As they say, “The biggest risk is not taking any risk at all.” It appears that more female business owners and entrepreneurs are taking this message to heart more than their male counterparts.
A new BMO Wealth Management Report has dispelled the myth that women tend to be risk averse. It found that 72% of female entrepreneurs are very confident in making risk-related business decisions. Only 64% of male entrepreneurs stated the same.
Comparing the Risk Tolerance of Male and Female Entrepreneurs
Why are women increasingly willing to take more risks with their business ventures? According to the report:
“While some entrepreneurs of both genders start their businesses with a measure of confidence in their ability to make risk-related decisions, a significant number of women reported that they became more confident, less fearful of failure, and consequently found it easier to make decisions related to risk. A number of women entrepreneurs reported they are or were in a position to make risk-related decisions because they grew up in an entrepreneurial family, had a supportive family to fall back on or qualifications to take up jobs in case of business failure, or did not have a lot to lose at that point in their life.”
Here is what the report found in regards to small business owners’ perception of risk:
• “It should be calculated, assessed, and managed” – 57% of women agree, 64% of men
• “A means to generate opportunity” – 40% women, 51% men
• “A necessary pre-requisite of innovation” – 25% women, 35% men
• “A means to achieve strategic objectives” – 23% women, 31% men
• “A means to achieve social and economic goals” – 23% women, 25% men
• “It should be avoided at all costs” – 6% women, 4% men
Women are also more willing to take risks when it comes to securing funding for their business. Here’s a comparison of sources of funding:
• Line of credit: 17% of women, 12% of men
• Business loan: 10% of women, 8% of men
• Other sources: 21% of women, 21% of men
With Risk There Is Reward
BMO’s report also cited a Carleton University study that found women entrepreneurs are on the rise and are taking more risks by starting their own business. They found:
• Self-employed women have increased by 15% since 2007
• Female owned businesses reported the highest average yearly revenue growth – at more than 20%
• 68% of female owned companies reported capturing a larger share of their existing market through innovation
Based on this report, it’s clear that more and more women are viewing entrepreneurship and owning a business as a viable career option with most wanting greater freedom and flexibility (37%) and wanting to pursue a passion to create a product or service (23%).
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