Female entrepreneurs remain a relatively untapped resource for economic
growth: RBC Economics
New report finds female-run businesses are growing in numbers; however,
increasing female representation could provide meaningful boost to GDP
TORONTO, Oct. 17, 2013 /CNW/ - Female majority-owned businesses are making
their mark among Canadian small-medium size enterprises (SME) with the share
of female- run firms rising to 15.6 per cent in 2011, up from 14.9 per cent
and 13.7 per cent in 2007 and 2004, respectively, according to a new RBC
Economics report entitled Canadian Women Grabbing the Baton. Still, RBC notes
that the prevailing ratio of female- to male- majority owned firms suggests
that there exist opportunities for further growth.
"SMEs are a significant source of productivity gains and a major driver of
Canada's economy," said Laura Cooper, economist, RBC. "Female entrepreneurs
have been steadily contributing more and more to this level of growth;
however, there remains a tremendous untapped opportunity for female
majority-owned SMEs to have an even deeper impact in terms of contributing to
In 2011, the aggregate contribution of female majority-owned SMEs was an
estimated $148 billion in economic activity. The RBC report projects that a 10
per cent rise in the number of female majority owned firms over the next
decade would boost the economic contribution to $198 billion.
Demographic shift presents an opportunity
A larger proportion of Canada's population is reaching retirement age and this
trend is being echoed in SMEs. For female majority-owned firms, the share of
those over the age of 65 has nearly doubled in the past four years, which in
part reflects a rising female participation rate in the 65+ age bracket.
RBC notes that at the same time, younger female entrepreneurs are not
balancing out the aging ownership trend - females under the age of 40 run a
relatively lower share of SMEs in the marketplace.
"We estimate that the increase in female labour force participation over the
past three decades resulted in a $130 billion contribution to economic
activity in 2012- equivalent to seven per cent of GDP," said Cooper. "There is
a clear opportunity for women to not only act as a supplemental source for SME
growth, but to also provide a further boost to Canada's overall economy. There
should be an emphasis on encouraging women, and younger women in particular,
to pursue the entrepreneurial opportunities that are of interest to them."
A further narrowing and eventual elimination of the gap between female and
male labour force participation rates over the next 20 years would result in a
four per cent boost to GDP in 2032, says RBC.
"Women entrepreneurs are a dynamic and powerful economic force that make up 38
per cent of our small business relationships," said Kim Ulmer, vice president,
Small Business, RBC. "We recognize that Canada's future economic development
and prosperity depends on the encouragement and cultivation of women
entrepreneurs and we are here to support women in business and continue to
close this gender gap."
Addressing barriers to growth
According to the report, in 2011, female business owners said that maintaining
sufficient cash flow and recruiting and retaining staff were serious internal
obstacles inhibiting growth, while the rising cost of inputs and instability
of consumer demand were identified as being the biggest external challenges.
As Canada's economy strengthens, RBC says a greater share of female firms are
projecting positive revenue growth in the near-term, which could spark renewed
optimism for small business formation and drive female entrepreneurs to expand.
The report notes that female-led industries have often had lower financing
request rates and faced various impediments in obtaining needed funds.
"The fact that female-led firms are seeing positive prospects is encouraging,"
added Ulmer. "Seeking out advice from their small business advisor can help
them overcome challenges and identify financial solutions that will help them
reach their growth potential."
Characteristics of female majority-owners and businesses
Nearly one-in-four female business owners in Canada are born outside of
Canada, and close to 70 per cent of female business owners have a
post-secondary degree. However, RBC notes that the share of businesses owned
by aboriginals and visible minorities remains low. While these demographic
groups represent relatively small shares of the overall Canadian adult
population at four per cent and 18 per cent, respectively, RBC says that
further aligning these ownership rates with associated population shares for
both genders could serve as a supplemental source for further SME growth.
A complete copy of Canadian Women Grabbing the Baton is available as of 8 a.m.
ET at rbc.com/economics.
About RBC Small Business Banking
Small businesses in Canada want flexible banking choices, convenient payment
options and simple ways to manage their cash flow. Whether they are starting a
business, managing growth, or succession planning, the RBC Advice Centre can
help answer their questions. Free interactive tools and calculators provide
customized information covering many facets of business finance and online
advice videos are updated regularly to answer questions that are top of mind
with small business owners. RBC Group Advantage is a comprehensive program
providing employees with advice from qualified investment specialists and
financial advisors and also offers flexible plans -- including group RRSPs,
group savings and groupbank -- as well as a mortgage relocation program, to
help small business owners attract, retain and motivate productive, long-term
employees. With the guidance of RBC business advisors, small business owners
have access to free, no obligation professional advice about RBC products and
services. For more assistance, please visit www.rbcadvicecentre.com.
Angela Harkey, RBC Communications, 416 313-5001 Kate Yurincich, RBC
Communications, 416 974-1031 Gillian McArdle, RBC Capital Markets, 416 842-4231
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