The Goldilocks Syndrome and Why Women Run Smaller Companies

Ask women why they started a business and the most frequent responses are a desire for work-life balance, self-fulfillment or job satisfaction, according to research from the US Small Business Administration.

Much of the time, women launch businesses without much hoopla or, indeed, overall strategy, especially Boomer and Gen X women. After being laid off or experiencing a setback, they frequently decide to market a skill honed at previous jobs. Enabled by technology and the expanding virtual and outsourced workforce, women can make a go of it more easily than in the past.

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Women frequently discover disruptive innovations
Many women get an early fix on a niche market or an overlooked opportunity or product because they're tapped for smaller or unusual projects within their field of expertise, and the light bulb begins to burn. Many other women assume self-employed status when corporate jobs become objectionable or unavailable for a range of reasons. They discover an aptitude for being in charge and end up preferring to be their own boss. Another significant cohort turns solopreneur because of its flexibility in caring for kids or relatives. Over time, the interim projects often scale into ongoing and reliable businesses.

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Gen Y women are schooled in Plan B
By contrast, Gen Y women are developing a somewhat different entrepreneurial dynamic, although it's too soon to see how far that will go. Tech-savvy, typically well educated and schooled by the Great Recession and the Free Agent Nation to always have a Plan B, Gen Y women are launching at younger ages than previous generations.

Whatever the generation, most studies show that men generally start businesses to make money. They typically work longer hours than women owners do. Interestingly, women entrepreneurs are more likely than men to show early positive revenue while male-led companies tend to have more employees than women's firms. Undoubtedly, that's a function of whether the business is something of a lifestyle choice or whether the owner is aggressively trying to grow.

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Male owners prefer a cheerleader at home
A 2012 survey of 258 entrepreneurs conducted by business professors Kimberly Eddleston and Gary Powell examined male and female entrepreneurs' satisfaction with their families and the role families played as owners built businesses. Their findings: "Overall, results supported feminist theories that depict entrepreneurship as a gendered process." Women entrepreneurs nurtured their satisfaction by "creating work-family synergies." Integrating business and family experiences enriched the women. Men, on the other hand, were satisfied with work-family balance by "obtaining family support at home."

That is, the men preferred someone who cheered them on while keeping the home fires burning and the personal wheels turning.

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Women run smaller companies
Across the board, women run smaller businesses than men do. Lots of explanations for that continue to be advanced. Take your pick. The reason for smaller firms, suggest a range of academicians and pundits, is because women owners suffer from: low confidence; less business experience; smaller startup capital; gender bias in funding; service businesses that don't scale; family responsibilities; fewer role models; a dearth of strategic planning; reluctance to delegate; inability to control the financial dashboard; inadequate pricing; resistance to taking on complementary partners; inattention to profit margins; unrealistic business valuations that discourage investors; and on the hobby horse rides.

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Choice or gender inequity
In fact, no one has a definitive reason. Might women prefer the fulfillment and intimate control of smaller companies, especially after facing the slings and arrows and stress endemic in larger companies? Is it because of choice or gender inequity?

You tell me.