Female entrepreneurs who’ve made their million in business have turned the tables on the gender pay gap. Those women earn on average 15% more than men in the same position, compared to the rest of the female population, who still lag around 15% behind men doing similar work.
Blow barriers of finance and the glass ceiling aside and the limits to female entrepreneurship largely fall away, according to new research from Barclays Wealth. In their new report ‘Unlocking the Female Economy: The path to entrepreneurial success‘, Barclays find that women in the top income bracket are just as likely to be business owners as men. Those women are also as likely to be self-made.
Those high-achieving women business owners pay themselves an average of £382,000 a year, with male millionaire business owners awarding themselves £327,000 on average. Other high net worth women in the Barclays survey, who don’t run their own business, are still stuck with the traditional pay gap. So why are the richest female entrepreneurs breaking the mould? Barclays says it’s because their pay is more directly tied to the performance of the company, rather than negotiated as it is in the corporate sector.
The trend is set to grow. Venture Capitalist, Gita Patel, an expert adviser to the Barclays report, says analysts predict that by 2020 there will be more female millionaires than men. At least a quarter of them will be female entrepreneurs.
Increasing the rate of female entrepreneurship
Overall the rate of female entrepreneurship is still very low. With some reports finding that virtually all new jobs are created by companies in their first five years of existence, getting more women-owned businesses to scale needs to be an economic and policy priority, say Barclays.
There also needs to be a practical focus on improving access to finance, negotiation skills and networking.
Access to finance is still a problem but new sources of funding are opening up opportunities for women. While women still access a small proportion of venture capital and business angel funds, new finance tools like crowdfunding are creating new options for women in business.
Women are more reluctant to negotiate. While traditional negotiation techniques can back-fire for women, it’s still an important area for skills development. Barclays came up with the following useful tips:
- Get negotiation training – practice is invaluable
- Set ambitious goals before you enter a negotiation
- Be confident. Take control of the negotiation rather than waiting for the other party to lead – make an ambitious opening offer
- Add value rather than reducing your fee
- Ask questions to understand the other person’s point of view – look for things that they value more than you. You can concede on those points in exchange for the points that are important to you
- Have alternatives in hand, which allow you to walk away if you’re not happy. This will give you the confidence to push-up the stakes and take higher risks.
Networking for success
Entrepreneurs with wider, more diverse networks are more innovative and successful. Yet, women generally have tighter networks. The advice from Barclays experts is to start growing your network early, you never know when you’re going to need it. Be a strategic and engaged networker. And while women’s business networks can be an important launching pad and support, make sure that you break out of gender silos as well.
Unlocking the Female Economy: The Path to Entrepreneurial Success, was published by Barclays Wealth and Investment Management in January 2013. It is based on a survey of more than 2,000 wealthy people, drawn from 17 countries, all of whom had more than £1 million in investable assets. More than 800 of the respondents identified themselves as entrepreneurs, including almost 200 women. Insights were provided by a distinguished panel of experts, including Prowess 2.0 contributor Lynne Franks, Gita Patel, founder of Stargate Capital and Dr Sally Ernst, Co-Founder and joint CEO of CloudStaff.
Photo: cc Victor1558 via Flickr
About Erika Watson
Hi, I am the founder and editor of Prowess, so the person to get in touch with if you have any ideas, queries or feedback: erika [a] prowess.org.uk. I run my own business too: Greenwell Consulting a communications company focusing on Enterprise, Environment & Equality. See here for details of our Start-up and Business Development workshops.