains and find links which could be improved upon via a wider pool of vendors. After all, the options are constantly evolving, and what could have been the best choice a few years ago could now be outstripped by a younger, more forward-thinking business.
Another crucial step in creating sustainable supply chains is examining the suppliers you already work with, and requesting a full report on their own suppliers. That way, you can ensure you’re both directly and indirectly supporting women-owned and minority-owned businesses, buying into companies which follow your ethos. By supporting women-owned companies at a Tier 2 level, you can help them become Tier 1 suppliers in their own rights.
With the upcoming regulations in the UK, this is also an ideal time to start questioning why certain industries lack diversity. While corporations are reporting on the gender pay gap, we can look at extenuating circumstances which create unequal opportunities, and work together to tackle them through company structure and a commitment to education and agile attitudes toward maternity leave.
How are WeConnect and WBENC helping?
While supplier diversity is something every company needs to work out for itself, they are not alone.
Partnering with an organisation that promotes and certifies diverse suppliers will not only give you access to top women-owned and minority-owned talent, but will offer actionable advice as you make your commitment a reality.
The Women’s Business Enterprise National Council (WBENC) champions female entrepreneurs in the USA, and offers networking and training to corporations willing to share that ethos.
WeConnect International is likewise dedicated to facilitating and supporting women-owned businesses on their journeys toward success on a global level.
By offering fair and equal access to procurement opportunities across industries, the organisation can promote the benefits of women-owned businesses around the world, taking the different economic needs of each country into account, while offering training and networking for female entrepreneurs whose talents may otherwise be overlooked.
The WBENC National Conference and Business Fair, opened by the WeConnect International Day, is a chance for organisations of all sizes to get behind this ethos and enact it in their procurement decisions. As well as sharing insights from some of the world’s largest diversity-conscious corporations, the event offers workshops for suppliers, partners and representatives alike.
As proud recipients of the WEConnect Seal of Certification, and with our executive Chair, Miriam Dervan sitting on the WEConnect board, mdgroup are proud to support this year’s International Day, where we can make valuable connections with fellow women-owned businesses and work to even wider awareness of the intrinsic value diversity holds in our economic future.