Their own bosses: Female small business entrepreneurs in the V4

Working women in the V4 have long faced discrimination and an uneven playing field in labor markets, pushing tens of thousands of women in Visegrad countries into entrepreneurial careers to avoid unemployment. Now, there is a new generation of women entrepreneurs, who’ve consciously chosen this career path to better balance family and work.

Photo: Jaap Joris

The small entrepreneurial world in the V4 countries is – like everywhere in Europe – largely dominated by men with around only 30 percent of women representation. Even though there are no significant differences in the region, the champion is Hungary with 34% self-employed women followed by Poland with 32%. The laggards are the Czech Republis together with Slovakia with 29% self-employed women.
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“I must admit that I was a little afraid and I also did not want to rush fulfilling my dreams either,” explains Szonja Márk, when asked why she had waited so long to start her own business.

In 2015, well into her mid-thirties, after years of a successful journalistic career, a marriage and two kids, now 10 and eight years old, did she have enough courage to open a small sweets shop in Budapest.

We are sitting on the terrace of Édesem (“My Sweet” in Hungarian), her tiny and trendy outlet in Buda, enjoying the sun, sipping coffee and nibbling on her famous rhubarb pie while speaking about her long preparations to become an entrepreneur. Now, with a well running small business, and an enthusiastic client base, with more than 12,000 followers on Facebook, 1 everything seems so linear and logical, although she insists that nothing is.

“My life-long dream was to set up a small shop and sell home-made pastries, but I graduated in communications instead of confectionery or culinary studies, and became a journalist instead of becoming an aide to a famous pastry cook,” remembers Szonja. Although she started taking small steps towards her dreams a little later than most, while at home with the kids she began experimenting with pastries, launched a culinary blog in 2009 that featured her amateur efforts to become a real pro, and this foray, along her articles, Facebook page and Instagram feed soon became very popular.

Thousands of like-minded women followed her pastry experiments, and her efforts to learn from the pastry-chef at the Four Seasons Hotel, where she interned. After she opened her shop almost seven years later, this group of fans became her regular customers.

“Later on, marketing and communications experts told me that this was exactly the way to start a business – by establishing a community. But all this wasn’t intentional. I just followed my instincts,” smiles Szonja. So unlike other new business ventures, she did not have to invest in a communications campaign at the start. The news of her shop’s opening spread by word of mouth throughout Budapest.

The operation is small: she only employs two women, in addition to her husband, who manages all back-office work and orders shop provisions. And although there is a growing pressure from clients for her to expand, her goal is to remain small and maintain excellent quality.

As I watch customers walking in and out of her shop, and read the comments on her blog posts, it becomes evident to me that Édesem is not simply a pastry shop, where housewives come daily to pick up their coffees and pies, but rather an example of a self-made woman fulfilling her dreams.

Numbers show inequalities and discrimination

Szonja’s example, however, is bit uncharacteristic. Statistics reveal a more complex and sometimes disheartening situation for the region’s female small business owners, who struggle with the same imbalances and prejudices as women employed in the other sectors of the economy do.

A 2014 Europe-wide study sponsored by the EU showed that while women constitute 52% of Europe’s total population, only 34.4% are self-employed, and a mere 30% are start-up entrepreneurs, lagging behind men by 8-10% in every EU country. This low level of entrepreneurial drive among European women becomes evident if we look at the entrepreneurial rate, the percentage of women entrepreneurs compared to the total number of women active in the labor force. The female entrepreneurial rate was a mere 10% in the EU-28, while the rate for men was twice as much, at 20%. 2

The top five countries with the highest female entrepreneurial rates were Greece, Albania, Portugal, Italy and Croatia, and the countries with the lowest rates were Norway, Estonia, Denmark, Liechtenstein and Sweden (however, in the Nordic countries, the entrepreneurial rate is equally low for men.) The Visegrad countries were not among the best or the worst. Poland with 14% and the Czech Republic with 12% fared better than the EU-28 average, while Slovakia and Hungary, with 10% and 8% respectively, fell within the mid-range of European countries.

The V4Revue’s own exclusive data collection also confirmed the EU Commission’s study results (for more results see our graph collection). (For the purpose of this study, entrepreneurs are defined as persons aged 15 years and older, who own and operate their own for-profit businesses, farms or professional practices, or are in the process of setting up an enterprise, which they consider to be their main activity).

The small entrepreneurial world in V4 countries is – like everywhere else in Europe – largely dominated by men with only around 30% female representation, with the highest rates, ranging between 32-34 % (for the last five years) found in Poland, while the lowest rate at 29.1% found in Slovakia.

Interesting gender inequalities and differences can be seen in the four countries in terms of age and education level. Two female age groups seem to be more inclined to dive into a business startup: those between 20 and 30 years old (or even younger in the Czech Republic and Hungary) and women above 40 (in practically all V4 countries).

