Only 1 in 3 UK entrepreneurs is female according to an independent review commissioned by the Treasury. The review also found that businesses run by women were only 44% of the size of male-led businesses, and that SMEs run by men were five times more likely to achieve a turnover of £1 million. Why is the case?
Women aren’t less able or any less ambitious, but it seems that they do face considerably more barriers than men when it comes to entrepreneurship.
So what are these barriers, how can they be overcome, and what is the case for encouraging female entrepreneurship
Barriers to Female Entrepreneurship
A lack of funding
Female entrepreneurs tend to have less capital made available to them than male entrepreneurs, and this poses a problem when it comes to being able to grow a business. The Treasury’s independent review mentioned above also found that a third of women said that access to funding is the biggest barrier to starting a business, compared to 20% of men. Another report found that only 1% of venture funding goes to business with all-female founders and teams.
Female entrepreneurs often feel that they aren’t taken seriously and are treated less favourably than male entrepreneurs, and this issue is especially prevalent in industries that are still very male dominated like tech.
Fear of failure
The Treasury review also found that when it comes to actually starting a business, only 39% of women believed they had the necessary skills, compared to 55% of men. Women also tend to be more risk averse, and 55% said that a fear of going it alone was a barrier to them starting a business.
Lack of access to business networks and female mentors
Unfortunately, less female entrepreneurship means that there’s a smaller pool of women who can mentor and give advice to women who want to start a business.
But the good news is that this appears to be changing and female-focused networking groups and events are springing up on Facebook and other platforms.
This barrier is a tale as old as time. Juggling childcare and other caring responsibilities alongside the demands of running a business can be incredibly tough. In fact, women are twice as likely as men to cite family responsibilities as a barrier to starting a business.
Women who do go into business and decide to have children have to navigate the difficulties of the lack of provision for, and legal protections around maternity compared to female employees, and finding affordable childcare. Many women go into self-employment as that is they only way that they can work while being able to look after their child themselves.
The case for more female entrepreneurs
If the barriers to female entrepreneurship were adequately addressed, there would be a positive impact on businesses and on the economy as a whole.
- Companies with gender balanced boards are more successful on every measure. (McKinsey & Co 2007).
- Up to £250 billion could be added to the UK economy if women started and scaled new businesses at the same rate as men. (Rose Review of Female Entrepreneurship, HM Treasury 2019)
- Because about 1 in 5 women move into self-employment from unemployment, this has a more immediate positive effect on the economy. (‘Promoting Female Entrepreneurship’ SBS/ DTI, 2005)
- Women who combine motherhood with being their own boss have become increasingly valuable to the UK economy. A 2015 report from the economic think tank Development Economics, commissioned by eBay, found that ‘mumpreneurs’ generate over £7 billion for the economy and support 204,000 jobs.
What about BAME entrepreneurs?
Women from BAME backgrounds face the same challenges as other women but to an even greater extent. Despite this BAME women are two and a half times more likely to be entrepreneurs than white women. (ibid GEM, London Business School, 2006)
A big challenge for BAME women is that they feel that the leadership and communication styles of white women were more positively regarded in the workplace. (Different Women, Different Places, The Diversity Practice Ltd, 2007).
The challenge for businesses owned by BAME entrepreneurs as a whole is a self-reported lack of confidence when it comes to finance. (Dr Stuart Fraser, Finance for Small and Medium-Sized Enterprises, 2005)
How will the barriers to female entrepreneurship be addressed?
The barriers and challenges faced by female entrepreneurs don’t have easy solutions as many are societal and cultural issues which demand a shift in attitudes and behaviours. Solutions will most likely have to be adapted for BAME female entrepreneurs and women in geographical areas where the rate of female entrepreneurship is already very low.
The barriers in this article need to be addressed by:
- Increasing funding and funding opportunities for female entrepreneurs.
- Giving families more support when it comes to issues like childcare.
- Making entrepreneurship more accessible to women by improving access to mentors and networks.
Are you a female entrepreneur? Have you faced similar challenges, and if so, how have you dealt with them? I’d love to hear from you!
I’m currently developing some research on entrepreneurship, the entrepreneurial journey, and in particular the relationships between character strengths, mindfulness and trustworthiness in business. If you’d like to take part in the research, email mOCallaghan@lincoln.ac.uk