It’s rarely easy being a business owner. You have to constantly deal with the uncertainty, risks, and responsibilities of being your own boss. It’s not surprising that entrepreneurs worldwide are facing a mental health crisis.

But it’s even worse if you’re a woman.

In developing economies, female entrepreneurs are increasingly recognized as key contributors to economic growth and innovation. Despite their potential, however, women often face unique challenges in business, ranging from limited access to funding to societal barriers. Addressing these challenges is crucial for not only the empowerment of women but also for the broader economic development.

A recent study conducted in Uganda offers groundbreaking insights into how mentorship can play a pivotal role in empowering female entrepreneurs. This research, focusing on a field experiment with 930 Ugandan entrepreneurs, delves into the impact of mentor gender on the performance of female-led enterprises. Its findings offer a new perspective on gender dynamics in entrepreneurship and shed light on the potential benefits of female mentorship in business.

Extra hurdles

The hurdles for female entrepreneurs are multifaceted. Financial constraints are a major barrier, often exacerbated by a lack of collateral and gender bias in lending. Moreover, women entrepreneurs sometimes lack the same level of access to education and training opportunities available to men. Additionally, cultural norms may restrict women’s mobility and networking opportunities, further isolating them from crucial business circles.

This complex set of challenges underscores the need for targeted interventions to support female entrepreneurs.

The new study aims to do just that. It involves a field experiment in Uganda, where 930 entrepreneurs were selected to participate; of them, 40% were female. This setup was designed to provide empirical evidence on the impact of mentorship on the performance of female-led enterprises.

The participants were divided into three groups: one receiving mentorship from experienced female entrepreneurs, another from male mentors, and a control group without mentorship.

The entrepreneurs involved in the study came from various backgrounds, representing a wide array of businesses typical in the Ugandan context. The mentorship program paired these entrepreneurs with mentors who had successfully navigated similar business environments.

Preliminary results from the study are promising, indicating that mentorship, particularly when paired with the right tools such as business management software, can have a positive impact on the growth of female-led businesses.

The entrepreneurs who received mentorship alongside guidance on utilizing business management software reported improvements in organization, time management, and financial tracking. This suggests that combining personal mentorship with technological tools could be a powerful strategy to empower female entrepreneurs in emerging markets.

The study uncovered significant performance improvements in the businesses led by women who were mentored by other women. These improvements were measured in terms of increased revenue and business growth. The female mentees reported not only better business outcomes but also enhanced confidence in managing their enterprises.

The researchers attributed this to a different attitude — female mentors were more positive and engaged in their interactions with the female entrepreneurs. For women entrepreneurs, it made a big difference.

“This really helped improve their firms’ performance,” said lead author Frank Germann, the department chair and Viola D. Hank Associate Professor of Marketing at Notre Dame’s Mendoza College of Business. “Our findings show that firm sales and profits of female entrepreneurs guided by female mentors increased by, on average, 32 percent and 31 percent compared with the control group. And these estimates are even greater for high-aspiring female entrepreneurs.”

The implications of this study are far-reaching for policymakers and organizations focusing on economic development and gender equality. The evidence suggests that gender-matched mentorship programs and small business grants for women can significantly boost the performance of female-led businesses.

This could guide the development of more effective entrepreneurial support programs, especially in regions where women face heightened barriers to business success.

There are some important limitations to this research as well. The study is conducted in Uganda, so the findings might not be generalizable to other cultural or economic contexts. Variations in the quality or approach of mentorship provided by different mentors are not uniformly controllable, which could affect results. Also, there may be some selection bias in choosing participants, which could influence the outcomes.

So while the study provides valuable insights, it also opens avenues for further research. Future studies could explore the long-term impact of such mentorship relationships, variations across different cultural contexts, and the potential benefits of mixed-gender mentorship scenarios. Understanding these dynamics can help refine and optimize mentorship programs for female entrepreneurs worldwide.

You can access the entire paper here.