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Financing Profile: Women Entrepreneurs (October 2010)
Comparison of Business Sizes
Majority female-owned SMEs appear to be catching up in size to majority male-owned SMEs
Previous research has indicated that majority female-owned firms tend to be smaller than majority male-owned firms in both numbers of employees and assets (Jennings and Cash 2006, Cole and Mehran 2009, Fairlie and Robb 2009). The gap between the two gender groups appears to be narrowing, however, with respect to both measurements.
As shown in Table 2, the percentage of majority female-owned SMEs that were micro-businesses (fewer than five employees) was 81 percent in 2007, just higher than 79 percent for majority male-owned micro-businesses. Majority female-owned firms were less likely to employ 20 or more people, on the other hand, than majority male-owned firms. Nevertheless, the gender differences were not statistically significant in any of the firm-size categories presented in Table 2.
| Number of Employees | 2004 | 2007 | ||
|---|---|---|---|---|
| Majority Female-Owned | Majority Male-Owned | Majority Female-Owned | Majority Male-Owned | |
|
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2004 and 2007. |
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| 0 | 54 | 50 | 54 | 50 |
| 1–4 | 32 | 32 | 27 | 29 |
| 5–19 | 12 | 13 | 17 | 15 |
| 20–99 | 2 | 4 | 1 | 5 |
| 100–499 | <1 | <1 | <1 | <1 |
Based on tax file data linked by Statistics Canada, a summary of financial figures from incorporated majority female-owned and majority male-owned SMEs is presented in Table 3.Footnote 2 As shown in the table, majority female-owned firms exhibited a strong performance in terms of average total revenue, jumping from $335 000 in 2000 to $525 000 in 2004 and $563 000 in 2007. Notwithstanding these increases in revenue, the average total revenue generated by majority female-owned firms in 2007 was half of that reported by majority male-owned firms. On the other hand, the average net profit (before tax) of majority female-owned firms was $32 000 in 2004 and $48 000 in 2007. In both of these years, the gender difference in average net profit before tax was not statistically significant. When measured as a percentage of net profit before tax of majority male-owned firms (male profit), net profit before tax of majority female-owned firms jumped from 52 percent in 2000 to 89 percent in 2004 and remained at 89 percent in 2007, suggesting that the gap in terms of net profit before tax between majority female-owned firms and majority male-owned firms is shrinking.
| 2000 | 2004 | 2007 | ||||
|---|---|---|---|---|---|---|
| Majority Female-Owned | Majority Male-Owned | Majority Female-Owned** | Majority Male-Owned | Majority Female-Owned | Majority Male-Owned | |
|
Source: Tax file data linked to Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2000, 2004 and 2007. |
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| Total Revenue | 335 000 | 706 000 | 525 000 | 936 000 | 563 000 | 1 126 000 |
| Total Expenses | 301 000 | 641 000 | 493 000 | 900 000 | 515 000 | 1 072 000 |
| Net Profit Before Tax | 34 000 | 65 000 | 32 000 | 36 000 | 48 000 | 54 000 |
| Net Profit Before Tax (as % of male profit) | 52 | — | 89 | — | 89 | — |
| Current Assets | 117 000 | 250 000 | 202 000 | 311 000 | 436 000 | 393 000 |
| Fixed Assets | 152 000 | 337 000 | 121 000 | 304 000 | 125 000 | 396 000 |
| Total Assets | 269 000 | 587 000 | 323 000 | 615 000 | 561 000 | 789 000 |
| Current Liabilities | — | — | 113 000 | 231 000 | 145 000 | 283 000 |
| Total Liabilities | 152 000 | 351 000 | 209 000 | 422 000 | 345 000 | 549 000 |
| Retained Earnings | — | — | 106 000 | 119 000 | 154 000 | 137 000 |
| Total Equity | 117 000 | 236 000 | 114 000 | 193 000 | 216 000 | 240 000 |
Between 2004 and 2007, the gender gap narrowed with regards to current assets, total liabilities, total equity and retained earnings. Average current assets of majority female-owned firms jumped dramatically in both 2004 and 2007 such that the gender difference was no longer statistically significant in 2007. On the other side of the balance sheet, average total liabilities increased considerably for both gender groups, especially for majority female-owned firms such that the gender difference was no longer statistically significant in 2007. Majority female-owned firms also saw average total equity increase by a substantial margin from 2004 to 2007, whereas the average total equity of majority male-owned firms in 2007 was only slightly higher than the average in 2000. Also noteworthy is the fact that average retained earnings were higher for majority female-owned firms in 2007 than majority male-owned firms, but this difference was not statistically significant.
Footnotes
- Footnote 2
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Tax file data were linked to both the 2004 and 2007 Statistics Canada data sets. The data also included unincorporated firms, but the volume of data was much more limited than that provided on incorporated firms. All tax file data are anonymous and cannot be traced back to a particular firm.
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