Female-led SMEs Less Likely to Run into Financial Difficulties

An interesting new piece of research suggests that small and medium-sized enterprises run by women are less likely to run into financial difficulties than their male-led counterparts.

The study, which featured in London Loves Business Magazine towards the end of last week, found that the insolvency rate was a surprising 70 per cent higher in small businesses run by men.

Specifically, it found that male-led SMEs were around eight times more likely to encounter financial distress than female-led businesses.

Meanwhile, it also found that only 12 out of 347 companies that had gone into administration in the past 12 months were run by women.

Strangely, researchers found that there was little difference in insolvency risk between industry sectors. However, the ‘gender insolvency gap’ remained prevalent across all of the businesses surveyed.

The sample used spanned several hundred businesses, but was slightly biased in favour of property and real estate businesses, reports suggest.

One of the study’s authors pointed out that there could be “a number of factors” behind the gender gap trend, and that the research did not necessarily suggest that men were inherently worse at running a business than women.

Nevertheless, businesses that are experiencing problems with their cash flow or are concerned about their future should always seek specialist advice sooner rather than later, to ensure they are tax-efficient and financially fighting fit.