There’s a scaling cliff for women starting businesses in Australia that’s costing the economy billions and thwarting the gains achieved from the record number of businesses now started by women.
It’s a massive progression problem occurring despite the fact that female-led companies that do scale match the productivity of male-led companies and, in some cases, exceed it.
That’s according to a first-of-its-kind study from The Gender Index Australia, released today, which finds that closing the gap between the rates at which women-led and male-led businesses scale would generate more than $100 billion a year in combined wages and government tax revenue.
Closing these scaling gaps would also be worth approximately 745,000 additional jobs, according to the data-led study building on the established methodology of a similar study in the UK.
Women now make up 42.2 per cent of the nation’s sole trader businesses, but just 15.2 per cent of Australia’s incorporated companies, according to the data based on millions of company and business records held by the Australian Securities and Investments Commission, and covering every state and territory.
The gap between male- and female-led businesses widens at every stage of growth. Women lead just 15.8 per cent of micro companies but an even smaller proportion of small companies (13.3 per cent), medium companies (81 per cent), and large companies (7 per cent).
Male-led businesses move from small to medium at a rate of 13.68 per cent per year. For women-led businesses, the rate is under half that, at 6.71 per cent.
So what’s getting in the way? According to the report, it’s about access: access to capital, access to contracts and access to networks.
Across Australia, there are plenty of opportunities for education, mentoring, and even early-stage assistance for women to start businesses, but these drop off dramatically. There are too few interventions to provide the sustained financing required to employ people and build scalable operations.
As Chair of the Gender Index Australia, Tamara Bryden said, “Too many founders are hitting a ceiling on capital, networks and customer access at precisely the point they should be accelerating.
“For the first time, we have a clear picture of where women are progressing in business and where they’re being left behind. The opportunity now is bringing government, industry, investors and financial institutions together to remove those barriers.”
John Cushing, co-founder of The Gender Index Australia, notes that Australia has no shortage of female founders but, “for too long, the evidence available to policymakers, financial institutions and industry has been fragmented.”
From here, the report says the challenge ahead is to move beyond women’s participation and create the conditions that will enable women-led businesses to scale and grow into significant employers.
“Better data will not close the gap by itself, but it allows government, finance and industry to direct action where it can make the greatest difference.”