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Study: Female #StartUp Founders are Less Likley to Pay Selves Salary compared to Male Founders

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A new study says the female startup founders are less likely to pay themselves a salary than their male counterparts.

According to the 2016 American Express OPEN Small Business Monitor, only 42% of women take a salary compared to 57% of men surveyed.

And get this: of the women who do pay themselves a salary, they earn an average of $17,470 less than their male counterparts.

The good news still is that this last number is a $930 bump up for female small business owners from 2015.

The salary differences are likely not indicative of business problems as women have a positive outlook overall, with 89% of women calling themselves optimists (compared to 81% of men).

Here are some noteworthy highlights about women business owners surveyed.

  • Seventy-six percent plan to grow their businesses (vs. 74% of men and 75% of businesses overall)
    • The biggest challenge they face as they grow their business is finding the right staff (21%), followed closely by the rising costs of doing business (17%)
  • They are more likely to say they are on track to save the funds they need for retirement (58%) when compared to their male counterparts (57%) and last year (54% last spring)
    • However they are more worried about their ability to save for the retirement they want than they were last spring (52% up from 47% a year ago)
    • On average they believe they will need $1,040,000 to retire, $70,000 less than they estimated last year
  • They are less likely to expect cash flow issues over the next six months, (33%) compared to men (39%) and last spring (46%)
  • The most important priority for women business owners is keeping/maintain their current business and sources of revenue (39%)
  • They are much less likely to pay themselves an annual salary when compared to their male counterparts (42%, vs. 57% of men) and compared to one year ago (down from 50% last spring)
    • on average they are earning more than they were a year ago $63,590, a $930 increase

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 Business Outlook and Managing the Economy

According to the Monitor, women business owners maintain their positive outlook on the economy and their business prospects over the next six months (64%, on par with 65% last spring), and are equally as positive when compared to men and small business owners overall (each 64%). The most important priority for women business owners is keeping/maintain their current business and sources of revenue (39%). However, seventy-six percent plan to grow their businesses (vs. 74% of men and 75% of businesses overall).  The biggest challenge women business owners face as they grow their business is finding the right staff (21%), followed closely by the rising costs of doing business (17%).

Over the last three years, women experienced fourteen percent revenue growth identical when compared to growth experienced by men and business owners overall.

Hiring Plans

Thirty-five percent of women business owners (on par with 31% last spring) are planning to hire within the next six months (vs. 42% of men and 39% overall). Thirteen percent plan to hire only part-timers, 12% plan to hire only full timers and 10% plan to hire both full and part-timers. More than one quarter say their top business mantra is “You are only as good as your people” (29%).

Addressing Cash Flow Issues

Women business owners are less likely to expect cash flow issues over the next six months, (33%) compared to men (38%) and last spring (46%).  The biggest worry among female entrepreneurs is the ability to pay bills on time (10%), followed by accounts receivable (8%), having enough cash to win new business, the ability to meet payroll and the ability to accurately track cash flow (each, 5%)

Investments in the Company and Access to Capital

Nearly half of women business owners (49%, on par with 52% last spring) will make capital investments over the next six months (vs. 52% of men).  For female entrepreneurs, technology investments lead the category (39%). Additional investments include office equipment (16%) and office furnishings, manufacturing/production equipment and real estate investments (each, 8%).

Find out more from Open at American Express

 

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