Introduction
In Bosnia and Herzegovina, as well as in the world, the importance of developing female entrepreneurship and its overall contribution to economic development is increasingly recognized. Entrepreneurship in itself contributes to new jobs, which is important for Bosnia and Herzegovina, which has a high unemployment rate, and is of great importance for young women and youth.
According to data from the BiH Agency for Statistics, our community has the lowest rate of female labor-force participation in Southeast Europe, so female entrepreneurship can certainly ensure the productive placement of well-educated and underutilized talent.
Key facts about entrepreneurship:
- An individual who takes on the risk of starting a new business venture by founding a company is called an entrepreneur.
- An entrepreneur creates a company that will realize their idea, known as entrepreneurship, which combines capital and labor in order to produce goods or services for profit.
- Entrepreneurship is very risky, but it can also be very rewarding, as it serves to generate economic wealth, growth and innovation.
- Securing financing is key for entrepreneurs: Sources of own capital include previously earned money, current earnings (from existing employment or some business), money from relatives, money from a business partner. Sources of external capital include financial institutions, government institutions, business angels and “crowdfunding.”
- The way entrepreneurs file and pay taxes will depend on the way the company is set up in terms of structure and local laws or regulations.
What is a business idea?
A business idea can be defined as a brief description of the basic functions of a future business venture. It is actually a combination of our resources and value for the end buyer or user. A business idea represents the beginning of every entrepreneurial venture. A business idea is also your first step toward realizing your entrepreneurial dreams.
A good business idea, therefore, represents a combination of your interests and skills, does not require large initial investments or the hiring of a larger number of workers in the first year of business, is directed at a market where there is unmet demand, has a defined competitive advantage and answers the questions of what will be produced/delivered, in what way, for which target market and why.
What is an entrepreneur?
An entrepreneur is an individual who creates a new business, taking on most of the risk and enjoying most of the rewards. An entrepreneur is usually considered an innovator, a source of new ideas, goods, services and business and/or procedures.
The process of founding a company is known as entrepreneurship. Entrepreneurs play a key role in a market economy, using the skills and initiative necessary to anticipate needs and bringing good new ideas to the market. Entrepreneurship that proves successful in taking on the risk of creating a startup is rewarded with profit, fame and opportunities for continued growth. Entrepreneurship that fails results in losses and less prevalence in the markets for those involved.
What are the basic obstacles/challenges women face?
Any research on the women's question in Bosnia and Herzegovina is often partial, the data, like much else, is not entirely reliable, and little of it is concentrated on women in entrepreneurship.
Still, based on my own observations, I can acknowledge that the number of female entrepreneurs is growing, women who in ever greater numbers choose entrepreneurship as a career path and as a means of realizing their talents, creativity and initiative.
Despite these optimistic forecasts, women-owned businesses are still in the minority, and in BiH there are roughly four male entrepreneurs for every female entrepreneur. Similarly, for those women who take the entrepreneurial path, the vast majority start small businesses/trades 52%, limited liability companies 21%, home-based work 5%, agricultural holdings 5%. The same data reveal that 84% of women-owned businesses have one to five employees.[1]
We all know that women are just as smart, creative and hardworking as men, so why do we have such a small number of female entrepreneurs? According to certain research, the conclusion was reached that the answer to the reasons lies in challenges in the categories: human capital (education and experience), social capital (business network), financial capital (sources of financing) and the need for role models/mentors. Some of these challenges, such as education, experience and sources of financing, are structural in nature and are the general challenges of all entrepreneurs, while others, such as the business network and the lack of role models/mentors, arise from various stereotypes and expectations. The mentioned challenges represent potential obstacles.
Challenge No. #1: Education
Our first challenge, education, is a type of “human capital” that helps an entrepreneur build their skills and abilities, while at the same time preparing them for various tasks or careers.
Nobel laureate Gary Becker emphasized the importance of education and its impact on earnings in his classic study of human capital first published in 1964. Data show that women actually have a higher level of education than men.
According to the BiH Agency for Statistics, women were awarded 60.2% of undergraduate university degrees, 63% of master's and doctoral degrees in 2020.[2] Despite these educational results, women and men tend to focus on different fields of study. Specifically, men are more likely to have degrees in technical fields, which include science, technology, engineering and mathematics. These fields are important because they are a source of entrepreneurial initiatives in key industries such as IT, technology and bioengineering.
