Cash flow challenges halt growth for female-led SMEs in the UK

Over 40% of UK-based female business leaders say they don’t have the cash flow or VC funding needed to support their businesses’ growth, according to new research published by Bibby Financial Services (BFS). 

To compare, only half of women business owners said their cash flow is stable and meets their needs – a significant drop compared with two thirds of male respondents who felt the same. While 43% of female business leaders say they don’t have the cash flow they need to grow, only 29% of their male counterparts agreed, representing a 14% point gap.

What do women business leaders have to say?

The news is unsurprising to Caoimhe Donnelly, cofounder and CEO at Legitimate. She says bias – whether overt or subconscious – still persists within the business world, resulting in limited resources and fewer opportunities for women.

“I have experienced this directly when interacting with some investors, and noticed the difference when my male cofounder had dealings with said investors,” says Donnelly. 

“While I acknowledge the positive efforts made in recent years with various initiatives supporting female founders, it is evident that more work remains ahead to level the playing field and truly empower women in entrepreneurship.”

In 2019, the UK treasury commissioned Alison Rose, CEO at NatWest, to lead an annual independent review of female entrepreneurship. In its latest edition, published in February, it found that 80% of female entrepreneurs did not feel confident about economic growth in the coming year. A third of those surveyed expected their businesses to become smaller over that time, and almost half expected fundraising to become more difficult.

The review also stated what we already know to be true: female entrepreneurs represent huge economic potential for the UK. It claims £250 billion could be added to the UK economy if women matched men in starting and scaling businesses.

Mastering business cash flow in uncertain economic times is particularly challenging, but more needs to be done to support female founders in weathering the storm, both through financial support and mentoring.

“Improving the situation for female startup founders will rely on an increased amount of mentorship from experienced entrepreneurs with similar experiences,” says Anne Glover, cofounder and CEO of Amadeus Capital Partners. 

“It is hard for all founders to raise capital, and those that reach out to learn from others fare much better than others. 

“The key thing the government can do to help press for better representation of women, as well as other disadvantaged groups in the tech industry, is to support the collection and publication of trends and data about this subject which can be used to improve business practices. Direct intervention is unlikely to work.”

Relevant content:
How to create a cash flow forecast (and why your business needs one)
The gender funding gap: small strides to equality, but are investors doing enough?

Kirstie Pickering - business journalist

Kirstie is a freelance journalist writing in the tech, startup and business spaces for publications including Sifted, TNW, UKTN, The Business Magazine and Maddyness UK. She also works closely with agencies such as CEW Communications to develop content for their startup and scaleup clients.