Canadian women are highly motivated entrepreneurs, but they face a significant obstacle when they go to start their own businesses: securing outside capital.
According to a recent report from Visa called The State of Canadian Women’s Entrepreneurship, 37% of women say they found it difficult to raise funds when they were starting small and medium-sized businesses (SMBs).
As a result, 73% of female-owned SMBs are self-funded, compared with 69% of male-owned SMBs.
Only 14% of women said they used a business loan to start their business, compared with 20% of men.
“Small businesses are the backbone of our economy and running a business takes time, investment and great resilience,” said Stacey Madge, country manager and president, Visa Canada, in a release.
“Women entrepreneurs face a myriad of challenges on the road to success and are seeking resources and connections to help them grow.”
It’s unclear from Visa’s research if women are encountering obstacles with investors and lenders.
According to the report, the smaller number of women taking out a business loan “can be attributed to the fact that many women-led businesses begin as hobbies and thus do not require seed capital or outside funding. In contrast, men find it more difficult to raise funding which can be attributed to the fact that their businesses usually require a larger amount of seed capital.”
According to Statistics Canada, only 15.7% of SMBs in Canada are owned by women, while 64.6% are owned by men.
Women-owned SMBs also fall behind male-owned SMBs with respect to business performance, StatCan says, in areas like sales, profits and employment.
Once their business is established, 31% of women said raising funding is still the third-biggest challenge they face as owners.
The top challenge they face is acquiring new customers, followed by sustaining long-term success. If they had access to additional funding, 19% of women said they would direct that money to advertising and marketing and 17% said they would use it to grow their safety net.
The overall outlook on female-owned businesses, however, is still hopeful. According to 2017 data from the Global Entrepreneurship Monitor, women’s entrepreneurial activity is up 10%, which has narrowed the gender gap by 5% since 2014. Over the past year, 163 million women started businesses spanning 74 economies around the globe. And 111 million were running already-established businesses.
All this female-led entrepreneurship is good for the local economy, too. According to Startup Canada, female entrepreneurs contribute $148 billion to the economy every year, giving jobs to 1.5 million people.
And despite the challenges women face in securing funding for their businesses, they remain excited about being entrepreneurs. According to the report, 44% said that their top motivator for starting their own business was financial independence.