In the end, as more and more women enter technical fields, the power structure will change in ways that will enable and empower the girls and women who will follow them. For now, however, statistics reveal that we still have work to do in terms of removing the structural and cultural barriers that discourage girls and women from pursuing these fields and the careers that arise from them.
Challenge No. #2: Experience
Together with education, previous experience is the second main type of human capital and serves as the main building block for entrepreneurial companies. Experience can come in the form of previous work experience in general, experience working in a particular industry, managerial experience or previous experience in launching an entrepreneurial company. As with education, women have made impressive progress in the workplace, and the number of women working outside the home has increased dramatically.
Women have also made gains in the workplace by advancing into managerial roles and are well represented in the ranks of middle management in most large organizations in BiH. Despite these gains, women remain underrepresented at the highest leadership levels. Similarly, women remain underrepresented on boards of directors. Therefore, although women have gained an enormous amount of experience in the workplace, industry and middle management, they have gained less experience in making the kinds of decisions that involve higher-level strategic planning and setting priorities.
What will it take for women to break the C-Suite code? A growing number of research studies show that diverse teams lead to better decisions and better results. Articulating these research findings so that the corporate community truly understands them will help communicate the value of having women, as well as men, in senior leadership and board roles. This heightened understanding can be linked to the ongoing efforts of corporate leaders to identify and coach employees, while providing them with the kinds of experiences that will prepare them for executive roles.
Women themselves can play an active role in encouraging companies to hire qualified women and provide them with career paths that lead to higher positions.
Challenge No. #3: Business Network
Like human capital, social capital in the form of a business network and key contacts is an important resource for female entrepreneurs. Social capital refers to the people you know and the groups or organizations you are part of. The importance of social capital lies in the fact that it serves as a means to help entrepreneurs secure the resources they need to launch and grow their companies. This especially applies to growth-oriented female entrepreneurs who need significant resources in the form of people, facilities and funds. In this sense, social capital is an essential building block for the success of growth-oriented female entrepreneurs.
Similarly, entrepreneurial business networks and contacts can provide valuable information along with emotional, financial and managerial support. And although there is no reliable data on women's participation in incubator or accelerator programs, it can nevertheless be seen that women are very poorly represented. Incubators have existed for some time in BiH and usually provide physical space for start-up companies. Most incubators are non-profit entities and are often affiliated with universities, state or municipal governments or research facilities. Early-stage companies in residence stay in the incubator for a certain time, usually ranging from one to five years. In addition to having physical space in which to work, these companies have access to support services in the form of training and contacts with the industry, as well as access to providers of professional services such as lawyers, accountants, consultants, marketing experts, angel investors, venture capitalists and volunteers.
Unlike incubators, accelerators are a relatively new phenomenon. The accelerator model consists of a short-term and very intensive program, usually lasting from 60 to 90 days, designed to help entrepreneurs bring their product to market and connect with potential funds. Entrepreneurs are provided with a rigorous program of training, mentoring and technical assistance that will help them develop their companies quickly. The goal is for participants to move through the accelerator program as part of a partnership, thus establishing lasting ties with the members of their group. The selection process is highly selective, with a focus on those companies most likely to succeed and grow in certain industries, such as software design or mobile application development.
Both of these examples sharply highlight the challenges female entrepreneurs face in accessing key business networks that could provide them with skills, contacts and access to economic opportunities. In response to this, a growing number of governmental and non-governmental organizations and business practitioners have called for the need for the female entrepreneurial ecosystem to respond to the unique challenges female entrepreneurs face and to help level the playing field in ways that will help not only women, but the economy as a whole.
As we could see from the previous analyses, that women make up almost half of the workforce and more than half of our graduates today, their lagging in building companies and high-growth companies is one of the main economic deficits of our society.
Challenge No. #4: Financial capital
The research we mentioned earlier focused on the financing strategies of female entrepreneurs and consistently documented the fact that women on average raise a smaller amount of financial capital than men and rely more on internal rather than external sources. This is especially true in the case of external financing provided by venture capitalists and angel investors. Although internal sources of financing in the form of personal savings, funds from family and friends and personal debt, often in the form of credit cards, may be sufficient to launch smaller companies, these sources usually cannot provide sufficient financial capital for growth-oriented companies.
Therefore, female entrepreneurs who aspire to grow must seek and obtain external sources of financing, such as bank loans, angel investments and venture capital. Unfortunately, financial capital is equally problematic in BiH for both male and female entrepreneurs.
