Women face a glass border check with international expansion

Access to finance can be a major barrier to expansion for many small and medium-sized businesses but when those businesses are run and owned by women that barrier is even higher.

According to a Women in Global Business (WIGB) and the University of Melbournereport “Australia’s Underestimated Resource: Women doing business internationally 2013” it may also be certain characteristics of female entrepreneurs which are holding them back. Very few women had considered private equity or venture capital.

“This is a wasted opportunity as there are investors who would like to back an ambitious woman with a successful business and a strong international growth plan,” says Cynthia Balogh, the National Manager of WIGB, a government program to assist women to build international companies.

The 2013 study and more recent research conducted by WIGB for a series of access to capital workshops designed for businesswomen found that the majority had used personal savings to finance their business. Less than half had approached banks for finance. When a woman did decide to use debt to finance her business less than 50 per cent were successful in getting a loan, with the most common form of debt being an overdraft.

Balogh says the report’s findings are supported by international research that shows women owned enterprises do not grow as fast as their male counterparts. “Female owned small and medium enterprises also have a lower appetite for debt, possibly linked to greater risk aversion,” she says.

One of the issues might be a lack of networks that foster connections to finance providers. Another is understanding the value of their business with the majority of women saying it represented a challenge. Over 65 per cent had not developed a three year finance strategy, an essential document when seeking equity investment.

Only a small minority had a financial planner with many citing their youth or the early stages of business as reason for not focusing on this area.

“It is clear from these findings that much more needs to be done to break down institutional, personal and mindset barriers,” says Balogh.

“Women often have trouble resourcing expansion and in particular accessing alternative sources of funding to do so.”

Women can also lack knowledge such as awareness of assistance programs and are concerned about risks from exchange rate variations and the high Australian dollar.

Balogh says it is essential that women build their skills and capacity to understand how to expand their business internationally while keeping capital requirements in mind. “They also need information, resources, support and contacts to help them understand how the system operates and how they can navigate it successfully.”

She says the next workshops are being held in Brisbane and Perth in July to help address these issues.

Link to workshops.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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