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Financing Profile: Women Entrepreneurs (October 2010)
Future intentions
Among owners who were planning to sell their business, women were far more likely to sell to an external party than men
In 2007, 25 percent of female business owners — the same percentage as male business owners — indicated that they intended to sell, transfer or close their business within five years. Of these business owners, women were far more likely to sell their business to an external party (61 percent) than men (38 percent) (Figure 9). In contrast, men were significantly more likely to transfer or sell the business to a family member. In addition, female business owners were less likely to plan the closure of their business (29 percent) than male business owners (35 percent), but this difference was not statistically significant.
Intentions of Those Who Planned to Sell, Transfer or Close Their Business, 2007*
[Description of Figure 9]Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2007.
* Bold value denotes statistically significant gender difference at 5 percent.
Among owners with growth intentions, women were more likely to consider sharing equity to raise capital for expansion than men
Previous studies have suggested that the financial performance of majority female-owned SMEs is associated with the aspirations of the owner with regards to growth (Hughes 2006, Cliff 1998). In 2007, 44 percent of female business owners indicated that they intended to expand the size and scope of their business within two years (Figure 10). This finding conflicts with Orser and Hogarth-Scott (2002), who found that female business owners were less oriented toward growth than male business owners.
SMEs Intending to Expand the Size and Scope of Their Business*
[Description of Figure 10]Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2004 and 2007.
*Bold value denotes statistically significant gender difference at 5 percent.
Among the female business owners who declared growth intentions, only 46 percent indicated that their company's current financing was sufficient to fund their expansion plans (compared with 57 percent of male business owners with growth intentions, a statistically significant difference). This finding implies that among owners with growth intentions, women exhibited greater financing needs than men in 2007. Interestingly, of those owners who required additional financing to fund expansion plans, women were significantly more likely than men to consider sharing equity in the business, whereas men were significantly more likely than women to make a loan request (Figure 11). Although previous research has suggested that female business owners are generally hesitant to share business equity out of fear of reduced independence and control (Manigart and Struyf 1997), the evidence presented here implies that majority female-owned firms with growth intentions may view sharing equity as an opportunity for expansion. In other words, female business owners with growth intentions may be more flexible in their capitalization strategies than the literature would suggest.
Capitalization Strategies Considered When Current Financing is Insufficient to Fund Expansion Plans, 2007*
[Description of Figure 11]Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2007.
* Bold value denotes statistically significant gender difference at 5 percent.
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