Small businesses run by women less likely to go bust

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Insolvency rates for SMEs run by men are 70% higher than female-run small businesses

British SMEs run by women are less likely to go insolvent than companies run by men.

The insolvency rate is 70 per cent higher in male-run companies, according to research by insolvency practitioner KSA Group. Male-dominated businesses have a 0.34 per cent insolvency rate compared with 0.20 per cent for female-run companies.

That said, eight times as many companies are run by men than women. Only 13 per cent of SMEs in Britain are led by women. However, the figure for female-led SMEs is nearly double the figure for FTSE 100 companies, where only 7 per cent have women as CEOs.

KSA Group investigated over four million UK SMEs businesses to see if the insolvency rate was higher for male or female-run companies.

And only 12 out of 347 companies that went into administration as opposed to going insolvent were female run. (Administration is a more complex and costly insolvency mechanism and is more likely to be used on larger businesses which are disproportionally more male-dominated.)

Robert Moore at KSA Group said: “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.”