Challenge No. #5: Role models, mentors and the media
We don't have to look far to find evidence of the gendered nature of entrepreneurship in BiH, and in the world too. Who are the main role models of entrepreneurial success today? Steve Jobs, Bill Gates, Mark Zuckerberg, Larry Ellison, Elon Musk, etc.? On the contrary, successful female entrepreneurs are much less visible, especially in those kinds of high-tech fields dominated by men on which the media focus. This focus on male entrepreneurs and male-dominated industries perpetuates the notion that entrepreneurship is not a viable career option for women or that women are not “good” at being entrepreneurs.
Why are role models so important? If female entrepreneurs have less confidence in their abilities, they might be less willing to take on the risks that accompany launching or growing a company, and then a problem of self-efficacy arises. One of the ways to solve the problem of entrepreneurial self-efficacy among women is to provide more role models of successful female entrepreneurs. The essential problem is not so much that female role models don't exist, but that the media in BiH, for whatever reason, do not devote equal attention to them as to men. If media coverage in promoting female entrepreneurs improves, such new role models will inspire the next generation of female entrepreneurs.
Another approach to solving the confidence gap is mentorship. Mentors can be a valuable source of knowledge and contacts. Equally important, mentors can provide moral support and other affective benefits, such as a great sense of self-efficacy and self-confidence for new female entrepreneurs. In light of these advantages, a female entrepreneur should have the opportunity to find a mentor or mentors who have launched successful companies. These are people who have experienced all kinds of stresses, strains and dark moments that you may also encounter, and they have found ways to overcome them.
On the contrary, it's necessary to encourage successful female entrepreneurs to give back to the community by teaching those who are inspired by their example. No one knows better what entrepreneurship is than those who have founded, run or have run companies.
Conclusion:
The good news is that women-owned businesses are increasing both in number and in economic impact. Despite this, various research, as well as anecdotal data, show that women still face disproportionate challenges when trying to launch or develop their own company. As we've noted, some of those challenges, such as the lack of women's experience in management and the male-dominated nature of the venture capital industry, are structural in nature, while others come in the form of cultural or generalized barriers. Regardless of the source, these challenges together represent an obstacle to the economic well-being of our country. If women are discouraged from taking the entrepreneurial path, they are less likely to take part in developing innovative products and services, jobs, creating added value and generating economic wealth for themselves and others. In light of this, our task is not only to identify these challenges but also to devise strategies to minimize or eliminate them.
In his significant work, “How to Start an Entrepreneurial Revolution”[3], Harvard professor Daniel Isenberg sets out the components of a strong entrepreneurial ecosystem, noting that when these different elements work together, they have the potential “to create and grow ventures.” Significantly, Isenberg places public leaders and governments at the top of his list of those responsible for developing and advancing entrepreneurship. He notes that “public leaders” must advocate and “open their doors to entrepreneurs,” while governments should create effective institutions to promote entrepreneurship and remove structural barriers; other scholars warn that there is no one-size-fits-all approach to developing effective entrepreneurial ecosystems and encourage leaders and decision-makers to design entrepreneurial ecosystems that work better at addressing the constraints women face, in order to accelerate the many positive changes already underway.
Although, thanks to the support of foreign organizations and certain non-profit organizations, we have made progress in female entrepreneurship in recent years, the job is not yet done. Our overall contribution should be in promoting entrepreneurship as strongly as possible as a basis for the better prosperity of women, in effectively and strongly advocating participation in education in technical fields, in developing entrepreneurial skills, in business incubator and acceleration programs, and in successful role models – women entrepreneurs.
[1] ANALYSIS OF NEEDS AND OBSTACLES TO ENCOURAGING THE DEVELOPMENT OF WOMEN'S ENTREPRENEURSHIP IN FBiH, poduzetna.ba - https://docs.google.com/forms/d/e/1FAIpQLSdrRA6Dp32-9B2f-W5WQ-HFIs2qq05X-ZdP2EoS04PQDZcbiw/viewanalytics [2] DEMOGRAPHY AND SOCIAL STATISTICS – BiH Agency for Statistics -https://bhas.gov.ba/data/Publikacije/Saopstenja/2021/EDU_05_2020_Y2_1_BS.pdf [3] THE BIG IDEA: HOW TO START AN ENTREPRENEURIAL REVOLUTION – Daniel Isenberg - https://hbr.org/2010/06/the-big-idea-how-to-start-an-entrepreneurial-revolution
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