Female entrepreneurs prefer ‘rational’ risks

Study finds women are more likely to consider wider impact of their business decisions

The myth that female entrepreneurs are risk averse continues to stand in their way of getting financing to help their businesses grow, a major new study concludes.

Female entrepreneurs also said they want more than just a loan from their bank, according to A Force to Reckon With: Women Entrepreneurship and Risk.

They want a relationship with a bank that understands their business and their personal needs, the study found.

“Women entrepreneurs, in general, are not satisfied with their experiences with financial institutions,” according to the report sponsored by the Bank of Montreal.

“In fact, in many instances women entrepreneurs reported that they felt humiliated and frustrated by financial institutions’ treatment of them.”

One female entrepreneur said the bank wanted her father to co-sign the loan, the report noted.

Indeed, 80 per cent of the women interviewed for the study said they faced obstacles in getting bank loans.

Female entrepreneurs contributed $148 billion to Canada’s economy in 2011, the latest year for which data is available, the study noted.

Yet, they continue to struggle with assumptions they are risk averse, when in fact “women entrepreneurs, like male entrepreneurs, are not all alike,” said Clare Beckton, report co-author and head of Carleton University’s Centre for Women in Politics and Public Leadership.

The study, which included interviews with 100 male and female entrepreneurs across Canada over a two-year period, found women prefer to take what they call “rational” risks.

“Women are not only interested in the earnings statement but the impact of their business decisions on all aspects of their lives,” Beckton said.

“Some contained their business rate of growth to accommodate family considerations. One slowed her growth to look after a sick child and then speeded it up later.”

In comparison, men take risks early in their careers but become more cautious with age as they have more to lose, the report found.

If a female entrepreneur gets turned down or has a bad experience with a bank, she won’t come back, said report co-author Janice McDonald, of the Beacon Agency, a strategic advisory firm.

Female entrepreneurs will choose instead to self-fund or “bootstrap” their business, a decision that can hold back their growth rate, McDonald said.

Bank of Montreal, which sponsored the study, said it has started incorporating some of the findings into its business.

“We know women are starting more business than men. It’s a growing market segment for sure and it’s one that I don’t think has received a lot of attention,” said Susan Brown, BMO senior vice-president and head of women’s strategy.

Bank of Montreal earmarked $2 billion for female entrepreneurs about 18 months ago and says nearly threequarters has been lent out. More funds will be allocated as the $2-billion ceiling is reached.

Barbara Mowat, founder and president of women’s networking organization GroYourBiz.com, said she hoped the report would not just sit on a shelf gathering dust. She urged the bank to ensure it is widely circulated.

Mowat also recommended creating an ombudsman to handle complaints about obstacles to financing for female entrepreneurs.