UK Female entrepreneurs
19 September 2024
Zempler Research: The “double hurdle” facing UK female entrepreneurs
Being an entrepreneur is hard. Hard, but rewarding. Yet, the challenges facing entrepreneurs don’t fall equally. As a bank that is focused on the needs of microbusinesses and has designed products and servicing to support them, Zempler recently conducted research with 1000 UK microbusinesses (0-9 employees) to discover what challenges they face when setting out on their entrepreneurial dreams.
The research revealed that women entrepreneurs faced a range of additional challenges, from paying themselves lower salaries to higher levels of stress.
Female entrepreneurs are financially exposed
When asked how much they take in salary from their business after tax, over two-in-five microbusiness owners say they are taking home less than £10,000 in salary per year, with nearly one-in-ten not drawing any salary at all. This number is significantly higher among female business owners with almost half taking home less than £10,000, compared to under one-third of men.
The same gender imbalance exists in relation to microbusiness cash reserves, with four-in-five female owners holding less than £5,000 in cash reserves, compared to just two-thirds (66%) of men.
These financial worries can take their toll on the mental health of entrepreneurs. Given these gender differences it is no surprise to note that more than one-in-four female microbusiness owners (27%) cite stress and their mental wellbeing as a daily challenge to running their business. This falls to fewer than one-in-five for men (18%) highlighting the cumulative effect of the additional challenges facing female business owners and the need for microbusiness focused banks and other service providers to play their part in minimising hassle and stress.
Closing the gender gap
Male owned microbusinesses had a significantly higher annual turnover profile than female owned businesses. 45% of female owned businesses turn over less than £20,000 annually – compared to only 28% of male owned businesses. At the top end, 23% of male owned businesses turn over more than £100,000 annually, compared to only 11% of female owned businesses.
However, female entrepreneurs are looking to close the gap. Women are significantly more likely than men to be targeting modest or significant growth for their business (77% vs. 65% of men).
Women are – on average – targeting growth equal to 139% of their current revenue. Among men, this drops to 74%. The UK’s female owned microbusinesses are setting a high bar for the coming two years. The onus is on our business and financial services infrastructure to better support these ambitions and help close the significant gap that remains.
Different policy focuses
For anyone looking to launch a new venture, a business-friendly economic environment, driven by supportive government policy, is key.
Among female-led businesses, there was a greater desire for policies providing more generous benefits such as sick pay, pensions tax relief and child benefits. This reflects the higher number of women who are motivated to start a business due to the greater flexibility vs employment – 56% vs 40% for men.
Women-led businesses also said there is a need to improve access to finance where banks are unwilling to lend. A higher percentage of male-led businesses supported cutting VAT on fuel.
Recognising that women can face different challenges and so often have different demands when starting a business, is key to offering them proper support. Making sure our economy is geared up to support 50% of all potential business founders will be vital to keep it growing.
