Smarter decisions: That’s why women outperform men in small business sector

Five months after receiving funding from Retail Capital, women saw a 27% credit turnover compared with just 8% achieved by businesses run by men. In the same period, women were seen to be 60% less likely to default on payments than men. Picture: iStock
Five months after receiving funding from Retail Capital, women saw a 27% credit turnover compared with just 8% achieved by businesses run by men. In the same period, women were seen to be 60% less likely to default on payments than men. Picture: iStock

Women-owned businesses in the Western Cape are outperforming their male counterparts, a survey conducted by funding business, Retail Capital, has revealed.

Speaking to City Press on Friday, Retail Capital chief financial officer Guy Hosking said “the significant rise in the success of female business owners in the Western Cape was, in part, owing to the fact that women are willing to take the same risks as men when it comes to business, but they made typically smarter decisions with their money”.

The survey also revealed that female business owners were less likely to default on business loan repayments than their male counterparts.

Retail Capital was established in 2011 to provide South African business owners with the opportunity to grow their business through providing access to funding and has since unlocked more than R1.5 billion to the small and medium-sized enterprise industry in South Africa.

Conducted from a relatively small pool of 53 businesses funded by Retail Capital in the province, the survey found that there was a 70% increase in turnover in women-owned businesses in the Western Cape compared with an 18% increase in businesses owned by men in the first five months of them having received funding.

The survey spans an 18 month period – from January 2017 to June 2018.

To calculate the growth rates, Retail Capital recorded companies receiving funding’s initial average revenue from credit card sales and compared with the credit card sales form the second to the fifth month since receipt of funding.

“Five months after receiving funding from Retail Capital, women saw a 27% credit turnover compared to just 8% achieved by businesses run by men. In the same period, women were seen to be 60% less likely to default on payments than men,” said Hoskings.

Retail Capital chief brand officer Erin Louw said this could be accredited to the fact that “women tended to take longer to make big business decisions, but had a tendency to have more deliberate investment goals once they took decision such as acquiring funding”.

“In the Western Cape, we are seeing more and more women taking funding to grow their businesses and they are seeing significant returns. This, in turn, shows more women that they can succeed in business with the right tools and support.

“According to our study, women invest funding for their businesses wisely and see higher turnover than men,” said Louw.

Retail Capital also found that 64% of women took funding with flexible repayment structures to mirror their business’s cash flow cycle as opposed to the fixed payment structures offered by traditional funders.

“In an unstable economy, taking funding out with a provider such as Retail Capital enables you to be flexible ? just as your business is. Any small business is unlikely to see the same fixed returns month to month, which may make it difficult to stick to a fixed payment structure.

“From any business owner’s perspective, this flexible structure might be harder to get your head around as you are not paying a fixed amount over a fixed period. However, figures show that in today’s economy flexible repayments are a savvy choice for micro, small and medium-sized enterprises,” explained Louw.

In light of the positive statistic revealed by the survey on women-owned business, the survey also depicted a concerning fact – most of these businesses were situated in Gauteng, while provinces such as; Mpumalanga, Free State, Limpopo and the North West recorded very low numbers of women-owned business.

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