Glass Ceilings

Female Entrepreneurs More Confident than Men in Making Risk-Related Decisions

More than 75% are confident about making risk-related business decisions, compared to 66 %of men

CHICAGO, Oct 3, 2016 – BMO Wealth Management (U.S.) on Thursday released a report which explores the similarities and differences between male and female business owners.

The report – titled Are there gender differences among entrepreneurs? – found that 77 percent of female entrepreneurs felt very or somewhat confident in making risk-related business decisions, compared to 66 percent of male entrepreneurs.

“We learned that for many people, regardless of gender, the main driver to become small business owners is the desire for greater freedom and flexibility,” said Jason Miller, National Head of Wealth Planning, BMO Wealth Management (U.S.). “All businesses can be volatile at some point and business owners need to plan accordingly for those times – especially when a majority of people use their own savings to start or grow the business. Nonetheless, it’s encouraging to see that entrepreneurs prudently assess and manage risks to advance their business interests.”

The report also showed that two fifths (40 percent) of women business owners describe themselves as doing something they enjoy, compared to 35 percent of their male counterparts. Similarly, 30 percent of female entrepreneurs define success in business by doing something they feel passionate about, compared to 24 percent of male entrepreneurs.

The biggest challenges highlighted by entrepreneurs are:

  • Managing everything themselves (36 percent)
  • Growing or expanding their business (33 percent)
  • Arranging or accessing financing (9 percent)

Miller added, “It takes a lot to manage a business and what business owners need to remember is that they don’t have to do it on their own. I recommend establishing your circle of trusted advisors who can help you make critical decisions that will contribute to a flourish business.”

What it Takes

BMO offers the following financial planning tips for entrepreneurs:

Creating a Business Plan: A business plan is a great tool to help you envision how your business will function and grow. It is also a necessary document that lenders need to review prior to lending money.

Corporately Owned Life Insurance: Life insurance can be used to protect your business in the event of loss of control on the death of one of the owners. If that is the case, the life insurance can buy out the interest of a surviving spouse or family member.

Sourcing Capital: Business lines of credit, business credit cards, government loans and venture capital are all ways of sourcing capital. A financial professional can work with you to find the most suitable type of credit that fits with your business.

Tax Planning: A tax professional can help you to enhance your personal wealth through your business by discussing the use of corporate structures and individual pension plans.

Excerpts from Are there gender differences among entrepreneurs?


Self Employment isn’t for the fait at heart
Popular belief loves to characterize entrepreneurs as “Type A” personalities who are competitive, outgoing, impatient, aggressive, careless risk-takers – and predominantly male. And women are perceived as mild-mannered, nurturing business owners who subtly influence the world around them.

Over time, these biases have translated into a misconception that female entrepreneurs are risk-averse and unwilling to make bold decisions that would enhance the growth of their businesses.

If this were true, such reticence could impede business growth and innovation, and even affect the willingness of financial institutions to invest in their businesses. More and more Americans are considering self-employment – particularly since the Great Recession of 2007–2009, when many jobs became vulnerable to downsizing. In fact, the BMO Wealth Report titled “ The Life of an Entrepreneur” showed that entrepreneurship is on the rise among a wide range of demographics, including new graduates concerned that their specialized skill sets will be underused in traditional workplaces and those in pre-retirement looking to keep sharp and social during their retirement years.

Research recently commissioned by BMO Wealth Management found many similarities between male and female entrepreneurs, while some differences challenged more than a few misconceptions.

We learned that for many people, regardless of gender, the main driver to become small business owners is the desire for greater freedom and flexibility

This study, conducted by Carleton University researchers in conjunction with The Beacon Agency, interviewed 100 entrepreneurs of both genders on topics such as their motivation to open a business, their risk-taking behavior and how their business growth was
funded. BMO Wealth Management followed up this research with a survey of 1,000 entrepreneurs on some of the same metrics to improve their understanding of entrepreneurs and to learn how best to serve them.

Common characteristics of male and female entrepreneurs
Motivation. Millions of Americans find passion in their work as employees, but many feel the need or desire to pursue self-employment. Such entrepreneurs are motivated by a variety of factors, including a love of their work, a desire for independence and a need to produce income.

When asked about their motivation in starting a business, male and female entrepreneurs scored similarly on all responses. An overwhelming number of entrepreneurs of both genders were prompted to open a business in order to pursue greater freedom and flexibility. The only minor ifferences were found in the passionate pursuit to provide products and services (favoring female entrepreneurs) and the desire for economic independence (favoring male entrepreneurs).

They are all entrepreneurs but they are not all the same
Surely, there are some differences between male and female entrepreneurs. The research and survey results confirmed some differences but they also showed some interesting insights. A number of small but statistically significant differences among male and female entrepreneurs were found in the types of businesses that they established, their self-reported measures of success, their risk-taking behavior and how their business growth was funded.

Gender and the type of business conducted
According to the Carleton research, women tend to open businesses in service industries (accommodations and food service, health care and social assistance, and retail trade) while men tend to open businesses in export-oriented sectors (knowledge-based and

Women also tend to focus on long-term relationship building and design their businesses to grow and adapt over time.

In contrast, male-dominated enterprises have a propensity for rapid growth in preparation for the future sale of the business.

These results give pause to traditional lending philosophies that value rapid growth, sale and reinvestment over long-term sustainability. It is as if traditional lending practices treat risk as an objective rather than a means to an end. Focusing on year-on-year growth, balance sheets and operating expenses would therefore seem like metrics that are more likely to favor male entrepreneurs over their female counterparts. There is a concern that businesses that focus on other quantifiable qualities such as goodwill and retained earnings – components of a business that sustain it through challenging times – might not get the attention they deserve
by traditional lending practices.

To view a copy of the full report, please visit here.

For more information about BMO Wealth Management or to learn more about wealth planning, please visit here and the Your Wealth Your Way resource center here.


About BMO Wealth Management
BMO Wealth Management serves mass affluent, high net worth and ultra-high net worth individuals and families with a full suite of wealth management solutions including wealth planning, banking, investment management and trust and estate services. With 35 offices across 12 states and international offices in Canada, Hong Kong, and Singapore, BMO Wealth Management provides guidance and planning advice combined with individualized service and local expertise. As of July 31, 2016, BMO Wealth Management had assets under management of US$48.6billion and assets under administration of US$56.2 billion. BMO Wealth Management is supported by the resources and stability of one of North America’s premier financial services organizations—BMO Financial Group. Visit here.
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