Cash crisis hits female start-ups

The age-old problem of accessing enough finance to start-up and grow a small venture is the number one challenge facing female-run companies over the next year.

The worrying revelation stems from the consensus among women who recently attended a London road show on how awareness of business funds can be heightened.

Speaking to invoice body FDA, the overwhelming majority agreed that female entrepreneurship in the capital is being hampered by a perceived lack of funding.

Such a perception became a realty for almost half of female business owners, who blamed an absence of capital for delaying the birth of their self-employed career.

Yet a strong determination to ‘go it alone’, charged mainly by the desire to be their own boss, meant that 50 per cent of women aim to start-up within the next six months.

Slighter fewer women said they were keen to set up their own business within the same time frame, because of the prospect of higher income and more flexible working.

The probe reinforces concerns in previous small business research, which centre on women being less likely than their male peers to consult an advisor about raising the necessary funds.

According to FDA, women today are as likely to seek advice from family and friends as they are from finance professionals, such as a bank manager or accountant.

However the biggest obstacle preventing them starting-up is the mass of legislation and red tape pertinent to setting up a company, which women feel has not been explained or demystified.

There is also the perception that men have a much easier time sourcing the sizeable funds needed to develop or sustain a business beyond the stage of fledgling start-up.

“It's astonishing to think that in the 21st century women still feel they don't have the same access to funding as men,” said Kate Sharp, FDA’s chief executive.

“Financial service providers need to work harder at making women aware of the range of products available for initial start-up and ongoing growth,” she said.

“Increased awareness and education will help overcome the perception of a funding gap and ultimately add the health of entrepreneurship in this country."

The survey also explored female entrepreneurs' relationship with their financial advisers and found that accessibility and flexibility were the key factors that influenced their choice of adviser.

“Our study revealed that the majority of women want their adviser to provide more access to impartial advice and market research to help make better informed business decisions,” Ms Sharp added.

Meg Munn, deputy minister for women and equality, said that the government-backed road shows are playing a key role in raising awareness of the varying finance options available to female entrepreneurs.

In an indirect message to the Economic and Social Research Council, which has warned youngsters are the key to boosting start-up rates, FDA said its research revealed women aged 40 to 50 were more likely to set up their own business than their younger peers.



 

9th May 2006

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