- 39% of female founders say poor access to finance is preventing scale-up plans – despite 65% feeling ambitious for 2024 growth this year
- 58% of women business owners take out no external finance, with 79% using personal funds
- Desire for independence is the top reason for women starting-up – with 60% driven by this
Access to funding, as well as a lack of financial skills and confidence, are some of the major barriers holding female entrepreneurs back, according to a new report by Small Business Britain, in partnership with Square and Clearpay. The report, launched today at the House of Lords at an event attended by many female entrepreneurs, pictured above, examines the challenges that women business owners face, and explores how entrepreneurial growth and inclusion can be boosted across the UK.
Despite significant ambition among female entrepreneurs, nearly three in five (57%) cite a lack of business knowledge and confidence as barriers to growth, with 39% saying securing funding is a major challenge.
The ‘Female Entrepreneurship: Moving Forward’ report – produced in partnership with Square and Clearpay – found more than half of female founders (58%) have never taken out external finance, with almost four in five women (79%) self-funding their start-ups and 13% even relying on personal credit cards.
The research – which consulted more than 1,000 female entrepreneurs – revealed that a desire for greater independence is the biggest driver for women starting their own businesses, cited as the primary reason by 60% of women.
The report pinpoints the urge to ‘be your own boss’ as a key motivator behind the rise in the number of female entrepreneurs across the UK during the last six years, but also suggests the desire for financial freedom may create a reluctance by female founders to take on debt or outside finance. Half of the women surveyed said they did not understand enough about equity investment and almost half do not like the idea of an investor owning part of their company.
Janan Leo, who invented her award-winning folding shoe Cocorose London in 2007, is an example of a successful UK female entrepreneur who self-funded her start-up as a side-hustle using personal income from her salary. “Money was incredibly tight and there were days when I sacrificed lunch,” says Leo.“Despite this, I persisted with boot-strapping because raising external investment was completely out of my comfort zone and I felt intimidated by the finance world.”
Michelle Ovens, speaking at the launch of today’s event at the House of Lords right, CBE, Founder, Small Business Britain, said: “Encouraging and supporting female entrepreneurship is essential for the UK’s economic growth, but with women accounting for just over 20% of the UK’s entrepreneurs their numbers still lag behind that of male-led businesses and we want to see this representation rise to at least 30% in the coming years.
“To do this we need to understand, recognise, and directly address the distinct challenges female founders face and the reasons why they tend to start businesses – notably a want for independence. This drive can also put women off taking on debt, and is often combined with a broader lack of confidence around finance and business skills among this group that can be hard-wired from a young age. We need to improve the ecosystem for female founders to encourage more women into entrepreneurship, as well as reaching female-led start-ups at an early stage with the right training, tools, and advice to help them succeed.”
Annilesse Dodds, left, Minister of State for Women and Equalities, spoke passionately at the report’s launch at the House of Lords to an enthusiastic audience made up mainly of female entrepreneurs. Small Business Britain’s report, in partnership with Square and Clearpay, proposes a series of early-stage interventions to boost gender inclusion and entrepreneurial success – including creating more accessible funding, producing targeted financial skills training, as well as mentoring and advice for female founders. Small Business Britain also runs the successful f:Entrepreneur campaign that celebrates and supports a large community of female founders across the UK.
Despite the financial barriers that women face, optimism about future growth and ambition for technological adoption is strongly reported among female entrepreneurs, pointing to significant economic opportunities for the UK that could be expanded further.
Nearly two thirds of women (65%) expect their businesses to grow in the coming year, with two fifths anticipating a 20% rise in income. Female entrepreneurs are also particularly open to embracing new technology, with 55% currently using artificial intelligence (AI) and 21% planning to do so in the next year.
Samina Hussain-Letch, Executive Director and Head of Industry Relations – UK, Square, said: “This research brings valuable insights into the challenges and opportunities for women business owners in the UK. From funding difficulties, to limited access to networks and resources, female entrepreneurs often encounter unique hurdles on their journey to success. Despite these barriers, women demonstrate resilience, creativity, fresh perspectives and unwavering determination. Now is the time to develop support, tools and solutions that help female entrepreneurs to truly achieve their full potential, enabling more growth and opportunity which will contribute to the economy.”
A reliance on self-funding is particularly prominent at an intersectional level, with 88% of ethnic minority women depending on their own funds to start-up and scale and many reporting that finance is both hard to come by and often not seen as a viable option.
Rich Bayer, UK Country Manager, Clearpay, said:“Female entrepreneurs are a driving force within the UK’s SME sector, contributing significantly to economic growth, innovation, and local communities. Two thirds of retailers affiliated with Clearpay are owned by women, and minority-owned businesses also account for 39% of our retail partners. It’s vital for industry to help these small firms grow and provide the guidance they need to thrive in today’s rapidly changing business landscape. This will not only benefit society as a whole, but will inspire the next generation of women-led businesses.”
To view the ‘Female Entrepreneurship: Moving Forward’ report, click here
