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Why having women in leading roles is good news for business

It is common knowledge that when it comes to business, you are more likely to come across men than women. The UENI’s Gender and Small Business Report of 2020 found that only 32.37% of small business owners were female. Research in 2019 found that men outnumbered women in leading businesses, with only 25 women in chair roles in FTSE 350 companies.

There have historically been reasons given for why the lack of women in business exists, some less founded in truth than others: access to funding, employer bias, family duties, reluctance to apply for roles, inability to climb the career ladder at the same rate as men and not having the personality traits often associated with leadership roles. There are arguments against many of these factors and how accurate they are in explaining the gender imbalance in business.

Regardless of the reasons, it is undeniable there is a gap for women in business. Despite misconceptions that women simply aren’t ‘suited’ for leading roles, addressing this gap would be good news for industry. In fact, the results could be good news for the entire economy, bringing greater profits to investors, increased performance to companies and more jobs to the market.

We have dissected why having women in entrepreneurial and business roles is to the benefit of everyone – as well as women themselves.

Better revenue and results

The most significant endorsement for having women in business is the results they can deliver. Female-led enterprises tend to offer 10% more return on investment compared to male counterparts, meaning that investors will receive greater returns backing women led companies.

Similarly, research from First Round Capital found that firms with at least one female founder performed 63% better than those with all-male teams. Having female executives also correlates with higher revenue and profit.

The COVID-19 global pandemic has highlighted the performance of women too, with female-led businesses among those best recovering and surviving knocks to their income during lockdown.

The fact that women have been proven to have such good results is even more significant when you consider that they get such a small part of overall investment. If more women were able to launch their own venture or take centre stage in firms, it might translate to increased success for companies in general, as well as better contribution to the economy via increased revenue and tax. 

Increased innovation and different perspectives

Perhaps part of the reason that women-led businesses perform better is that they add a new perspective to markets, offering value that may previously have been ignored.

Women account for 85% of all consumer purchases, meaning they possess an enormous amount of spending power. By adding women into leading roles, they shine a light on the challenges and wants female consumers face, allowing them to fill gaps in the market and unleash new demand. As a result, new markets are uncovered, and diverse audiences are served, all of which can drive profit.

Data has also found that women are more likely to collaborate with research institutions in the development of products and services, enabling them to utilise data and technology to provide innovative and effective solutions.

The insight women provide is beneficial to many people: consumers, who get their needs addressed better; businesses, who achieve better profits by meeting demand; and even industries as a whole, who adapt to innovation and improve their offerings to the world with optimised products and processes.

Leadership skills and problem-solving mentality

Despite claims that they do not have the traits associated with strong leadership, women do stereotypically possess skills that lend themselves well to running a business. These include a problem-solving mentality, empathy, emotional intelligence and effective communication.

Research has found that character plays a huge part in the success of a CEO, with traits such as compassion, integrity and responsibility seen as particularly vital. CEOs who were rated to have a strong character in line with these traits saw return on investment increase five-fold compared to those with low character ratings.

Female-led companies are also more likely to focus on corporate responsibility, meaning these firms benefit from increased sustainability, social consideration and legality. This, in turn, leads to happier workforces and a more positive environment in business.

Promoting equality

In the modern world, there is now a brighter spotlight than ever on how minority groups are locked out of opportunity, with increasing pressure on companies to readdress the balance. This applies to gender equality, as well as many other forms of equality.

Undeniably, one of the biggest draws for having women in business is to level the playing field and encourage an equal world for everyone. Equality for women in business has already grown in recent years, but there is still work to be done.

The lack of opportunity for women affects many industries, as well as specific sectors such as investment and finance. By introducing them into these settings more frequently, it will encourage others to follow suit. Role models play a huge part in motivating women to realise their ambitions, allowing the balance to shift over time until we reach a better level of equality.

Addressing inequality is advantageous in many ways. It unlocks hidden potential and insight in industries (as well as revenue). It creates a fairer society and allows more members of the population to access opportunity. Finally, it allows those companies who are seen as doing their part to benefit from improved reputation – which is particularly useful in a world where consumers are increasingly concerned with the moral background behind their purchases.

Expanding economic opportunity

Due to the results women have been proven to deliver, there lies a vast economic opportunity in bringing them into business on a broader scale. The Alison Rose Review of Female Entrepreneurship found that up to £250 billion of value could be added to the UK economy if women started and scaled new businesses at the same rate as men. This is a stark view of the value we may be missing out on by not providing relevant funding and opportunity to women in business.

By facilitating women, more enterprises could be set up to enhance the UK business population, covering niches that may have previously been ignored. This would also result in increased tax to the government and create jobs for all genders across the country.

It would also boost demand for banks and investors, with more eligible companies seeking start-up and scale-up finance and investment.

Get advice

It’s clear that we are at a point where we need to empower more women into business and entrepreneurship and begin to reap the economic benefit of doing so.

However, to enable this, the gates need to be opened: including offering female entrepreneurs better financial backing, employing more women in leading positions and placing emphasis on their role in industry.

If you are a female entrepreneur, we understand it can be frustrating when seeking the support you need to turn your vision into a reality. At Pegasus Funding, we pride ourselves on providing solutions for companies of every shape and size, while offering advice on how to progress through the funding journey.

Get in touch today to find out how we can assist you and your business.

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