Research by leading insolvency practitioners the KSA Group Limited has revealed that the insolvency rate is higher among small businesses led by men.
Gender in the boardroom
The study, which was the first of its kind in the UK, was carried out jointly by KSA marketing manager Robert Moore and Rebecca Dunne, a marketing intern from the University of Hertfordshire.
Using Creditsafe’s database of 4m UK companies, they looked at all active companies that had been actively trading in the last 12 months and had either:
- 2 men on the board or a majority of 75% men on the board (46,1048 companies)
- 2 women on the board or a majority of 75% women on the board (56,654 companies)
They then looked at all companies that went into administration or liquidation in male-run businesses or female-run businesses as above (male-run, 1561 companies; female-run businesses, 117).
KSA have pointed out that the difference in size of each data set is substantial, with only 1 in 8 SME businesses being run by 75% or more women, and that only 1 years’ worth of data was analysed, with single directorships, partnerships and companies with a smaller gender majority excluded from the study. Nevertheless, significant statistics emerged.
Are women really better at business
The research revealed that:
- Insolvency rate is 70% higher in male run companies
- 8 times as many companies are run by men than women (a significant gap, although this is a much higher ratio than even women on the boards of publicly listed companies. Only 7 FTSE 100 companies have women as CEO’s, although 19% of directors of FTSE 100 companies are women).
- There is little difference in the industry sectors of companies run by men or run by women that have gone bust
- Only 12 out of 347 companies that went into administrations were female run
- The insolvency rate of male-dominated businesses was 0.34% and those in female-dominated businesses was 0.20%. So, the insolvency rate is 70% higher in male-run businesses
- Interestingly, when looking at the difference in companies that were likely to go into more costly administration, as opposed to liquidation, out of 347 administrations in the data, only 12 occurred in female-dominated companies
- Real estate and letting businesses were overly represented in the data set of female-dominated businesses that have become insolvent
However, Robert Moore at KSA Group warned against using these findings to conclude that women are better at business!
“It is apparent that the insolvency rate is higher in male run businesses, but this may be due to a number of factors that have nothing to do with whether men are inherently worse at running businesses than women.
“It may well be that the businesses that tend to be more likely to become insolvent due to the nature of the industry or recent economic events are coincidently run by men.”
Whether you’re male or female, make sure your new business doesn’t go bust! Read The Accountancy Partnership’s excellent New Business Guide to make sure your business gets off to a healthy start.