Entrepreneurship: why women quit

Entrepreneurship is often viewed as a way of enhancing work-life balance and flexibility, but for many female founders the reality is quite different, according to a study that explores why women leave their businesses and the emotional effects of doing so.

Researchers Dr Janine Swail (University of Auckland) and Dr Susan Marlow (University of Nottingham) undertook in-depth interviews with 16 female founders and discovered that all of the participants left their businesses due to personal reasons rather than financial or performance issues.

These reasons were related to gendered caregiving responsibilities for children or elderly parents. Of the study participants, those who had or were planning to have children said this was their main reason for leaving or selling their business.

Dr Swail, a senior lecturer in entrepreneurship and innovation, says although the study participants were from the UK, the findings have implications for Aotearoa New Zealand and globally.

All the women in the study referred to their business exit as a decision they made personally and voluntarily, but the researchers say quitting was often necessitated by the impossibility of satisfying the competing time demands of the household and the business.

“The evidence presents a picture of the participants being pushed into exiting from or closing their businesses, often without the pull toward another career opportunity, such as secure employment. This undermines the so-called choice and agency that supposedly encompasses an entrepreneurial career,” says Dr Swail.

“As such, more women entrepreneurs are likely to experience selling, closing or simply walking away from their business as an unwilling choice.”

In addition to maternal caring responsibilities being a key driver in many of the women’s decisions to leave or sell their businesses, tensions around household finances were an issue and many of the business owners found themselves dealing with a trade-off between hours invested in the business and those in the household.

Faced with such financial implications, the participants highlighted the penalties and issues with using entrepreneurship as a route to flexible working and work-life balance.

One interviewee said: “Basically, I wanted to do something that was flexible. I was told that [business ownership] would be flexible. I wanted something where I wouldn’t have to work full time, but I was completely wrong about that – especially with setting up your own business. It takes over your life and just becomes another baby, I suppose.”

The study authors say the popular perception of entrepreneurship as providing a pathway for making a decent income while offering greater flexibility and choice regarding how, when, and where to work can be dangerous.

Swail says almost all the study participants had strong negative emotions directly after exit including feelings of failure when shutting down or leaving their businesses.

“There needs to be a more nuanced view of entrepreneurship and self-employment, and people need to have difficult and realistic conversations in their households about what it takes to set up and run a business, especially when you have, or are considering, a family.

"Entrepreneurs, particularly women need to be in relationships where they feel supported in terms of caregiving and finances. This is a conversation we don’t often have openly in start-up ecosystems.”

Marlow and Swail say support organisations and government policy initiatives should refrain from presenting self-employment in a simplistic and overly optimistic way.

“Governments have a responsibility not to reproduce arguments that entrepreneurship is beneficial for all because it’s clear that for some women, who are at a certain point in their lives where caring responsibilities are large, there’s the potential for this route to be financially and psychologically damaging.”

The researchers say the plethora of networking sites for female entrepreneurs, which exist to inspire and provide mentoring, role models and educational support, should also offer a channel for women to share more negative experiences of entrepreneurship.