Call for urgent action as Scottish female-led start-ups fail at ‘alarming’ rate

Releasing new research, Women’s Enterprise Scotland (WES) said it was calling for urgent action to tackle the high levels of women-led ventures failing to progress beyond the start-up phase.

The authors of the study highlight that while more women are starting up in business than men in Scotland, fewer of the former are making it through the post-start-up phase to establish and grow.

While female-led business start-ups have increased to 54 per cent of all new ventures in Scotland, according to a Business Gateway Impact Report, the post-start-up pipeline has a high attrition rate of 61 per cent, and women-led employer businesses have dropped to just 20 per cent of all employer businesses. This declining trend in Scotland is said to be at odds with the global increase in established women-led businesses.

Tackling the issue north of the Border and improving current outcomes for women-led start-up businesses has the potential to unlock an estimated £17bn “reward” for the Scottish economy every year, WES said. This would eliminate almost two-thirds of the current public sector spending deficit, which now stands at £26.2bn, according to the latest Government Expenditure and Revenue Scotland (Gers) report. Achieving parity would eliminate over 80 per cent of the deficit.

Carolyn Currie, chief executive of Women’s Enterprise Scotland, said: “A perfect storm of economic conditions and structural inequalities is halting the progress of women-led businesses, despite their start-up successes. What we are seeing is an alarming number of new women-led businesses failing to thrive.

“They are simply falling into an abyss, leaving their economic potential and the ambitions of their founders unfulfilled. The WES survey reveals a clear demand for needs-based business support.

“Many of the issues - and suggested actions that need to be taken - have been highlighted in research numerous times over the past 30 years,” she added. “We can continue to watch talented women entrepreneurs leave the market, taking billions in economic potential with them, or we can implement the evidence-based solutions this study provides.

“The choice is clear - the community has spoken, and we need to listen. The time for action is now.”

The survey found that economic conditions are threatening business sustainability and reveals a devastating cost for women-led businesses. Some 78 per cent cannot recover all their increased costs, 55 per cent are using personal savings to capitalise their businesses and 52 per cent are making no pension provision, threatening retirement security.

The report also highlighted inequities in Covid pandemic business relief distribution, with female-led businesses receiving just 10.6 per cent of grant funds, despite comprising 15.4 per cent of all businesses.

Experiences of discrimination have doubled since 2016, with 68 per cent of survey respondents reporting that they had experienced discrimination as a female business owner. Key structural challenges identified included funding inequalities.

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