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‘Women make better business leaders’

‘Women make better business leaders’

Businesses run by women tend to generate higher profits and hence make better investment options, according to controversial figures from an international consulting firm.

Businesses run by women tend to generate higher profits and hence make better investment options, according to controversial figures from an international consulting firm.

And that is despite an ongoing investment gap, which sees more than two-thirds of investment dollars going to businesses run by men.

That is according to Boston Consulting Group (BCG) and MassChallenge, which delved into the financial data of 350 American start-ups and compared the levels of investment and revenue returns with the gender of the founders.

The analysis found that female entrepreneurs secured less than half the rate of venture capital than their male peers, at an average of US$935,000 each versus $2.12 million each for male-founded businesses.

Nevertheless, female-founded businesses, on average, generated revenues 10 per cent higher than those founded by men.

That meant that for every dollar invested, female-led businesses generated a return of US$0.78 over five years, compared with just US$0.31 for male-led firms.

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“Women-owned start-ups are more effective at generating revenue from each dollar of investment. Women [make] a better bet for financial backers,” said Jane Danziger, head of BCG’s Sydney office.

The review suggested this difference could be because women tend to be more conservative in their financial projections, and that they also tend to face more hurdles to success in business than men.

“Often women have to prove their credentials or skills before they can really start promoting their ideas. And unfortunately many men simply don’t understand and therefore see the potential in the ideas women pitch to them,” Ms Danziger said.

What the figures did not reveal, though, was the types of industries in which these start-ups operated, which could have a bearing on both the amount of capital sought and the revenues achieved.

Regardless, such restrictions on women entering the business world may be coming to an end, as more female entrepreneurs enter the marketplace.

In April this year, the ABS revealed that the number of female business leaders jumped by 8.2 per cent in the decade to 2016, while the number of male business leaders remained flat.

‘Women make better business leaders’
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