A new report by Small Business Britain highlights some major obstacles female entrepreneurs face, including access to funding and a lack of financial skills and confidence.
The report, Female Entrepreneurship: Moving Forward, delves into the challenges women business owners face and explores ways to enhance entrepreneurial growth and inclusion in the UK.
Almost 80% of female founders self-fund their businesses
According to the government, women comprise just over 20% of business owners in the UK. They contribute £116bn to the economy, according to the FSB.
However, despite their high ambition, nearly 60% of female entrepreneurs struggle with business knowledge and confidence, while 39% find securing funding particularly challenging.
The study – which was run in association with Clearpay and Square – reveals that over half (58%) of female founders have never sought external finance, with 79% self-funding their businesses.
Aside from existing working capital, the primary sources of finance for the next 12 months, according to the respondents, are:
Personal savings – 20%
Grants – 18%
Credit Cards – 11%
Business Loans – 10%
Overdrafts – 8%
Family and Friends – 7%
Independence is the primary driver for starting a business
The report—which used feedback from 1,000 female business owners—identifies the desire for independence as the primary motivation for starting a business, with 60% of women citing it as their primary motivation.
This drive for autonomy has been a big contributing factor to the rise in female entrepreneurship over the past six years.
Other motivating factors include:
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To improve work/life balance (49%)
Pursuing a passion, hobby or side hustle (40%)
To have greater flexibility after having children (36%)
To choose where I work from (26%)
Making a social impact (24%)
Many women are hesitant about seeking outside investment
However, this quest for financial freedom may prevent women from taking on debt or seeking investment from outside.
Half of the surveyed women say they lack an understanding of equity investment, and nearly half are hesitant about giving away a stake in their business.
Women business owners optimistic about the future
Despite the financial challenges women face in business, there is strong optimism about future growth and a keen interest in technological adoption among female entrepreneurs, indicating significant economic opportunities for the UK that could be further developed.
Nearly two-thirds of women (65%) expect their businesses to grow in the coming year, with two-fifths expecting a 20% increase in income.
Female entrepreneurs are also particularly open to new technology, with 55% currently using artificial intelligence (AI) and 21% planning to adopt it within the next year.
Recommendations
The report suggests various early-stage measures to enhance gender inclusion and entrepreneurialism.
These measures include:
making funding more accessible to female entrepreneurs
offering targeted financial skills training
providing mentoring and advice for female founders.
facilitate networking events and platforms to help people share experiences
encourage the use of AI via practical training
Small Business Britain runs the successful f: Entrepreneur campaign, which supports and celebrates a large community of female small business founders nationwide.
