Women small business owners prioritize employee welfare more than their male peers.
Recent research indicates significant differences in confidence levels between female and male small and midsized business (SMB) owners regarding their financial outlook and risk tolerance. Women owners tend to emphasize positive employee experiences and outcomes more than men.
The 2023 State of Women survey, which involved over 500 SMB owners, revealed that nearly half (46%) of female SMB owners express concern about the U.S. economy in the coming year, while only a third (35%) of male SMB owners share this sentiment. However, this caution differs when assessing personal financial situations, with 42% of female owners and 48% of male owners feeling optimistic about their finances over the next year. (Discover the initial findings here, which highlight the persistent gender gap in workplace financial wellness programs.)
Confidence Gaps in Financial Knowledge
Male SMB owners exhibit greater confidence in their financial management skills compared to female owners. Analysis of a previous survey found that male SMB owners ranked highest in financial knowledge, followed by male employees, female SMB owners, and female employees.
“To manage a business effectively, a solid understanding of money management is crucial,” remarks a financial expert. “Yet, it’s concerning that women business owners rate their financial knowledge and confidence lower than male employees, reflecting a pattern of underestimating their capabilities.”
The hierarchy of confidence levels is as follows:
Risk-Taking and Future Strategies
Male SMB owners are significantly more inclined to take financial risks than their female counterparts. In times of economic uncertainty, nearly half (49%) of women SMB owners would opt to maintain their current financial strategies, while only a third (36%) of men would do the same. Furthermore, male owners are more likely to increase their investments compared to female owners (25% vs. 9%).
“Access to financial resources is vital, especially during market fluctuations. Thankfully, many businesses have managed to build cash reserves,” states a company president. “We’re also seeing a trend where business leaders are fostering connections within their local communities. It’s essential for SMB leaders to find trusted peers who can assist them in navigating challenges ahead. By prioritizing their finances and employees, they can leverage support from established networks during downturns.”
Women Business Owners Prioritize Workplace Culture
Workplace flexibility and a sense of purpose are increasingly important to employees. The State of Women 2023 survey indicates that female SMB owners recognize this, valuing positive work environments more than their male counterparts (75% vs. 62%), as well as focusing on mental health (52% vs. 42%) and career advancement opportunities (50% vs. 41%).
However, when it comes to promoting employee financial wellness, women SMB owners are less inclined to offer such programs (56% vs. 36%). Many believe their workforce is too small to warrant a financial wellness initiative (66% vs. 55%), while men often cite costs as a barrier (25% vs. 12%). A significant majority — 77% — of employees deem it essential for workplaces to emphasize financial health, compared to 69% of SMBs.
“Businesses that thrive during tough times often have a strong sense of purpose and a clear mission,” shares the company president. “During crises, employees find comfort in knowing their company stands for something significant. Given the current economic pressures, employees expect their organizations to support them in all aspects of their lives — emotionally, mentally, and financially.”
ABOUT THE STUDY:
The 2023 State of Women results stem from an online survey conducted in August 2023, involving 510 small and midsize business owners and 900 full-time employees across various age groups, all linked to small and midsize employers offering health insurance or retirement plans.
- The Gender Gap Is Still Very Real In Workplace Financial Programs
- The Gender Pay Gap, Revisited
- No, We Can’t Control Every Aspect Of The Financial Gender Gap, But We Can Take Charge Of These Three Things
About Principal Financial Group® Principal Financial Group® is a global financial organization dedicated to enhancing the wealth and well-being of individuals and businesses. With over 140 years in operation, Principal® assists customers in planning, protecting, investing, and retiring, while also striving to support local communities and cultivate a diverse workforce. Learn more about Principal at principal.com.
