Why businesses run by women often fail
Published on: Saturday, March 09, 2019
By: Sherell Jeffrey
Kota Kinabalu: Most businesses run by women wind-up closing after three or five years due to lack of entrepreneurial literacy. Universiti Kebangsaan Malaysia (UKM) School of Social, Development and Environmental Studies Assoc. Prof. Dr Sivapalan Selvadurai said according to Thibault’s 2001 state of business, one out of three businesses survive their fifth anniversary, while only one out of five make it to their 10th anniversary.
Among reasons for failure for business start-ups range from inconsistent management accounting, funding gaps, indecisive leadership, insufficient market adjustment and tax and law-related aspects.
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He said entrepreneurial literacy could be defined into three, one is having some basic knowledge of how a business is created and managed.
Second, is the level of relevant knowledge that potential founders (such as women) should have obtained in order to start and sustain their business and third, is about the research done as one prepares to start a business.
“The more you learn and grow, the better business leader you will be. Real entrepreneurial skills come from your work and industry experience, and your willingness to continue learning,” he said.
“Entrepreneurial literacy, encompass varied dimension, but eventually if women have equipped themselves with all those knowledge, they will not only start business but also be able to sustain it,” he said when speaking at a recent seminar on “Gender and Literacy in Sabah: Eliminating the Gaps” here.
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His talk titled “Entrepreneurial literacy in empowering women in rural areas: Drawing on experience of local champions” was based on their research on eight entrepreneurs who have succeeded in the business world.
“They have given us all this input on what type of knowledge they have equipped themselves so that their capacity and ability to sustain is there,” he said.
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He said their findings showed that the types of entrepreneurial literacy includes financial knowledge, technical, innovative development, business operation and experience, network know how and company knowledge.
He said market and environment needs, institutional literacy, pricing strategy and certification awareness are also equally important.
Women, he said, tend to have lower participation rates in entrepreneurship than men, citing statistics by Mei Fun 2009 which found only 16 per cent of SME enterprise involved in service, manufacturing and agriculture sector in Malaysia are owned by women.
The findings showed that women generally choose to start and manage firms in different sectors than men tend to do.
It also showed that women face challenges in reducing gender gap in rural enterprise as consequence of multitude factors from cultural drawbacks to lack of access to information.
Citing Sharma et al 2012, he said challenges faced by rural women in business are lack of technical knowledge and skills.
Among list of challenges include technology-technical understanding and gaining the required skills, accounting, managerial skills, assistance and training in implementing the business idea and finance and marketing of their produce.
He said identifying initial sources of financing, and advertising promotion is also part of the challenge for rural women.
In conclusion, he said rural context and the nature of lack of facilities and distance to engage in enterprise has placed women in severe constraint to participate in entrepreneurial activities as compared to men. Stay up-to-date by following Daily Express’s Telegram channel.
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