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Financial Literacy: Biggest Hurdle For Female Entrepreneurs

By QuickBooks Australia

Published on April 12, 2023

New research from QuickBooks has revealed that 74% of female entrepreneurs believe financial literacy is the biggest financial barrier when running a business. A further 90% of female small business owners believe their understanding of financial terms and skills impacts their ability to scale their business.

Given the significance of finance in this world, a woman's long-term financial success may suffer greatly if they are not financially literate. It can also create barriers to business growth and success.

But what is financial literacy? Financial literacy refers to the knowledge and skills required to make informed and effective decisions on financial matters. This can include understanding financial concepts, budgeting, and investing. Financial literacy gives you the tools you need to run your business successfully.

In contrast, a lack of financial literacy can lead to several issues, including a higher chance of overspending, taking on too much debt, and failing to invest in growth opportunities. It could also make it harder to secure funding from investors or lenders because small business owners may struggle to prepare the financial statements and projections required. This shows why female small business owners feel that financial literacy is a big hurdle to growing their business.

This latest research shows just how critical the need is to address the financial empowerment gap with Australian small business owners, specifically female small business owners. 98% of businesses in Australia are small to medium enterprises, with approximately 40% being female-owned. These businesses are crucial contributors to our economy, society, and livelihoods; as a nation, we need to immediately work to build financial confidence and resilience within this community.

Shaye Thyer, Head of Accounting at Intuit QuickBooks Australia

About the Research

This research surveyed 1,000 small business owners who identified as female and employed no more than 19 people, including themselves. The study focused on understanding business owners' perspectives around barriers to business success and financial literacy.

Some key takeaways from the survey include:

74% of female small business owners believe financial literacy is the biggest financial barrier to overcome when setting up and running a business.
60% of female small business owners feel very confident in their financial literacy
98% of women have used their own money to fund and grow their business

Survey Results Explained

The biggest financial barrier or barriers to overcome when starting or running a business:

Statistics from the survey highlighted the importance of financial literacy for women who run businesses. 74% of small business owners who identify as female say that financial literacy was the biggest financial barrier to overcome when setting up and running a business. Furthermore, 90% say that financial literacy affects their ability to scale their business.

Meanwhile, 57% of female entrepreneurs believed cash flow management was the biggest barrier, and 49% believed inflation/higher interest rates were bigger barriers.

Opinions on the biggest barrier to overcome

The level of confidence a female small business owner has in their financial literacy

The survey revealed that one in three female small business owners (36%) are somewhat confident in their level of financial literacy. Furthermore, six in ten female small business owners (60%) feel very confident in their financial literacy.

Overall, 72% of small business owners who identify as female feel confident they can make the right decisions for their small businesses.

A way to gain financial confidence is through QuickBooks’ accounting software and personnel. Gabriela Andrade, one of the creators of Lionfish Collective, decided to contact an employee at QuickBooks once she started facing big financial challenges.

“QuickBooks helps a lot. It doesn’t matter where I am. I can keep an eye on what’s going on. We’ve integrated it with the ATO, which makes my life so much easier. It gives me so much confidence that now when I am overseas, I can actually take time to rest.” says Gabriela.

QuickBooks’ intuitive payroll features gave Gabriela access to a wide variety of insights and data on her cash flow and expenses, all within easy-to-understand software.

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Where female small business owners find financial advice for their businesses

Data from our survey showed that the greatest support female small business owners had for financial advice includes family members at 44%, followed by their accountant or bookkeeper at 25%.

In addition, 26% of female small business owners have taught themselves the financial knowledge needed to run their businesses. 98% have also used their own money to fund and grow their business.

Biggest source of ‘financial advice support’

However, sometimes financial advice from non-professionals can pose some risks. Alternatively, you could also invest in a rewarding relationship with a QuickBooks ProAdvisor, like how Tory Archbold, CEO, and founder of Powerful Steps, did with advisor Lielette Calleja.

“Lielette immediately understood my business goals and model. Not only did she help deliver a strong foundation between the technology funnels we were using, but she also suggested actions to improve them,” Tory expressed about her experience.

“She deep-dove into the heart of our business and was dedicated to its success from day one because she was the type of woman who would use our services. That’s what I call soul-based alignment!”

Use QuickBooks to help you find a ProAdvisor who can help advise your business.

‘Financial boosts’ female small business owners want to see besides grants

Results from the survey reveal that 30% of female small business owners would like to see free Government-funded financial advice to support their operations.

Furthermore, 28% of female entrepreneurs want free financial well-being refresher courses, and 20% want financial education to start at the school level.

Opinion on ‘Financial boosts’ excluding grants

Financial Literacy Gap

For Australia’s over 800,000 female entrepreneurs, this financial literacy gap has the potential to limit their business’ success. A report by the Global Financial Literacy Excellence Center identified that Australian women already exhibit the second-highest financial literacy gap compared to men in all G20 countries.

Further, the gender financial literacy gap is only increasing, according to the latest Household, Income and Labour Dynamics in Australia survey in 2022 that asked respondents a series of five basic questions about money. The survey found that the average correct score of women – already lagging well behind men – slipped from 3.7 to 3.5 (out of 5), while men had an average correct score of 4.

Understanding financial literacy and the benefits it can bring can help transform a business owner’s day-to-day financial decision-making skills.

These skills usually call for at least a basic understanding of important financial concepts like the time value of money and compound interest. It also calls for knowledge of health insurance, mortgages, and other loans since these have grown in importance.

This makes the matter even more imperative for female business owners to understand so that they may spend their money responsibly. This also helps women entrepreneurs know which investment decisions are best when saving.

What is evident is that female small business owners require easy access to information, advice, tools or support. As an accountant by trade, I can’t highly recommend enough that all female small business owners lean on their accountant or bookkeeper to guide, inform, and educate them on financial decisions that will impact the running of their business and ultimately, keep them financially secure. Women often sit at the heart of families as well as small businesses – so the more empowered women are to apply their financial knowledge, the more female-led small businesses will thrive to the benefit of everyone.

Shaye Thyer, Head of Accounting at Intuit QuickBooks Australia

Boost your financial literacy confidence by connecting with a ProAdvisor from QuickBooks. When it comes to your finances and all things accounting, these professionals are guaranteed to help you act more responsibly and make smarter decisions. You can also have a look through the QuickBooks blog for articles that can help boost your financial literacy.

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