More women-led businesses need to scale and sell
Of the six million UK businesses in 2022, just 32,000 (that’s just 0.01%) grew beyond 45 employees and only 8,000 businesses scaled to the point that they employed more than 250 people.
A whopping 4.25 million UK businesses don’t employ anyone other than the founder. These disappointing figures are skewed towards women, with fewer female entrepreneurs scaling and/or exiting their businesses.
Why do so few female-owned companies manage to scale and sell? Well, there are, broadly speaking, three different types of entrepreneurs:
- Those who want the benefits of self-employment
- Those who started their business to capitalise on a particular skill or idea
- Those who set out to grow and exit a business
Many women fall into one of the first two types. They have a skill or idea and want to earn some money doing it while having the flexibility and tax benefits of self-employment. Many women prefer the work-life balance that self-employment offers as well as being able to manage work alongside other commitments, such as childcare.
But it’s the last of these entrepreneur types who tend to scale because they start with the end in mind. Their aim is to grow, so that’s what directs their business decisions.
Starting with a long-term exit in mind, entrepreneurs can identify ways to scale from the outset. They can keep costs low, minimise debt, scale the business, develop a name for themselves, and then sell up for a decent sum of money. Then they can choose to retire early or use the profit as seed money for their next venture, or perhaps invest in other entrepreneurial women and help them grow and exit.
Why don’t more female entrepreneurs scale their businesses?
Lack of confidence: The main reason more women don’t scale and sell their businesses is simply the lack of belief that it is possible. Maybe they started the business on the back of a good idea or skill, so their focus is bringing in some money from that skill or idea. They may never have considered scaling and selling their business or perhaps they don’t have the confidence to successfully scale and sell their business.
Lack of know-how: Small businesses, sole traders and side hustles tend to require little management. As soon as a business starts to scale, it requires employees, legal frameworks, regulatory compliance, and fiscal management. These are not things easily learnt in the school of life. So, for anyone who didn’t go to business school, scaling a business can be hard and intimidating.
Overly focused on details: Many entrepreneurs who do plan on scaling and selling their businesses often get stuck focusing on the minutiae of day-to-day operations. Women in this group are often chronic perfectionists, wanting everything to be just right and struggling to trust other people to get the details right. It’s those added details that make the business what it is, after all. But it’s still important to keep the horizon in view and hand over certain responsibilities to employees.
Little encouragement or accountability: Life gets busy, and we can find 101 reasons not to take action, especially when no one else is encouraging us or holding us to account. A good coach or mentor can provide inspiration and encouragement as well as hold your long-term plans to account, helping you to maintain that essential long-term view.
How can we support more women scaling and selling their businesses?
Inspiring role models: While men have a lot of role models to choose from, there are fewer high-profile businesswomen to look up to. What’s more, many female-led lifestyle brands rely on curated social media content, obscuring many of the challenges and strategies that they’ve used to gain success.
What we need are more real-life role models for women to look up to and emulate. Women who share their success stories without shying away from sharing the challenges they faced and strategies they employed. With more inspiration, we can cultivate more belief in women that they will be successful business leaders, helping embed that important mindset from the very foundation of their business.
Encourage bootstrapping: Advice for entrepreneurs (of any gender) tends to focus on starting up a business and getting it investment-ready. Of course, this advice can work, but it drowns out other considerations and ways of growing organically.
There needs to be more conversations about how to grow a business, especially without seeking investment. Seeking investment from the outset focuses the mind on chasing potential investors rather than trying to grow a loyal customer base and a good product offering.
It is often far better to keep costs down, bootstrap your initial product range, grow your customer base, develop products in line with feedback, and progress from there. Then, if you decide to seek investment, you will have a far more attractive proposition. This way, you can continue to grow organically, keeping more of the business for yourself! Yes, it was a lot of hard work, but I am so glad that I focused on scaling my business rather than seeking outside investors.
Developing know-how: Scaling and selling a business with multiple employees can be difficult and intimidating. Having some business know-how can be really useful to avoid common pitfalls and ensure that the foundations of the business are in place early on (certainly before they become needed).
Now, there are a lot of benefits to not having this formal education too. Self-motivated entrepreneurs will often be hungrier and more self-reliant – great qualities for any business leader. They will also think a little differently since they haven’t been moulded in the same way as business graduates.
However, while these qualities are an excellent starting place, they need complementing with more formal skills and knowledge if you are to avoid making mistakes and successfully scale your business.
Fortunately, there are a growing number of organisations dedicated to helping female entrepreneurs. See a full list here: https://www.startuploans.co.uk/business-guidance/support-for-female-entrepreneurs/