Women More Likely Than Men to Take Wage Cut When Setting up in Business
A survey has shown that female entrepreneurs are more likely to take a pay cut than men when starting their business, and are not able to sacrifice as much family time as their male counterparts.
The new study, carried out by small business investor Iwoca, and reported on by The Telegraph (https://pipe.todate.info/news/2019/08/07/women-likely-men-take-wage-cut-setting-business/) is yet another reference point in the argument that female entrepreneurs do not have the same opportunities as males in business.
One reason appears to be the difficulty women face in attracting investment, compared to men. Accordingly, women are under more pressure to reinvest much of their spare income and profit back into the business, meaning sacrifices are often made elsewhere, and with significantly more frequency.
The survey of nearly 400 entrepreneurs found that almost half of all female business owners (46 per cent) said they sacrificed pay or income compared to just 34 per cent of male entrepreneurs.
The results also show that while a quarter of all those surveyed had to sacrifice time spent with family or a partner, more men sacrificed how long they spent with family, with 28 per cent of men compared to 18 per cent of women. The survey suggests childcare as a possible reason behind this trend, with women more often being designated as the primary carer upon starting a family.
Brenda Trenowden, global co-chair of The 30% Club said “I have heard many stories from female founders about their inability to raise venture capital funding or bank financing for their businesses; instead they rely on their own savings or friends who believe in them to get their business started.”
The UK VC and Founders report from 2019, stated that female-led businesses receive less funding than those headed by men at every stage of the process. It cited the lack of start-up funding as the number one barrier for women – women start businesses with 53 per cent less capital on average than men. The real eye-opener, however, was that only one per cent of all venture funding goes to businesses founded by all-female teams.
The Rose Review, led by Chief Executive of RBS Commercial and Private Banking Alison Rose, is one of the more prominent voices calling out venture capital investors for this imbalance. The review found that women are 81 per cent less likely than men to feel they can access the necessary start-up funds, and estimates up to £250bn of new value could be added to the UK economy if women start and scale businesses at the same rate as men. She proposes a number of measures to support female entrepreneurs, including the creation of a task-force to raise funds for business, an entrepreneur advisory board to drive investment and support toward female entrepreneurs and a “one-stop-shop digital platform: a go-to place where entrepreneurs can go to get help”. It also calls for a code of practice to be drawn up which commits finance providers to treating female entrepreneurs fairly and encourages transparency.
Fortunately, initiatives such as the Rose Review of Female Entrepreneurship, the Allbright Club, the Modern Muse programme and the Women in Investing Code, are all designed to not only raise awareness of this issue, but more importantly to take action to address the imbalance. The organisations that sign up to the Women in Investing Code – a voluntary body for banks to be transparent about their investment in female founders – commit to ‘a culture of inclusion and to advance access to capital for female entrepreneurs’.
Numerous studies sponsored by wealth managers and private banks have highlighted the fact that in the UK, women will control 60 per cent of wealth by 2025. Many believe that 60 per cent of global wealth will be controlled by women by 2050. Yet, there appears to be too many incidences where women go without the necessary support in business.
It’s time for the finance industry to adapt to the huge potential that is represented by women entrepreneurs. The UK will not close its productivity gap until women have access to the same opportunities in business as men – a good starting point would be not having to take a pay cut.