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East Midlands
female entrepreneurs cite funding as the toughest challenge they face when starting
their own business. Research conducted by the FDA, the UK association for the
invoice finance industry, showed that access to finance, followed by networking,
were the main areas of concern for female business professionals.
The survey was conducted at the Access to Finance for woman entrepreneurs road show in Leicester, which was run by LeicestHERday Trust, the DTI's Small Business Service and the East Midlands Development agency. The results showed that one third of business women in East Midlands felt it was harder for females than males to get funding to start their business.
Other key findings from the survey included:
The
women's access to finance road show focussed on raising greater financial awareness,
particularly on the different types and sources of business finance available
and provided direct help and advice to women entrepreneurs with finding the appropriate
finance for their businesses.
Commenting on the results, Kate Sharp, Chief Executive Officer for the FDA, said: "It is clear from these results that females still don't see themselves on an equal footing with male entrepreneurs with only 19 per cent believing they can get the same access to funding as males. Financial service providers have to take the responsibility for educating and making women aware of funding options available for initial start-ups and long term growth. This type of guidance will ensure a healthy range of starts ups will prosper and ultimately benefit the economy.
"The other apparent result from the survey is that East Midland females place a great focus on the advice from business professionals such as the Small Business Federation, accountants and bank managers, where as London women tend to turn to their family and friends to guide them on business matters. Therefore the East Midlands financial service providers have a captive audience who are willing to trust them and follow their advice. "
Margaret Hodge, Minister for Industry and the Regions said "We clearly need to unravel why women believe that access to finance is a barrier to starting their own businesses. If women think they can't get the money they need to start a new business, Britain will lose out on the huge benefits we could all enjoy from more new business start-ups. If women in the UK started as many businesses as women in America currently do, we'd have at least 700,000 more businesses in the UK.
"Increasing the financial awareness of women entrepreneurs has been our key priority. We want to do all we can to encourage more women to set up their own business and together with the Women's Stakeholder Group and Regional Development Agencies we have run a series of regional roadshows. These have helped to raise awareness of the different types and sources of finance available, to help women start and grow their businesses."
The survey was conducted as part of the FDA's tenth anniversary. The invoice finance industry is now worth more than £148 billion, a growth of 460 per cent since 1995. Last year around 43,000 businesses in the UK were advanced over £11 billion by FDA members, with SMEs accounting for 99 per cent of clients using invoice finance.
Tips from Kate Sharp, Chief Executive Officer of the FDA
1. Always have a business plan, if you are not clear about what you are doing and where you are going others will not be inspired to invest in you.
2. Don't be worried about seeking the advice of others when putting your business plan together. Speak to people who have established businesses themselves, seek advice from the relevant agencies about the best way to construct and lay out your plan. Time invested at this stage will reap dividends later.
3. Make sure you have considered all of your financial requirements. An under-funded business is a guaranteed route to failure.
4. Make your trading figures prudent. Financiers are not impressed by over rapid growth projections and unrealistic profit margins. They need to believe that your projections are achievable and sustainable
5. Make sure your business plans clearly demonstrates how you will pay your financier back, if they cannot how they will recover their investment they simply will not invest
6. Think carefully about your financial needs in terms of the most suitable means of obtaining funding. There are many different types of funding out there besides the obvious loan or overdraft, from venture capital investments, mortgages for property, leasing for plant and machinery and invoice finance for cashflow. Seek the most appropriate type of funding for your needs.
7. Be prepared to make a personal commitment to your business. You cannot expect others to invest in your business if you are not prepared to invest in it yourself. Financiers and investors will want to see a personal commitment before they invest their money.
8. Have reasonable expectations, most financiers will look for some form of security if they are to advance funds to you. Don't expect to borrow more than the value of your security.
9. Don't just approach one financier, try a number and compare the offers you are made before accepting the one that is best for your business and always read the small print on the contracts.
10.
Make sure your figures include the cost of finance, if you are only making a profit
for your financier and not yourself and your business it's simply not worth it.