Research recently commissioned by BMO Wealth Management found many similarities between male and female entrepreneurs, while some differences challenged more than a few misconceptions. This study, conducted by Carleton University researchers in conjunction with The Beacon Agency, interviewed 100 entrepreneurs of both genders on topics such as their motivation to open a business, their risk-taking behaviour and how their business growth was funded. BMO Wealth Management followed up this research with a survey of 803 entrepreneurs on some of the same metrics to improve their understanding of entrepreneurs and to learn how best to serve them.
One particularly dramatic finding in the Carleton research relates to the obstacle women entrepreneurs face in acquiring loans from banks. Women reported that they were not satisfied with their experiences with financial institutions. Particularly the lack of access to capital prevented many women from growing their businesses or slowed the process of growth because they had to self-finance. According to the BMO study the majority of men and women will typically use personal savings to drive their business from inception to sale.
Often women start a business with their own resources, and then use personal credit cards and lines of credit, personal loans from friends and family, funds from government grants, and/or organizations such as Futurepreneurs, the Business Development Bank, and Women’s Enterprise centres and other similar organizations. While there may be multiple reasons for arranging funds themselves, such as lack of financial literacy, a dislike towards debt, it is the fear of being turned down by the bank that is perhaps at the pinnacle of these reasons. As mentioned earlier, female entrepreneurs reported the lending attitudes of banks towards women entrepreneurs’ businesses as an impediment to the start-up and/or growth of their business. In their view financial institutions fail to understand the relationship oriented approach women would prefer. Instead, banks and financial institutions are more concerned about security for their loans and projected earnings.
Banks and financial institutions should take notice and consider the growing body of evidence that illustrates women entrepreneurs as A Force to Reckon With. The Carleton study highlighted that
- The number of self-employed women with an incorporated business has increased by 15 per cent since 2007;
- Over two thirds (68 per cent) of female owned companies reported capturing a larger share of their existing market through innovation; and,
- Businesses with majority female ownership report the highest instance of average yearly revenue growth of more than 20 per cent.
Clearly, there is an opportunity to support the aspirations of women entrepreneurs to starting up and growing sustainable businesses.
Partnering with your financial institution
An overwhelming number of entrepreneurs of both genders reported that their single biggest challenge as a business owner is “managing everything myself”. With BMO Wealth Management, you do not have to go it alone.
At BMO Wealth Management, we understand that you and your business are inextricably linked. Therefore, it is important to look at both sides of the proverbial balance sheet: your personal financial plan and planning for your business’s sustainability and growth. A BMO wealth management services professional can help you to make decisions that relate to your personal goals (such as paying off mortgages, educating your children, tax-efficient wealth accumulation and planning for retirement) with your business goals (sustainability, growth and eventual sale).