Female Founders Struggle with Finance, Despite Ambitious Growth Plans
It’s a tough world for female entrepreneurs, especially when it comes to access to finance. A recent report highlights how this financial barrier is a major hurdle for women aiming to scale their businesses. Here’s a closer look at the challenges faced and what can be done to support female founders better.
Financial Barriers for Female Entrepreneurs
According to the new report by Small Business Britain in partnership with Square and Clearpay, a staggering 39% of female founders say poor access to finance is stopping them from scaling up their businesses. Despite this, 65% of women are brimming with ambition and expect to grow their businesses in 2024.
Key Statistics:
- 39% of female founders face challenges securing funding.
- 58% have never accessed external finance.
- 79% rely on personal funds to support their start-ups.
Access to finance isn’t just a minor inconvenience; it’s a significant barrier. The report reveals that many women are not seeking external funding because of a lack of understanding and confidence in financial matters. This reluctance is compounded by a strong desire for independence, which makes women wary of taking on debt or giving away equity.
Desire for Independence Drives Female Entrepreneurs
The primary motivator for many female founders is a desire for independence. This drive is a double-edged sword. On one hand, it fuels their ambition and innovation. On the other, it often leads to a reluctance to take on external funding. The report shows that 60% of women start their businesses with the goal of being their own boss, but this desire for control can sometimes limit their financial options.
Challenges Identified:
- Lack of Business Knowledge: 57% of women cite limited business skills as a growth barrier.
- Limited Financial Skills: Many lack the confidence to navigate financial landscapes.
- Reluctance to Take on Debt: 50% of women are uncomfortable with equity investment.
Personal Stories: Take Janan Leo, for instance. She bootstrapped her company, Cocorose London, using personal savings. “Money was tight, and I often sacrificed basic needs to keep the business afloat,” she recalls. Janan’s story is a common one, showcasing the grit and determination of female entrepreneurs who self-fund their ventures out of necessity and a desire for autonomy.
Efforts to Improve Support for Female Founders
The report stresses the need for better support structures for female entrepreneurs. Michelle Ovens, founder of Small Business Britain, emphasises the importance of addressing these barriers to boost female representation in entrepreneurship.
Recommended Interventions:
- Accessible Funding: Increase availability and ease of access to finance.
- Financial Skills Training: Offer targeted education to boost confidence.
- Mentoring and Advice: Provide guidance to navigate business challenges.
Optimism and Growth Potential Among Female Entrepreneurs
Despite these challenges, female founders remain optimistic about their futures. 65% of women expect their businesses to grow in the coming year, with 40% anticipating a 20% increase in income. They are also eager to adopt new technologies, with 55% using AI and 21% planning to implement it soon.
This optimism and technological openness represent significant opportunities for economic growth and innovation. However, achieving these goals requires addressing the barriers that hold female founders back.
Intersectional Challenges and Opportunities
The report also highlights the unique challenges faced by ethnic minority women, who are even more likely to rely on personal funds to start their businesses. 88% of ethnic minority women use their own money to fund their ventures, reflecting broader issues of finance accessibility and support within this demographic.
Calls for Action:
- Industry Support: Encourage more support for female and minority-owned businesses.
- Growth and Opportunity: Develop tools and solutions to help these businesses thrive.
Conclusion: Moving Forward
The “Female Entrepreneurship: Moving Forward” report sheds light on the crucial barriers female founders face, particularly in terms of access to finance. By understanding and addressing these challenges, we can foster a more inclusive and supportive environment for female entrepreneurs. This will not only help individual businesses but also contribute to broader economic growth.
Let’s keep pushing for the changes needed to make entrepreneurship more accessible and supportive for everyone. The future is bright for ambitious female founders who can overcome these hurdles with the right support.
