We’ve all heard the clichés about female entrepreneurs: they’re risk averse; bad at raising capital; fundamentally lacking in the cut-throat qualities needed to make it in business. But aren’t most of these received wisdoms in fact fiction? What is being done to help more women become their own bosses? And might alternative funders have an essential role to play in encouraging female business success?
Female-run firms on the rise
One thing is certain – more women are running their own businesses than ever before.
- About one in five UK SMEs is majority female-led, according to the Department for Business, Innovation & Skills, up from 14 per cent in 2008.
- But 49 per cent of firms are still entirely led by men.
If women were setting up and running companies at the same rate as men then an extra one million female entrepreneurs would be created, the Women’s Business Council estimates. Recognising this untapped talent, the Government has recently given £1.6 million of support for women in business in rural areas; launched the £1 million Women and Broadband Challenge fund helping female entrepreneurs tap into super-fast internet connections; and run a mentoring roadshow aimed at women who want to be their own boss. There’s also a dedicated section on the Business is Great website offering advice specifically to women. And now alternative funders are also doing their part to help female business owners who want new types of funding that better suit their enterprises’ needs.
But, a major challenge remains overcoming the negative stereotypes that abound around female business ownership. These hackneyed beliefs do much to hold back would-be entrepreneurs, as well as women already running their own companies.
Women are less successful at raising money
UNTRUE. In fact, women applying for a business loan are more likely than their male peers to get what they want, according to a recent report by BDRC Continental. However, it is the case that women are likely to ask for less funding, which can limit their company’s growth. SMEs headed by female bosses are also less prone to seeking external finance or using trade credit than male-run firms, BDRC found.
Women don’t like risk
UNTRUE. This perception most probably stems from women business owners’ tendency to seek less external capital. But just because a male business owner may ask to borrow more, this doesn’t necessarily mean women are shunning risk. Some experts contend female leaders take a different approach to risk. Consider this: they’re more likely to have a business plan, employ a qualified or trained person to deal with their finances, and typically seek advice before making a financing application, according to the BDRC findings. This suggests they weigh up evidence more thoroughly before making a decision. And, as we’ve established, their loan applications are more likely to be accepted as a result.
Women don’t have the right business skills
UNTRUE. There’s no evidence women don’t have what it takes to run the nuts and bolts of a business. It’s more a question of self belief. Just one in three women believes they have the skills necessary to run a company, according to the latest UK element of the Global Entrepreneurship Monitor. This compares with half of men who think they could succeed. Rather than being found wanting in real skills, often women simply lack confidence.
They’re also more likely than their male peers to say that a fear of failing is a barrier to running their own enterprise. This is something the Government hopes to tackle by offering businesswomen better guidance, and it recently published a report entitled Inclusive Support For Women in Enterprise. This strongly recommends improving the quality of advice offered to female entrepreneurs rather than using the current ‘one size fits all’ approach. A greater number and variety of female business role models would also help, as would encouraging bigger corporations to improve the diversity of their own suppliers – in other words, to use more women-led firms.
How alternative finance is helping
As mentioned above, research shows female business owners complain that much business support is created for typical male-led enterprises, and can seem irrelevant to their own companies’ structures. There is also some suggestion female businesses are unfairly disadvantaged when it comes to gaining access to information about available capital. They either don’t know where to go for help, or even if they do find any support or possible funding it feels like it’s not designed for them.
Alternative finance is trying to offer business owners a wider range of funding options, in a number of different forms. Just like business advice, for too long SME finance has been too uniform – high-street-bank-based, in the form of a bank loan or overdraft, and requiring huge amounts of paperwork to secure. Having greater choice increases the probability that a woman business owner will find a product or loan that suits her and her organisation. And it seems more women are being drawn to alternative funders as a result. Taking crowdfunding, for example, one recent study suggested that as many as 44 per cent of people contributing to Kickstarter campaigns are women, and evidence shows women investors are more likely to back female-led projects. More female business owners are also looking to raise funds this way, as well as via other alternative platforms, such as short-term lenders like us, asset finance, and other innovative funders.
We here at Boost Capital specialise in many sectors that are traditionally female-dominated, such as retail, beauty salons, and hospitality. And if women typically want to borrow smaller sums, that’s no matter to us. In fact, our business is founded on supplying smaller, unsecured sums of money up to £500,000 that are intended to be paid back quickly. Our industry in general isn’t bound by the conventions, and pre-conceptions that still dominate most areas of mainstream business finance.
Even so, alternative finance does need to do more to get the message to female entrepreneurs that we’re open for their business, and have the funding their companies need to grow. Once they know we’re here, we’re in a great position to help them on their path, and to play a part in busting the myths that exist about women-led companies. Because we know the truth about women in business – they’re savvy, talented, and on the increase. They want to do business differently, and so do we. You might say women business owners and alternative finance is a match made in heaven.