In Hungary and the Czech Republic women, who have attained a basic education level tend towards self-employment more than the average, while in Slovakia and Poland female representation in the total number of small business entrepreneurs increases with higher education levels.

As the above-mentioned EU study showed, a higher proportion of female entrepreneurs were active in the human health, social work and education sectors across Europe. For example, 60% of the entrepreneurs active in the human health and social work sector were women, while women made up 55% of the education sector. Fewer women entrepreneurs could be found in the EU-28’s construction, transportation and storage, water supply, information and communication, and manufacturing sectors. And in the V4, similar trends could be spotted, with health, social, education and also financial services serving as the top sectors for women entrepreneurs.

The V4 data also shows that while women may work somewhat less than men, the gender wage gap was considerably higher in all V4 countries, mirroring the usual inequalities between men and women in the labor market. 3

The V4Revue polled various entrepreneurial organizations (like chambers, associations and interest groups) in the region to find out about female representation on their executive and supervisory boards, and it turns out, women are largely underrepresented here as well. Women only held 24 of the 137 total positions examined across the four countries, and there were several associations in the region, where only men held the executive positions.

More women entrepreneurs, better society?

Statistics show that men can better manage labor market challenges, as well as an entrepreneurial career. Katalin Keveházi, a Hungarian expert on gender issues and female entrepreneurship, told the V4Revue that societies should motivate more women to start their own businesses. “It is not only a question of women establishing their own economic independence, but also a logical response to the dire job situation,” she explains. She believes that self-employment affords women economic independence and autonomy, allowing them to make the best decisions for themselves and their families in every phases of their lives. 4

Keveházi points to a clear societal benefit as well, saying that female entrepreneurs, and women in general, tend to spend more of their revenue on their children and their education. Additionally, they benefit society by creating jobs for others.

These factors are outlined in various EU documents as well, which all have determined that gender inequality and the underrepresentation of women in the entrepreneurial world are real problems for the V4 (and European) societies. For example, one EU report on the public consultation of the Union’s “Entrepreneurship 2020 Action Plan,” which highlights job creation potential and possibilities in a European economy just awaking from its worst financial crisis since WW2 claimed that, “women represent the most underused source of entrepreneurial potential in Europe.” 5

For most women, being an entrepreneur is not a long-pursued, dream-come-true, but the only viable alternative to unemployment. As the various statistics show women entrepreneurs’ situations in the region are closely linked to the labor market.

While speaking with the V4Revue, Lenka Simerská, a Czech sociologist and gender expert emphasizes that, “[self-employment] is the only exit strategy for a lot of women.”

“Even women with high qualifications have difficulties finding jobs, especially after a certain age. The patterns we see for how and why women become entrepreneurs, seem to be their responses to labor market deficiencies and discrimination,” says Simerská, adding that these patterns include mothers who turn to self-employment when they realize they are unable to get their jobs back after maternity leave, or women in their mid-forties or even fifties, who are often considered unemployable by companies who prefer a younger or male workforce. 6

Maternity leaves in the V4 countries are quite long compared to other, Western EU member states: a legacy of life under Communist regimes, where mothers could enjoy years at home with their kids. Maternity leave in Hungary remains three years and in the Czech Republic four years, and very often it is a clear barrier for mothers wishing to return to the labor market. Although employers are bound by law to reemploy them, they often find ways to avoid these obligations.

A new wave of women entrepreneurs

“One of my friends organized a birthday party. I had the perfect dress, but did not have the appropriate purse,” says Darina Ermisová, a Czech entrepreneur, discussing her company’s inspiration. 7 At the time, Ermisová was managing a high-risk pregnancy, and could not simply go out and buy a new bag. So she fashioned and sewed a purse for that evening, and her creation became the first model for her enterprise, which now employs dozens of people and sells hundreds of bags a month.

“Friends liked my first purse, so I started making similar ones for them. Then once, jokingly, they put pictures of my handbag on a sales portal, and it sold within an hour,” she remembers. The brand Dara was born, and in 2015 she received Czech Forbes Magazine’s Entrepreneur of the Year award.

Katalin Keveházi, who conducts regular interviews with women entrepreneurs, says that Dara’s story is an emerging pattern in the field. “We see more and more women who do not wait to be discriminated against in the labor market, or until employers refuse to reemploy them or make it impossible for them to reenter the job market following their maternity leaves,” she says.

She then explains that these new women entrepreneurs now use their maternity leaves to prepare for new phases in their lives. “They often choose this path because they think being self-employed will allow them a better balance between children and work. So they consider self-employment their own autonomous choice, instead a constraint of the labor market,” says Keveházi.

