Female entrepreneurs could play crucial role in economic recovery but require greater support, new report finds
31 Jan 2013 15:02 GMT
- 44% of employed High Net Worth females are businesses owners or entrepreneurs, compared to 49% of men, new Barclays report reveals
- Greater support for female entrepreneurs could have positive impact on the economy
- Report considers toolkit required to encourage increased levels of female entrepreneurialism – to include better access to funding and support networks
- The pay gap is reversed for entrepreneurs and business owners with males trailing their female counterparts by 14% – £327,000 annual income compared to £382,000
With the number of female business owners still trailing levels seen amongst their male counterparts, a new research report from Barclays Wealth & Investment Management finds that women are much better represented amongst high net worth business owners. The report suggests that with better opportunities and greater access to information and funding, aspiring female entrepreneurs could not only achieve business success and increase their personal wealth, but also have a wider impact on the economy as a whole.
Though a 2011 UK government survey found only 14% of small and medium-sized firms were female-led , this new report, entitled Unlocking the Female Economy: The Path to Entrepreneurial Success, finds that 44% of high net worth women classify themselves as business owners; broadly similar to the 49% of high net worth men who describe themselves in this way.
The report also shows that when it comes to entrepreneurs, the gender pay gap is not just diminished but reversed altogether. Amongst high net worth female entrepreneurs, the average annual income stands at £382,000 – whilst male entrepreneurs earn 14% less, with an annual income of £327,000. In contrast, the average income of a high net worth woman who does not own her own business is £217,000 - 21% lower than the corresponding average male income of £273,000.
This reversal in the pay gap indicates that women may be better rewarded in a more entrepreneurial environment, which is more market-driven than within a more traditional job role in which pay must be negotiated. Panellists quoted within the report also attribute this pay gap reversal to women tending to be more reluctant to negotiate compensation increases, which can help explain why they typically earn less than men in employment contracts. The report also includes expert tips and strategies for negotiating in the workplace.
The report is the second in a series of white papers from Barclays Wealth & Investment Management with a specific female focus. The inaugural white paper, Understanding the Female Ecomony: The Role of Gender in Financial Decision Making and Successing Planning for the Next Generation, explored the role and importance of the female economy in its broader sense. The report revealed that women and men have different attitudes towards risk taking and financial decision-making. It also highlighted the growing influence of women as decisions makers and the need to improve the services and support available to them.
This new report examines the behavioural traits of male and female business owners and canvasses insight from a distinguished panel of business experts, in order to understand how to provide better support to aspiring as well as established female entrepeneurs. Based in part on a global survey of more than 2,000 high net worth individuals, it comes at a time when entrepreneurs are increasingly being seen as playing a crucial role in the development of the UK economy.
Barbara-Ann King, who heads the female client focus at Barclays Wealth & Investment Management, said: “This report shines a light on a very important, yet often overlooked group: female entrepreneurs. By scrutinising the current levels of entrepreneurialism, and identifying the distinct behavioural traits of male and female business owners, we can identify what needs to be done to best support the current and future generations of entrepreneurs. We know that women and the female economy are vital to economic growth, so encouraging an environment which supports women on their entrepreneurial journeys must now be considered a global imperative.”
Female business owners value past failures less than male counterparts
The report also identifies fundamental differences in the attitudes of male and female entrepreneurs when it comes to failure and risk. As many entrepreneurs know, failure can be a valuable and often vital learning tool in setting up a new venture. However, the Barclays research shows that female business owners tend to value past failures less than their male counterparts. Whilst 60% of male business owners agree that past failure in entrepreneurial endeavours increases the chances that a new business will succeed, this figure falls to 51% for female business owners.
This inability to see the value in failure, or the lessons it brings, may be hindering burgeoning female entrepreneurs, according to the report’s expert panel, who credited failure as being an important source of information, helping entrepreneurs to refine their vision, address shortcomings and increase the overall strength of their business.
Recounting her own past experience of failure in the report, Tamara Heber-Percy, co-founder of the luxury hotel specialist Mr and Mrs Smith, said: “Failure does make you more resilient because you learn from your mistakes. The worst thing you can do is fail and make the same mistake again.”
Men and women also have very different attitudes to risk-taking, the research reveals. When it comes to taking risks in their investments, high net worth women are less likely than their male counterparts to choose high risk, high return investments or describe themselves as financial risk takers, which carries important implications in an entrepreneurial context. Whilst the more cautious approach favoured by the majority of women may minimise the danger of excessive risk-taking and over-committing resources, it can also mean female business owners may miss opportunities or lose out to competitors who are more willing to take a leap of faith.
Dr Emily Haisley, a Behavioural Finance expert at Barclays, commented on these findings, saying: “In any setting, and especially in an entrepreneurial one, the propensity for risk-taking is going to be helpful at times and harmful in others. Whilst it is natural for men and women to have different perspectives in decision making, it is important to be aware of your own propensity for risk and surround yourself with people who have different attitudes towards it. It’s not a matter of having male opinions and female opinions; it is a matter of increasing the likelihood of having diverse opinions feed into decisions in order to secure the best outcome.”
Better support for the female economy
Unlocking the Female Economy: The Path to Entrepreneurial Success also explores the ‘toolkit’ that needs to be developed in order to better support women at various stages in their entrepreneurial journey. Access to information, finance and networking opportunities are outlined as key tools required to increase the chances of success, with budding female entrepreneurs urged to explore a wider net of new and innovative funding methods, such as angel investors and crowdfunding, as well as taking advantage of networks and business mentors.
Commenting within the report on the need for more investment models that meet the needs of female entrepreneurs, Gita Patel, co-founder and director of Stargate Capital Investment Group, said: “In the U.K., 95% of business angels are men and 5% are women and yet we see many more women becoming more affluent, often from having exited a businesses. The problem is that we do not see the woman’s pound working for women in the women’s market.”
Barbara-Ann King continued: “The failure to provide the necessary tools, information and support to female entrepreneurs means that thousands of great business ideas may never become a reality. At a time when many countries face the prospect of slow growth for years to come, there is a desperate need for inventive new business ideas to kick-start economic growth. There is a real opportunity for women in particular to contribute to the economy, but it is clear that work still needs to be done to bolster the necessary toolkit for success.
“Importantly, this new report launches alongside the latest issue of our quarterly publication SmartWoman, which aims to demystify finance, provide guidance and support and empower women and female entrepreneurs to gain control over their financial futures.”
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