Not only are women starting their own businesses at a faster rate than men, they are generating more revenue on average, writes Australian Invoice Finance’s, Julie Hyam Elliott.
Did you know that the number of women choosing to start their own businesses has been growing faster than the number of men taking the entrepreneurial leap of faith? According to the 2016 Census data, the number of women owning their own business jumped 7.6 per cent over the previous decade versus a rise of just 0.3% for men.
The idea that youth is a key to entrepreneurial success has also been debunked, with the latest ABS figures revealing that the median age of women starting small businesses is 47. A recent Kauffman Foundation funded study found that twice as many successful entrepreneurs are over 50 than under 25.
So, what lies behind this increase in female-led start-ups?
On the one hand, many of Australia’s pre-eminent corporates are improving working conditions by implementing the latest technology, encouraging agile work places, attracting and retaining top talent by embedding a trust culture and providing employees with the option to work remotely.
But those companies that are slow to innovate are losing out - female workers are exiting the ivory towers at a rapid rate. Frustrated by the lack of control and flexibility, an increasing number of women are choosing to back themselves and go it alone.
And these women starting businesses are not afraid to work hard. Gruelling hours are usual in the start-up phase of a business, but it’s the flexibility of the hours that women embrace and the option to work when they want and how they want. The ability to attend the school assembly without judgment. The option to log back on after the kids are in bed in order to finish the day’s work. Utilising the advantages of modern technology, ‘work smarter, not harder’ is the zeitgeist of the 21st century.
Female entrepreneurs are adept at seeing gaps in the market and capitalising on those opportunities. Take American Spanx founder, Sara Blakely, who used her personal savings of $5,000 to launch her iconic body-shaping underwear. In its first year alone, Spanx’s revenue topped $4 million and Sara still owns 100 per cent of the company.
Closer to home, tech entrepreneur Catriona Wallace blazed a trail by starting artificial intelligence (AI) company, Flamingo, in 2014. She led the way again by listing Flamingo on the Australian Securities Exchange (ASX), making it one of only two listed companies with a female CEO and Chair. As 90% of AI coding work is currently done by men, Catriona’s voice is critical in the debate about avoiding unconscious bias and building diversity into AI hard coding.
According to research undertaken by Boston Consulting Group, companies in the US founded by women receive an average of US$935,000 in VC investments, roughly half the amount invested in companies founded by male entrepreneurs. Despite being comparatively underfunded, these female-led businesses generated 10% more in cumulative revenue over a five-year period. Put simply, startups founded by women make significantly better investments.
The venture capital system is highly male dominated, and it is thought that the lack of diversity creates unconscious gender bias around strategic investment decisions. On the plus side, women know they’re likely to begin with less funding but, determined to make a success of their companies, generally learn early to be more capital efficient.
Post start-up phase, cash flow and the ability to access immediate capital become critical metrics for small businesses. Although the biggest cause of small business failure is running out of cash, traditional bank lending to small business is at an abysmally low rate. If you’re a small business owner, and you walk into a bank to apply for a loan, you’ve got around an 80 per cent chance of being rejected.
At Australian Invoice Finance (AIF) we are committed to disrupting the market and providing better cash flow support to small business. We immediately lend up to 85 per cent of unpaid company invoices, providing the small business owner with instant leverage to capitalise on short term business opportunities.
While female bosses have the odds stacked against them, successful women need to know they are not alone on the journey. From managing cash flow, juggling family and scaling up the business, it’s important to have the support of others who have experienced similar challenges, and are able to provide advice and practical support.