As a trainer, Ági Vida is building a whole movement out of this new wave of autonomous women entrepreneurs-to-be in Hungary. Born out of a blog for young mothers, she now operates a website, Gazdagmami.hu, 8 and organizes workshops and competitions for women curious about becoming self-employed. She uses her own experiences – being regularly refused by employers after her maternity leave, and starting her enterprise with only 150 euros – as a model. And her model has paid off. In 2015 and 2016, she was selected as one of the 50 most influential women in the country. And she is optimistic that there will be more women entrepreneurs in the region in the coming years.

“When I started my business, most of my clients were young mothers who were looking for part-time activities so they could earn money while they were on their maternity leaves,” she explains. “Now, I meet more and more freshly-graduated, young women who are consciously preparing themselves for an entrepreneurial career,” she says, speaking to the V4Revue, adding that most of them hope their enterprise remains small. “Their main motivation is to be their own boss and be autonomous,” Vida says.

Barriers to growing big

Lucie Viterová, winner of the 2015 Czech Businesswoman Award in the small company category with her firm, Home Care Promedica, believes women have some advantages over men in business. “They tend to be more practical-minded, they can concentrate on several activities at a time and they have greater empathy,” 9 she said in an interview with Marta Zieba-Szklarska, head of Alter Group, a consultancy with offices in Warsaw and Krakow. “Women in business are able to build relationships based on trust, loyalty and quality. For men, business is like a war; they are better competitors than we are. But I think women have the advantage and the ability to communicate with each other – to cooperate,” she emphasized. 10

Experts interviewed by the V4Revue agree that women entrepreneurs possess clear characteristics, empathy being number one; they are also more family-focused and interested in their employees’ wellbeing.

These female small business owners often never dream of expanding their operations. “Typically female small business entrepreneurs begin their operations to sustain themselves or their families. They remain small, do not expand internationally and that pattern reflects the culture they are operating in,” Keveházi explains. She thinks that these women limit their businesses growth opportunities to reconcile their very untraditional approach to work, along with their autonomy, independence and entrepreneurial spirit with the traditional roles and stereotypes society has assigned to them, as woman. The European Commission’s report also found that stereotypes and cultural context are major factors that prevent female small business entrepreneurs from expanding – even if they would like to. 11

Keveházi’s extensive research on female entrepreneurs, has led her to believe that all major inequalities between men and women and the discrimination women face – be it in the labor market or in the education system – are replicated and more emphasized in the business sector, and consequently in the field of small business entrepreneurs. The discrimination women face in primary education, for example, makes it difficult for women entrepreneurs to have the necessary managerial skills to grow their businesses. “This is why we often see women starting businesses much later than men,” Keveházi says.

Keveházi also points out that labor market segregation means that women only do business in certain sectors that women are already better represented in anyway. For various reasons (under-investment in human capital, schooling, prejudices and stereotypes, entry barriers, etc.) certain professions are more dominated by men, the business and entrepreneurial sector, being one of them. 12 Furthermore, the revenue or fortune gap between sexes prevent women entrepreneurs from having the necessary financial resources to invest in their companies.

The financial discrepancies were also discussed in the EU report, 13 which noted that women are disadvantaged when it comes to raising the initial capital for their businesses, typically using only a third of the start-up capital than men do, irrespective of the sector. On top of that, some women’s personal assets and credit records fall short of the guarantees required for external financing; and women experience more difficulties dealing with banks and entering informal financial networks.

Smarter use of funds would be necessary

“Women entrepreneurs clearly have characteristics that should be taken into account when a state or the EU designs policies and allocates funds for them,” agrees Simerská, who thinks that women entrepreneurs’ specific conditions should be considered and different policy solutions developed for the barriers women face when starting companies.

She says that if the EU truly believes that women represent Europe’s most underused source of entrepreneurial potential, then member states should acknowledge that women face a number of difficulties establishing and operating their businesses than their male counterparts, mainly in the areas of finance acquisition, networking, and reconciling business demands and familial obligations.

Simerská criticizes the EU’s social funds, which solely provide entrepreneurial workshops and trainings to women. Although she acknowledges the importance of such education, she argues that funding should be diversified and focused on other challenges identified by the various, above-mentioned EU reports. “Tweaking the tax and the social security system in ways that makes it easier for women to start and sustain enterprises or improving their access to daycare facilities or financial markets would be equally important,” she explains.

The EU Commission report on the public consultation over the Entrepreneurship 2020 Action Plan 14 echoed Simerská’s sentiments about tailored entrepreneurial training for women. While a third of all respondents regarded the trainings as very important, another third of the respondents disagreed, considering not very important at all.

Other initiatives like helping women expand their networks of female entrepreneurial ambassadors and mentors, or facilitating access to banking finances were considered very important by two thirds of all respondents. A lot of them also mentioned that fostering female investors and networking among women entrepreneurs were equally important. A full 64% of all respondents considered the availability of adequate child/dependent care facilities a very important element for improving the situation of Europe’s women entrepreneurs.

