5 September 2023 – The number of female entrepreneurs in the UK has risen, despite the challenging economic landscape, with more than 150,000 new businesses started by women in 2022.
2022 was a tough year for small businesses. Many were still recovering from the impacts of the COVID pandemic, when they got hit by supply chain issues as well as increases in energy and other bills.
The cost-of-living crisis that followed the pandemic also forced many customers to reduce their spending on non-essentials, which created difficult trading conditions for many small businesses.
Despite this, over 800,000 new companies were incorporated in the financial year 2022/23, with more than 150,000 of these new businesses started by women.
4% More New Businesses Started By Women
According to the latest Rose Review, over 150,000 new company incorporations in 2022 were all-female led. This is more than twice as many as in 2018.
A fifth (20.5%) of all new companies that were started in the financial year 2022/23 were female-led. Up from 16% in 2018. This is a positive trend, especially given the challenging encomic landscape businesses are currently facing.
The report also shows that it’s the younger generation of women that are responsible for the increase in female-led businesses. In the group of 16- to 25-year-olds, the number of new businesses started by women rose by 24.3%.
Data from the Department for Business and Trade shows that women are more likely to lead a business without employees, albeit only just. 20% of businesses without employees were female-led in 2022, no change from the previous year.
In comparison, 18% of SMEs with employees were women-led in 2022. This is a slight decrease from 2021, when 19% of small businesses with staff were female-let. However, 2% more than in 2020.
The government department defines a business as women-led, if it is controlled by a single woman, or has a management team with a majority of women.
From those businesses without employees that are female-led, 26% were unregistered, while 12% were registered.
The traditional division of labour between the sexes is still visible, with women being more likely to lead businesses in traditional female sectors.
The sector with the highest percentage of women-led businesses without employees is the accommodation and food sector, with 60%. Followed by the health sector with 55% and the education sector with 38%.
Businesses in male-dominated sectors are less likely to be female-led. In the construction sector, only 3% of businesses are women-led. 5% of businesses in the transport and storage sector are led by women. In each of the communications and information and primary sectors, 9% of businesses are led by female owners or managers.
The picture is similar for women-led SMEs employing staff, with 44% in the health sector, 34% in the education sector, 29% in the other services sector and 28% in the accommodation and food sector.
Women Start Businesses To Get A Better Life-Work Balance
The reasons why women start businesses are likely to be different from those of men. While they want to be successful, money is not the main driver.
Research by the industry group Small Business Britain shows that the main reason why women start their own business is to achieve a better work-life balance. 39% of female business owners named this as their main driver.
With women still shouldering the majority of unpaid work, such as household chores, it’s no wonder that the traditional 9-5 schedule doesn’t work for them.
According to government data, before the pandemic 75% of unpaid work was undertaken by women. During the pandemic, this increased because women took on most of the homeschooling of their children.
30% of women started their own business, so they could choose where they worked. This is likely also linked to the unequal division of unpaid labour, including childcare.
25% made the decision after reassessing their career after having children. With soaring childcare costs, many women can’t afford to go back to work, or it doesn’t make financial sense.
By starting their own business, these women are able to generate an income, while still fulfilling their caring responsibilities.
Despite the many economic challenges for business owners that need to be tackled, it is uplifting to hear that most women are happier for having taken the plunge into entrepreneurship and are seeing immeasurable benefits in their lives.Michelle Ovens, Founder of Small Business Britain
While it is great news that the number of female entrepreneurs in the UK is rising, the Rose Review called for more support for women who want to start their own business.
Earlier this year, research from Startups.co.uk has shown that female-led businesses receive less funding than male-led organisations. As a result, half of women-led businesses are either bootstrapped or self-funded.
If there would be an equal number of new businesses started by women as by men, £250 billion could be added to the UK economy, the Rose Review estimated.