Just 7% of executive directors in FTSE 100 companies are female. For the situation to improve, more women need to engage with businesses at start-up and SME level
The UK has many great examples of female entrepreneurs, just look at Karren Brady, Annabel Karmel and JK Rowling to name a few. These highly successful women operate in a range of industries and have pushed through a number of boundaries to get where they are.
Many people’s first management experiences occur while they are in small or start-up companies (SMEs). However, there are fewer women than men in the UK creating small businesses. The country has a strong, high-performing SME sector, with 99.9% of all businesses falling into this category. SMEs employ an estimated 13.8 million people, accounting for 58.5% of the total private sector workforce. Small business activity is a key driver of economic success, with SMEs contributing almost as much as large businesses to UK output (48.3% of gross value added) and turnover (48.8%). The shift towards getting more women into UK boardrooms starts here.
Women are much less likely than men to be involved in the setting up and running of businesses according to Office for National Statistics self-employment data. Of the 4.2 million people in the UK who report that they were self-employed, 71% were men and 29% women. However, this is still an improvement on the percentage of women who sit on Britain’s boards.
The lack of women in boardrooms is self-perpetuating, which is why we must change our business ethos at start-up level. Often, chief executives seek out people like themselves to be their colleagues and therefore their future replacements: this is only human nature. It is no coincidence that women are far better represented on the boards of companies that have been founded by women.
Interestingly, I’ve noticed that women approach business differently to their male counter-parts. They’re known to be a lot more cautious and intuitive, and I find that this can add a new dynamic to a business. Personally, I look forward to working with female entrepreneurs – their approach and professionalism has been instrumental to the success of many businesses.
Anyone, no matter the gender, can be an entrepreneur if they have the right idea, the right plan for execution and passion. The idea alone is not what makes an entrepreneur; it’s what you do with the idea and how you execute it that really sets you apart. If more start-ups that are created by women this will result in an increase in the number of women in the boardroom. We must start by inspiring young people to aim for the very top, no matter their gender.
The Start-Up Loans Company, of which I am the chairman, was created last year to help young people bring their business dreams to life. Every young entrepreneur who receives a loan is also provided with a business mentor and access to discounted resources.
Of the first 2000 loans that have been awarded, 65.7% have gone to male and 34.3% to female applicants. This is already a considerable improvement on national self-employment statistics, which I hope will continue to increase.
Credit Suisse published a report in 2012 entitled: ‘Gender diversity and corporate performance’, that looked at nearly 2,400 American companies with and without female board members between 2005 and 2012. Their report discovered that the stock of companies with at least one female member on the board outperformed the stocks of companies with all male boards by 26% during that period.
With this in mind, can the UK afford to deny ourselves similar growth?
James Caan is an entrepreneur and chairman of the Start-Up Loans Company
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