A 2011 specialized report  15 on entrepreneurs in Poland echoed these opinions, and emphasized that besides generally supporting women entrepreneurs by easing gender barriers, specifically-designed measures to help female-led businesses thrive, should also be implemented. Apart from professional trainings, these include: investing in individualized professional assistance (coaching, mentoring), developing more flexible social services (nurseries, kindergartens) that are better adept to the special needs of women wishing to launch enterprises, and introducing incentives for contracted, female employees to start their own businesses. Then-director of the Polish Agency for Entrepreneurship Development, Bozena Lublinska-Kasprzak noted in the report’s summary that all over Europe, “there are still noticeable disproportions regarding female and male entrepreneurship”.

So if entrepreneurial women are provided equal opportunities to use their full potential, society and the economy will greatly benefit.

The full data visualisation is available here. In case you would like to receive the full data set for either country or the whole V4, send us an email at rebecca(at)visegradrevue.eu

The article is part of the project “Learning about causes and effects of gender (im)balance in Central Europe” funded by the European Union flag_yellow_high
The content series was created by the V4Revue, not by the funder.

Notes:

  1. Édesem Facebook page, http://bit.ly/2b5vh0Q (accessed on August 13, 2016).
  2. European Commission, Growth, Entrepreneurship and Small and medium-sized enterprises (SMEs), Promoting entrepreneurship, Who we work for, Female entrepreneurs, 2016 http://bit.ly/2bblb0o (accessed on August 5, 2016). See also Statistical Data on Women Entrepreneurs in Europe, European Commission 2014, http://bit.ly/1rWUwY1 (accessed on August 5, 2016). See also Izzy Hatfield, Self-employment in Europe, Institute for Public Policy Research (IPPR) report, January 2015, p. 15, http://bit.ly/2bemdJE (accessed on August 9, 2016).
  3. Gender pay gap statistics, Eurostat – statistics explained, http://bit.ly/1Bf20GV (accessed on August 9, 2016).
  4. See also Viviana A. Zelizer, The Gender of Money, Wall Street Journal, January 27, 2011, http://on.wsj.com/2b5sKDR (accessed on August 9, 2016).
  5. Report on the results of public consultation on The Entrepreneurship 2020 Action Plan, European Commission 2015, http://bit.ly/2aSdOfm (accessed on August 3, 2016).
  6. See more on this topic in: Report on the future of gender equality in the EU, European Commission 2015, http://bit.ly/1RtQyCc (accessed on August 2, 2016).
  7. Na rizikovém těhotenství ušila první kabelku. Dnes má desítky zaměstnanců a zná ji celé Česko, Zenysro, November 10, 2015, http://bit.ly/2aQugGT (accessed on August 2, 2016).
  8. A Gazdagmami lett Európa legjobbja, HVG, October 3, 2014, http://bit.ly/2bdlyqp (accessed on August 3, 2016).
  9. Kvalita služeb rozhoduje, Franchising, February 1, 2016, http://bit.ly/2beKWcM (accessed August 1, 2016).
  10. Female Entrepreneurship Thrives in Poland, The Globalist, September 13, 2015, http://bit.ly/1J6OTbm (accessed on August 5, 2016).
  11. European Commission, Growth, Entrepreneurship and Small and medium-sized enterprises (SMEs), Promoting entrepreneurship, Who we work for, Female entrepreneurs, 2016, http://bit.ly/2bblb0o (accessed on August 5, 2016). See also Supporting Document No. 2. Evaluation On Policy: Promotion Of Women Innovators And Entrepreneurship, Final Report, European Commission, DG Enterprise And Industry, EEC (GHK, Technopolis), July 25, 2008, http://bit.ly/2bblb0o (accessed on August 5, 2016).
  12. Gender segregation in the labor market, European Commission report, 2009, http://bit.ly/2aTCwbk (accessed on August 9, 2016).
  13. Promotion of Women Innovators and Entrepreneurship, European Commission, 2014, http://bit.ly/2b9jmm5 (accessed on August 9, 2016).
  14. Report on the results of public consultation on The Entrepreneurship 2020 Action Plan, 2015, European Commission, http://bit.ly/2aSdOfm (accessed on August 3, 2016).
  15. Women entrepreneurship in Poland, Polish Agency for Enterprise Development Warsaw, 2011, http://bit.ly/2aQuIoF (accessed on August 9, 2016).
Attila Mong

Attila Mong

is an editor of the V4 Revue. Attila is also currently working as editor for an innovative investigative journalism NGO, Atlatszo.hu and a researcher for Mertek, a media think-tank in Budapest. He also does journalism trainings in Asia and Africa for the DW Akademie,