Cashflow Challenges Continue to Plague Women-Owned SMEs
Recent research conducted by Bibby Financial Services (BFS) has shed light on the persistent cashflow challenges faced by women-owned small and medium enterprises (SMEs) in the UK. The findings reveal a stark contrast in financial stability between female and male business owners, highlighting a significant confidence gap that continues to hinder the growth and ambitions of women entrepreneurs.
The Cashflow Disparity
According to the BFS study, only 49% of women business owners report having stable cashflow that meets their needs. This figure is notably lower than the 66% of male respondents who feel similarly secure about their financial situation. The implications of this disparity are profound, as cashflow is a critical component for any business’s sustainability and growth. Furthermore, 43% of female business leaders admit to lacking the cashflow necessary for expansion, which is a striking 14 percentage points lower than their male counterparts.
This gap not only reflects the financial realities of women-owned businesses but also underscores a broader issue of confidence in managing company finances. The recent rise in interest rates has exacerbated these concerns, with nearly half (48%) of female business leaders expressing worries about their ability to repay loans if rates continue to climb. In contrast, only 32% of male business owners share this apprehension, further illustrating the financial trepidation that women entrepreneurs face.
Institutional Barriers and Stigmas
Lucile Flamand, Chief Strategic Development Officer at Bibby Financial Services, emphasizes that the challenges faced by female entrepreneurs are rooted in institutional barriers and entrenched stigmas. “An uneven playing field of institutional barriers and entrenched stigmas have a significant impact on female-led businesses,” she states. This systemic issue contributes to the confidence gap observed between women and men in the business landscape.
Flamand points out that even in 2023, women entrepreneurs encounter significant hurdles in accessing funding compared to their male peers. Alarmingly, women business owners receive less than half of the investment capital allocated to men, despite generating twice as much revenue per dollar invested. This inequity not only stifles the growth of women-led businesses but also limits the diversity of ideas and innovations that could emerge from a more balanced entrepreneurial ecosystem.
Access to Financing: A Major Challenge
Access to financing remains a formidable challenge for women business owners, extending beyond mere confidence issues. The 2023 Alison Rose Review of Female Entrepreneurship highlights that 50% of female business leaders faced difficulties in securing funding and investment over the past year, compared to 40% of their male counterparts. This statistic underscores the systemic barriers that continue to impede women’s access to essential financial resources.
BFS’s research further reinforces this trend, revealing that 62% of female SME leaders believe that obtaining a business loan has become more challenging since the pandemic. In comparison, 57% of male business leaders share this sentiment. The pandemic has undoubtedly reshaped the financial landscape, but the impact has been felt more acutely by women entrepreneurs, who often lack the same level of support and resources as their male peers.
Resilience Amidst Challenges
Despite these obstacles, female entrepreneurs remain remarkably motivated and determined. The UK saw a record 150,000 new firms founded by women last year, a testament to their resilience and entrepreneurial spirit. However, the statistics serve as a clarion call for continued efforts to level the playing field and ensure that women-owned businesses have the support they need to thrive.
Flamand emphasizes the importance of fostering an environment where women entrepreneurs can flourish. “Women business owners have so much potential to bring new ideas and exciting businesses into the world,” she asserts. “Now, it is more important than ever to make sure that we keep fighting the good fight – recognizing both the opportunities and challenges for women-owned businesses, and ensuring that access to finance is not one of them.”
The Path Forward
The full SME Confidence Tracker report from BFS provides a deeper exploration of the resilience and challenges faced by businesses during these uncertain times. It highlights the urgent need for systemic change to address the financial disparities that persist between male and female entrepreneurs. By acknowledging these challenges and advocating for equitable access to funding, stakeholders can help pave the way for a more inclusive and diverse business landscape, where women-owned SMEs can thrive and contribute to the economy on equal footing with their male counterparts.