The female economy is the world’s largest, fastest-growing market, and women control 80% of buying decisions made worldwide (Deloitte) which amounts to over $72 trillion. On a personal level, women have an 8.1% rate of growth in wealth, as compared to 5.8% for men. However, women still lag behind men financially when it comes to owning and running a business. Part of this gap is due to lower levels of financial confidence in women. Outlined below are the differences in financial confidence between men and women, why financial confidence is important in regards to scaling a business, and how to improve financial confidence in women.

Financial Gap Between Men and Women
Women-owned businesses are a huge force in Canada; in 2018, BMO reported that women-owned businesses contributed $150 billion to the economy and employed over 1.5 million people. And yet, there is a sizable financial gap between businesses owned by women and those owned by men. On average, women-owned businesses are smaller, exhibit slower growth rates of net income and employment, lower survival rates, and lower labor productivity. Women are also less likely to assume the risks of debt financing and apply for loans; 68% of women-owned SMEs with credit needs are unserved or underserved (IFC). These differences can be vastly attributed to the lower rates of financial confidence in women. In financial knowledge tests conducted by Scotiabank, 58% of men rated themselves “knowledgeable” or “very knowledgeable” as compared to 45% of women, and women on average performed worse on tests regarding financial knowledge.

What is Financial Confidence?
Financial knowledge is the familiarity with small business finance terms and concepts, while financial confidence is one’s self-assessed level of financial knowledge. While financial knowledge is key in order to understand how to manage and scale a business, financial confidence is necessary in order to pursue opportunities where that knowledge can be put into practice. The Financial Consumer Agency of Canada found that confidence is the predominant factor in success with day-to-day money and debt management, and that those with higher confidence performed better than those with higher knowledge levels, but lower confidence levels.

Improving Financial Confidence
In this case, knowledge is power; women feel undereducated in financial concepts that are key to running and scaling a business, which include business valuation, cash flow forecasting, risk management, and sources of capital. Initiatives like the Scotiabank Women’s Initiative help tackle these issues through having a two pronged approach; they not only provide access to capital, but also access to education so that women can better understand their financial needs, and how to meet these needs using banks and other lenders. Michele Smith, Associate Director of Canadian Commercial Banking at BMO, advises that women search for a bank that understands their needs, and that having a thought-out business plan with historical and projected financials can give banks an accurate picture of your vision, and how they fit into that. She also encourages women to pursue alternate sources of funding that are women-centered, such as women-focused capital funds, government grants, and crowdfunding (To check out some women-specific financial resources, read our blog on entrepreneurship strategies here). When women harness their financial knowledge, the results are positive; 34% of private sector leaders see profits rise as a result of advancing women’s financial power. When women do apply for loans, they are more likely to be approved for loans, and women have an average 1.5% non-performing loan rate, which is 53% lower than the rate for men (IFC). The proof is in the pudding; women have the knowledge and the power to be financial powerhouses, but a lack of financial confidence is holding us back.

SSFPA Financial Resources
The SFFPA has a plethora of financial resources for food processors. For information regarding resources for women, click here. For information regarding the SSFPA Cash Advance programs for processors in BC, AB, and SK, click here. For information on SSFPA courses, click here.