For the second year in a row, a team of Johns Hopkins University SAIS Masters Degree students has collaborated with the Inter-American Development Bank on research to strengthen women entrepreneurs as a driver of economic growth in Mexico. This year’s team explores a deeply relevant topic not only to the future of Mexico’s economy but to the health of its population and ability to meet the UN Sustainable Development Goals. Identifying the barriers and challenges faced by women entrepreneurs in the plant-based sector in Mexico, SAIS students partnered with a private investment fund, the Ananda Group, to learn how it can best empower women to overcome these challenges.
In this study using gender analysis to investigate female entrepreneurship in the vegan sector, key 10 lessons are drawn in identifying the main challenges for women entrepreneurs in the industry and the best practices for overcoming those obstacles.
LESSON 1: Women are driving social, health, and environmental impact
Women in Mexico are leading an estimated 75% of companies in the industry and are creating social enterprises that align their values of ethical veganism with a for-profit business model. They are redefining and challenging the idea of “value” in business whereby social impact motivations strongly influence their bottom line. As entrepreneurs explore the vegan lifestyle further, they generally dive deeper into the larger philosophies attached to the movement, be it environmental concerns, health interests, animal ethics, as well as social justice. Among vegan entrepreneurs, these existing values of compassion and anti-violence advocacy for their communities lie in juxtaposition to Mexico’s alarming rates of violence against women, thus providing a safe environment for other women to run a business.
LESSON 2: Women integrate vegan values into their business practices
Vegan businesses are challenging traditional business models to support equitable development and to promote fair business practices. These practices include paying living wages and setting prices at accessible levels for consumers, while promoting physical health, animal rights and environmental sustainability. This practice of sharing profits and avoiding arbitrarily high prices is common to many plant-based entrepreneurs who are developing their own type of “social economy”.
As business owners that participate in a capitalist system, entrepreneurs reconcile this inconsistency with their vegan values through the adoption of creative strategies to incorporate their beliefs of equality and compassion into their business models, including ethical product pricing schemes, privileging local, small-scale goods suppliers, and providing employment opportunities for other women.
LESSON 3: Women are asset-poor
A lack of credit history, caused by a lack of asset ownership amongst women (their cars and homes are legally under their husbands or father’s names) to pledge required collateral against bank loans, has been identified as a major challenge facing female entrepreneurs in Mexico.
Additionally, there are generally more informal microenterprises in Mexico led by women than men. Such companies are considered less trustworthy from the perspective of a credit institution and therefore less likely to be extended credit. This vicious cycle has led to women’s lack of credit history and collateral – the two essential criteria that lenders evaluate for loan approval.
Meanwhile, for the entrepreneurs who do have access to credit products, high borrowing costs in Mexico are yet another barrier.
LESSON 4: Trust is a major factor affecting women’s business and financial decisions
When considering financing options, trust is a major factor that affects women entrepreneurs’ decisions. Based on interviews conducted for the study, women entrepreneurs in the plant-based industry look to build trust amongst the entities and individuals involved in every aspect of their business by consistently delivering products that contribute to physical, environmental and animal wellness, and by ensuring fair compensation and treatment of customers, employees and suppliers.
For example, nearly all of the entrepreneurs interviewed primarily fund their businesses through personal savings, reinvested profits and support from friends, families, and fans; they do not trust the financial system and at the same time they do not know enough about it, also reflecting a general lack of financial literacy.
LESSON 6: Women’s leadership is connected to self-esteem
Empowering women entrepreneurs through self-esteem development is a critical component of overcoming barriers that restrict the success of their businesses. Experts at business accelerators and financial institutions consulted for the study assert that women in particular benefit from entrepreneur support programs that incorporate confidence-building and leadership skill development.
Beyond the obvious business benefits of such professional development courses, participants in a training program offered through a partnership of independent organizations, have reported feeling empowered to leave situations of domestic violence. This unexpected success of the program highlights the role of personal insecurity as an additional underreported and lesser known barrier to female entrepreneurship.
LESSON 7: Bureaucratic hurdles delay business growth
Managing paperwork is hard, and it is even harder for time-strapped small businesses. Despite the positive institutional support for entrepreneurs during their initial start-up phase, the registrations and certifications needed to help foster larger-scale growth, including franchising documentation, organic certifications and product labeling requirements remain a challenge for growing entrepreneurs to secure.
Trying to expand the business through the creation of a franchise model or obtaining an organic certification which in turn will make their products more attractive to consumers, have become a major obstacle for women entrepreneurs. Though perhaps an often-overlooked aspect of entrepreneurship, this critical issue of bureaucracy and paperwork permeate all levels of businesses, potentially stifling growth and development.
LESSON 8: Women entrepreneurs in the plant-based sector are growth oriented, yet face challenges to scaling-up
Vegan entrepreneurs are ambitious and growth-oriented; however, they face unique challenges to scaling-up, stemming from their gender, business size, and business capacity. They express frustration with their own “state of vulnerability” and with others’ perceptions of their business skills, something that impact investors noted translates into less investment opportunities, relative to their male counterparts.
Female entrepreneurs who are suppliers often face production bottlenecks due to technological or capacity constraints, which limits the growth of these vegan distributors. Given the relative size of the vegan food sector in Mexico, as well as veganism’s focus on locally and sustainably sourced foods, many shops carry goods from small, artisanal producers. As a result, these stores are unable to scale-up if their suppliers are not able to do so as well.
LESSON 9: Overcoming barriers through strong networks
As entrepreneurs’ networks grow, their community reach increases. This development is critical for plant-based businesses given the values-oriented and community-dependent nature of the industry. Entrepreneurs choose to engage with the public through hosting educational workshops at their businesses and participating in events around the city in order to meet other entrepreneurs and potential customers.
Additionally, women entrepreneurs become involved in lending groups to seek financial support as well as explore opportunities to build leadership skills and expand their professional networks in an effort to further develop their businesses. Community engagement is essential for women entrepreneurs’ professional development and business expansion.
LESSON 10: Location and business context matter for vegan entrepreneurs’ success
Through comparing the development of the vegan sector in each city, the study found that for plant-based businesses, the entrepreneurial ecosystem in which they operate matters significantly. Cancun and Tulum, for example, have reputations as health focused and ecologically conscious vacation destinations. Given their high population of tourists, some plant-based entrepreneurs in the region began opening businesses to cater to this market, neglecting to consider domestic consumers.
However, in order to succeed, plant-based businesses require a sticky base of clients who are willing to reduce their meat consumption or use of leather and other animal products for substitute products. Given the myriad of reasons why a consumer may follow a vegan diet, there are many opportunities for the industry to expand as these unexpected populations of consumers have likely not engaged previously in the sector.
This study is authored by Lindsay Breier, Leanna Roaf, Albert Lai and Megan Seiboldt of the Johns Hopkins University School of Advanced International Studies-Women Lead Practicum. The complete report, as well as recommendations, can be found here.