The funding challenges hounding female small business owners

From starting their business until it bears fruit, female entrepreneurs face obstacles and tough decisions

The funding challenges hounding female small business owners

A new study provides a revealing glimpse into the world of women-owned small businesses in Canada, as well as the funding challenges they encounter.

Visa Canada has published a new study titled The State of Canadian Women’s Entrepreneurship, which draws from a survey of almost 895 business owners and decision makers, of which 243 were women business owners.

When asked about their motivations for starting a business, 44% of female business owners cited a desire to achieve financial independence. Nearly the same number (42%) identified flexibility, and an equal number were looking for a better balance for work and family life (36%) and a chance to create their own environment (36%). “Making money,” cited by 29%, fell just outside the top five.

When it comes to starting their business, 22% said they had difficulty raising capital/funding, making it the third top answer behind “growing as fast as I needed” (23%) and “finding the tools to grow and manage my business (32%).

Focusing on how female small and medium business owners fund their business, the survey revealed that only 14% used a business loan; 5% received partial funding from investors; 5% requested all of the funding from one investor; and 3% requested it from multiple investors.

However, nearly three quarters (73%) of female entrepreneurs self-funded their businesses. The report attributed it to the fact that many women-led businesses grow from hobbies, so they do not require seed capital or outside funding as much as men do.

For 31% of women entrepreneurs who participated, the need for funding doesn’t end immediately. They said that even after the business is established, they still find raising funds a challenge to run the business; the problem shares second place with “sustaining long-term success.” Another 37% cited “finding new customers” as a problem, making it the top concern among women business owners.

As for the question of where they would choose to direct more funding, the participants gave a variety of answers. The most said they would focus on advertising and marketing (19%), followed by increasing or growing their safety net (17%).

Other top answers included investing in newer technology (13%); creating new products (10%); hiring more staff (9%); and providing better benefits to employees (7%).

The survey also asked female business owners what topics they would look for from a workshop offered by an outside source. They found that 33% would be interested in learning to use social media to promote their businesses; 30% would like to know how to grow their business through digital marketing; and 23% would like to know how to access additional funding. Controlling and tracking spending was also a point of interest for 12% of participants.


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