Start-up moms: ambitious and with a firm eye on the family

• In 2016, one in six businesses was founded by mompreneurs
• Personal services were the main focus
• Start-ups as opportunity to balance work and family life

Start-up activity in Germany has been on the decline for some 15 years now as a result of Germany’s vibrant labour market. The number of business start-ups fell from 1.5 million in 2002 to 672,000 in 2017. The share of start-ups by women, however, has risen – from 34% in 2002 to 40% last year. Four in ten female business founders have underage children in the household. Known as mompreneurs, they accounted for one in six start-ups in 2016. A special analysis of the KfW Start-up Monitor has now revealed that women, particularly mothers, run start-ups differently than men.

A key finding was that balancing work and family life is crucial to start-up moms in every respect. ‘On the one hand, many mothers venture into self-employment particularly because it allows them to manage their time flexibly’, said Dr Jörg Zeuner, Chief Economist of KfW Group. Nearly three fourths of mompreneurs (72%) mentioned the desire to improve their work-life balance as a motive for starting their business. ‘On the other hand, potential mompreneurs also abandon their start-up plan more often than average out of concern that it may put pressure on the family. Managing work and minding children remains a major challenge for many mothers, whether in employment or while running a business’, said Dr Zeuner.

Roughly one third of mompreneurs start their business on a full-time basis, as do female business founders without children. Mompreneurs, however, limit their working hours (to 36 vs. 50 hours a week). But that does not mean weaker growth ambitions – on the contrary. While 9% of all female business founders mentioned the desire to grow, that rate is 14% among mompreneurs. They also start their business more often with employees and/or partners in a team (29% vs. 23%).

Mompreneurs have a clear sectoral preference with a particularly strong focus on personal services (45%). These include hospitality and health services as well as home childcare services, for example, which facilitate balancing work and family life and are offered by mompreneurs more often than average. The share of digital business founders is notably low, at 13% vs. 20% for all start-ups. This has to do with the type of qualifications they have. Only 7% of mompreneurs with a university degree have MINT qualifications (compared with 33% for all business founders and 17% for female business founders without children).

In the financing of start-up projects, differences emerge mainly between female and male business founders, and it is less relevant whether there are any children in the household. Because of the differences in business sector and size, men use external funds more often than women and employ higher amounts on average as well. Mothers are hardly any different from other female business founders in this regard except for the composition of external funding sources they use. Mompreneurs are the group of business founders who use promotional loans and grants from the Federal Employment Agency most often.

‘Mothers who start a business always keep an eye on the family, but that does not mean they have less entrepreneurial ambition. They limit their weekly working hours but start their business more often with others, and are adept at making use of promotional schemes’, said Dr Zeuner.

Note:

The Focus on Economics No. 184 "Starting a business with kids - mompreneurs balance work and family life" can be found at: Fokus No. 184, October 2017 Mompreneurs(PDF, 214 KB, non-accessible)