Entrepreneurs -- Challenging Perceptions

By Marilyn Helms

How one female entrepreneur made it work for her

Can Japanese women find career success and personal satisfaction through new venture creation? Professor Shiho Futagami and I addressed this question in our recently published case study of Digimom Workers, a successful female start-up company in Japan.

The question is an interesting one given Japan’s long-standing cultural bias against entrepreneurship. Historically a big business focus, a myriad of regulations and expensive fees has hindered start-ups. Discussions of entrepreneurship too, tend to center around Western values of individualism, materialism, and competitiveness. In Japan, social pressures to succeed limit the risk taking and creativity needed in start-ups. Japanese fear failure and research shows that few entrepreneurs succeed at their first venture but often prosper following a series of learning opportunities (I.e., prior business failures). For women in particular, there are few entrepreneurial role models to follow.

The Global Entrepreneurship Monitor (GEM) at www.gemconsortium.org is a country-to-country comparison of entrepreneurship. In the 2008 report, Japan ranked under 0.5 percent for high-growth entrepreneurial expectations, yet the country is perceived as innovation-driven. GEM reports the Japanese media attention on entrepreneurship is positive and plentiful although starting a business is not seen as a good career choice in Japan.

Yet, educational reforms including entrepreneurship as part of the university curricula and a growing number of incubators along with venture capitalists, angel investors, and banks are more readily available to assist Japanese start-ups. Socially, changing attitudes toward life-time employment and mobility no longer based solely on seniority are promising as is the number of women and seniors with personal savings to invest in creative business ideas.

Let’s meet Noriko Teramoto who founded Digimom Workers in late 1999 along with two female partners and an initial personal capital investment of Â¥3 million (about $26,000). Specializing in internet projects, Digimom Workers offer webpage design, database creation, systems development and homepage content creation for customers.

Teramoto fits the profile of an entrepreneur. She received her bachelor’s degree in sociology from Kanazawa University and worked at a small Tokyo printer controller manufacturer after college. She continued to study computer programming and learned new skills through online study. Later she worked in Osaka as a firmware programmer until her career ended with marriage and the birth of her first child. Teramoto was asked not to return to her job at the end of her one-year child care leave. She then studied entrepreneurship at a seminar in Kyoto Research Park for six months before founding her company. Her then-home-based business began in 1995 as she completed short-term programming jobs and designed homepages for several clients including an airline and a printing company. In 1996, she started “Digimom” (a contraction for the words “Digital Mom”), the name of a group of 12 home-bound mothers Ms Teramoto taught to create internet homepages. She was a natural leader. She discovered her particular talent was her skill with computers. At the time she became involved in the circle, the internet was growing in popularity in Japan.

In 1997, along with a graphic designer who was a member of her Digimom group, Teramoto joined the planning department of a community newspaper and then in 1999, with two original members from the mother’s circle she transitioned to her own company. Her business mission was to meet the needs of her clients with unique designs and Webpage content while establishing her own identity. Her secondary goal was encouraging other Japanese mothers to participate in business.

Today, Digimom is unique in offering both homepage design as well as programming. All Teramoto’s employees are female; thus clients can easily recall the company name. Teramoto agrees women empathize with clients’ intentions and can express these in a superior design. An example of their work can be seen at the website at www.hanakomon.jp. Digimom’s output takes longer than competitors since employees often can’t work overtime and still juggle family demands.

While there is opportunity for growth as more Japanese consumers shop online, competition for Digimom’s services is increasing. Teramoto must continue to differentiate her business to her mix of corporate clients (60 percent), public organizations (30 percent), and individuals (10 percent). Her newest website, “Uchino- Ko-Mon” (see www.uchinokomon.com) offers custom crest or heraldic designs for t-shirts, towels, and straps for cellular phones. This should separate the company from other homepage creation firms. The entrepreneur has expansion plans into IT services for manufacturers including order systems, business efficiency, and branding.

Teramoto agrees hiring female employees was a key way Digimom overcame the labor market barrier.

Most Japanese entrepreneurs are unable to hire the best workers because they are already employed in large companies and have job security or hopes of lifetime employment. Also the cultural fear of failure would cause many employees, particularly men who are deemed the provider for the family, to lose face if unproven ventures fail. If the venture was unsuccessful, it would be difficult if not impossible to find employment in a large company. Teramoto agrees hiring female employees was a key way Digimom overcame the labor market barrier. Like her employees, Teramoto juggles her business and her family which includes her husband and three children. In the beginning, her husband opposed her new venture, but slowly he has accepted her work.

Teramoto and the two original members of Digimom provided the seed capital funding needed to incorporate and establish the business. Each member invested ¥1 million. She had no difficulty in finding clients for her new venture. For the first three years, she operated using only personal savings and received no bank loans, primarily because her IT business did not need a large level of capital funds. Since 2003, she has borrowed money from the bank to cover her daily operating expenses. She agrees that obtaining bank loans is easier today in Japan, even with little or no collateral.

Digimom’s first location was an office within the SOHO (Small Office Home Office) Business Incubation Center in Kusatsu, a facility supported by Shiga Prefecture. The monthly office rent was subsidized and internet, cable, telephone line, meeting rooms, copy machines, a parking area, and a reception desk were provided by the center. About 20 IT-based businesses were housed in the facility including an architect, ecology business, a sightseeing business as well as educational information services, all of which were screened by the governor of Shiga Prefecture. In the approval process, Teramoto was interviewed and supplied her business plan and current financial information. After the three-year incubation period ended in 2006, Digimom moved to a new office in Kusatsu, incurring a larger rent and overhead.

Her yearly sales have grown from Â¥28 million in 2004 and exceed Â¥40 million today. She broke even in 2005 and has been profitable since, but cash flow remains the most serious problem, particularly due to the time lag between paying her employees and the later receipt of payments from her customers. Like all entrepreneurs with a growth motive, Teramoto’s profit goal is 20 percent of her sales and she hopes to double her staff size and see sales grow three or four times the current levels. With her lower cost advantage over larger competitors, she feels these goals are realistic. Networking with various community and internet-related groups remains a priority. Her employees learn new trends from this networking as well as from participating in internet seminars.

Teramoto found her voice and independence via entrepreneurship. Though she didn’t plan to be, she also serves as a role model for women in general, for women entrepreneurs, and for all would be entrepreneurs in Japan who just need a little encouragement to pursue their ideas to business success. Teramoto has created her own economic independence through self-employment, and success stories like hers may offer a long-term solution for sustaining the Japanese economy. JI

Dr. Marilyn M. Helms mhelms@daltonstate.edu Sesquicentennial Chair and Professor of Management, Dalton State College, USA.