Though the wage gap between genders is wide around the world, even the UK doesn’t rank the best among entrepreneurs and their pay. Only one-third of businesspeople in the country are women, and their businesses are 44 percent of the size that mens are. Looking towards a post-Brexit country, the government is looking for ways to not only make a moral judgement that women should be included more in entrepreneurship, but that they will use it to expand the economy.
The Disparity and & the Economy
A new report from the Rose Review of Female Entrepreneurship said that closing the gender disparity could generate up to £250 billion in the economy. The Rose Review, which is an independent commission of the UK Treasury, claimed that men are five times more likely to turn around a £1,000,000 because there are many barriers to their success. According to MoneyPug, the website used to find personal loans, it is the goal of the government to increase the number of female entrepreneurs by 50 percent in the year 2030 and facilitate their ability to get investments.
The “Investments in Female Entrepreneurs” Code
With UK Finance, the Treasury of the country is creating a new code for lenders to follow. It is called “Investing in Female Entrepreneurship.” Published annually, the code will focus on the habits of financially institutions and investment lending. Partly led by Alison Rose, a banker from NatWest, the eight-point initiative provides resources and financing to both women looking to get started in business and women who wish to expand their company.
Barriers Women Face
The review found that five pivotal barriers exist that result in the lower entrepreneurship rates among women. First is the low access to capital. There is also less awareness of capital and a greater awareness or risks. Misperceptions of experience and lack of skill harm women’s chances for investment, disproportionate responsibilities at home make it harder for women who want to get into business, and all of this leads to a smaller number of mentors and role models. The government aims to mitigate these obstructions using a plan of eight initiatives that target different stages of becoming an entrepreneur.
Beginning with promoting greater transparency in the allocation of funds. To do so, they will introduce the new code that commands financial institutions to the principles of gender equality. It also calls for transparent reports of funding. Another initiative is to launch new methods of investment in order increase funds to women in business. Lenders will be encourage to invest in female-led companies.
Both institutional and private investors will be called to fund women entrepreneurs. Banking products will be reviewed and a new system to help entrepreneurs who have family responsibilities. Two initiatives focus on improving access to mentorship, expertise, and networking opportunities. Finally, the institutions and organisations that offer educational services will accelerate their development and a new public platform will be created to help provide information to all entrepreneurs.
How this Will Affect the Economy
Currently 6 percent of British women run their own business. This is compared to nine percent in Australia and 11 percent in the US. All are low, but the UK’s is the smallest of the three. The gap at present represents over a million “missing businesses.” This accounts for a significant percentage of the British economy overall, without these companies the UK isn’t as competitive or as strong as it could be. But only time will tell if the government will be able to cultivate that much growth, the equivalent of £250 billion, in added gross value to the economy.
The Right Thing, the Smart Thing
Now that the disparity between male and female business leaders is clear, it is also apparent that the government is going to try to lessen the gap and help female entrepreneurs. With support, guidance, and mentorship, increased numbers of women in business will lead to better products, lower prices, and a stronger economy. Some may be skeptical that the right person will get the loan every time with gender equality measure, but if the rate of female entrepreneurs stays low the economy will not be at its full potential and we won’t be doing the moral thing. Doing the right thing is the smart thing, and increasing women’s role in business is both.