Thorough forward planning, adept financial management, imaginative use of resources, clearly thought-out logistics, structured HR development, supportive environment, harmonious surroundings – these are just some of the elements you will find in successful companies.
Yet they are also the skills that millions of women harness every single day running their homes.
I have long held the view that women who run busy, thriving households have all the skills necessary to launch/grow inventive businesses. So it saddens me that, according to the 2019 Rose Review for HM Treasury, only 39% of women feel confident they have the skills to start a business compared to 55% of men. Yet if they recognised that running a home can be more complex with greater mental load than starting business, perhaps their lack of confidence would disappear?
If women started businesses at the same rate as men, there would be 150,000 more UK businesses within three years, adding £250 billion to the economy. With the country as a whole benefitting.
And I firmly believe women make brilliant business owners for a whole host of reasons…
1. Women take less risks
Women are naturally more cautious and risk averse. Although their businesses may build more slowly, female entrepreneurs are less likely to overstretch themselves to the detriment of their business and staff.
This is reflected in McKinsey’s research which shows that gender balanced boards of companies are more successful overall than mono-culture boards.
And whilst women’s businesses may have a higher churn rate (closure) rate than men, ‘personal reasons’ are cited, not business failure (RBS 2013).
2. Female-owned firms outperform male-owned companies
In an RBS study from 2012, once factors such as size, sector, age and funding, were controlled for and balanced out, it reported that women-led companies outperform those owned by men. This should boost the confidence of women starting out today. Helping them to grow this confidence is vital. Women are also adept at seeking advice, assistance and guidance from any source they can, both pre-launch and during their business growth. This includes tapping into professional advisors, support networks as well as seeing what is available across social media.
3. Women understand women
They understand what women want, how women think, what women need. And with 67% of all UK household consumption controlled or influenced by women, there is tremendous potential for women-led businesses to address these needs. Additionally, there are sectors where women make the key purchasing decisions at a much higher rate such as 93% of food, 92% of holidays and 65% of cars. We have such great opportunities to launch businesses that tap into what we know about each other.
4. Women are smart innovators
Women start businesses for a variety of reasons but they are particularly good at spotting opportunities and developing a business that fills the gap. By identifying this market gap, it is likely there will be an audience, a less risky strategy than developing a totally new product/service that may be looking for a market.
Women-led businesses are also three times more likely to collaborate with research institutions such as universities and colleges in the development of their companies’ products and services. This gives them leading-edge potential.
Women are more likely to start businesses in sectors that have social, ethical and environmental impact. With exponential growth in these areas expected over the next few years as we face the climate crisis, it is really encouraging to think that women-led ventures will be at the forefront.
5. Women entrepreneurs are ambitious
Interestingly, established female business owners are more ambitious than their male counterparts, wanting to reach out to more markets, innovate more and develop their companies further. (GROWE Report)
6. Women are endlessly inventive in their search for funding
Research shows that women in business will find it harder to raise investment than men. Whether from banks, grants, VCs, business angels, across the board women-led companies gain 5% of the investment their male-led counterparts receive. This is deeply shocking, but reflects that the funding is generally apportioned by men.
Rather than allow this to put them off, this seems to encourage women to be inventive around how they build their business and where they seek funding. Women will bootstrap, sourcing their own funding, using small business and start-up loans. Whilst this may lead to slower growth, it allows them to build the business they want, probably taking fewer risks.
When they do receive funding, however, female-led businesses return 20% higher revenues with investment 50% lower according to research into small businesses. Hopefully this will start to change now that increasing numbers of women are joining the ranks of millionaires and billionaires globally.
Whilst women starting companies are more likely to start with lower financial, human and social capital across the board, there are some great women-led businesses out there to provide inspiration. And by trusting and building on our innate abilities, as well as developing the capabilities we are now securing through increased success in education at all levels, bode well for seeing more growth in companies being founded and evolved by women.
So if you are thinking of launching a business – go for it. The world is moving in your favour and you probably have all the skills you need already, don’t let anything stand in your way. But if you do feel you need some support and advice, look for another woman-led company. You will get a warm welcome.
Erica’s new book Simple Tips, Smart Ideas : Build a Bigger, Better Business is out now. Full of her usual easy-to-use advice, lots of case studies, quick tips, diagrams and innovative ways to think about growing your business – its 288 full colour pages will help you transform your business. Available to order from Foyles, Amazon and all other good bookshops.