Economy needs more female entrepreneurs says government commissioned report
The UK economy could be given a £250bn boost if women entrepreneurs were given the opportunity to develop new businesses on the same scale as men, a government-commissioned report says on International Women’s Day.
It estimates there are 1.1 million “missing” female-run firms and sets out eight ways of boosting the number of female entrepreneurs. One of the ideas is a code for investors to report gender funding.
Alison Rose, head of the review, said the shortfall was hurting the economy.
Ms Rose, the head of Royal Bank of Scotland’s corporate, commercial and private banking business, said: “I firmly believe that the disparity that exists between female and male entrepreneurs is unacceptable and holding the UK back.”
“The unrealised potential for the UK economy is enormous,” said Ms Rose, who is also deputy chief executive of NatWest.
Ms Rose was commissioned in September by Robert Jenrick, Exchequer Secretary to the Treasury, to examine whether there were unfair obstacles preventing women setting up businesses.
Mr Jenrick said: “Today’s striving businesswomen are too often facing barriers to setting up and growing their own enterprise. These barriers don’t just hold back women, they hold back every single one of us.”
Prime Minister Theresa May said the government would encourage more companies to look at the gender split of the companies they invested in.
NatWest, owned by RBS, is to be the first signatory to the code, which commits financial investors to setting out gender funding, while the Treasury will establish a new “investing in female entrepreneurs code” to show a gender split of the investments they make annually.
Released on International Women’s Day, the report said that 6% of UK women run their own businesses compared with 15% in Canada, almost 11% in the US and more than 9% in Australia and the Netherlands.
It calculates that even if the UK achieved the same average share of women entrepreneurs as other countries, some £200bn could be added to the value of the economy.
That rises to £250bn – the equivalent of four years’ economic growth – if women were backed to the same extent as men.
According to the report, in the UK, for every 10 male entrepreneurs there are fewer than five female entrepreneurs.
The report said only one in three UK entrepreneurs is female, which it describes as “a gender gap equivalent of 1.1 million missing businesses”.
Keely Deininger started her business, Angel’s Face, in 2007 with an investment from a colleague.
“Before I started my business, I was a design director at a Marks and Spencer supplier. I absolutely loved my job, but juggling a six-year-old, a three-year-old, and new baby didn’t lend itself to travelling for work for weeks at a time. I had achieved everything I wanted to do in the company I was working for, so I thought I would give full-time motherhood a go.
“At 39, this was, however, a bit too much of a culture shock. I loved being a mother, but I knew that I wanted to do something to keep my design brain working. One day, I called my mother and asked her to look after the children. I took a plane to Vietnam, a country I’d always wanted to visit, and within days I was already designing a complete range of clothing out of my hotel room. I became an accidental entrepreneur overnight. No company name. No business plan. No research. Just action.
“I have faced many challenges along my journey; cash flow being one of them, being incredibly time-poor another. I ran my business between school runs, karate lessons, shopping, making the dinner and putting three kids to bed. For me, it is now a priority to support other mothers to be successful in the workforce.”
Female-led businesses are also smaller than those run by men and less likely to grow. Small businesses run by men are five times more likely to reach a £1m turnover than female-run small businesses.
The report describes the UK as the “start-up capital of Europe”, with a 5.1% growth rate in the number of new businesses between 2013-2017.
But, it said, female-led businesses receive less funding than those headed by men at every stage of their development.
A survey of 1,500 men and women conducted for the review found that access to funding is the number one barrier, mentioned by almost twice as many women as men.
Among the other recommendations is making UK banks and investment funds help their wealthy clients invest in female-run businesses and encourage UK-based entrepreneurs to back female entrepreneurs. This initiative is to be led by Alexandra Daly, founder of fund specialists AA Advisors.
An “expert in resident” programme could be offered to entrepreneurs. The report also suggested banks should design products to help parent entrepreneurs manage family care.