‘I’ve never paid myself’: why the reality for female entrepreneurs doesn’t always match the rhetoric

Sarah Marks, lecturer in HRM and Organisational Behaviour, Swansea University

Inspiring stories of female entrepreneurs are a familiar part of International Women’s Day. Typically, these portraits follow a narrative arc of adversity, resilience, passion and success.

The message is that women are skilled, resourceful and successful entrepreneurs.

However, one thing you are unlikely to learn from these role model stories is how much (or perhaps more pertinently, how little) money the founder pays herself. While this partly reflects taboos on discussing money, it contributes to a gendered veil of silence regarding the very poor personal incomes of most women entrepreneurs.

My research on female founders in the UK suggests that entrepreneurship rarely pays for women. It may also exacerbate gendered financial precarity, particularly as women get older. This hidden picture of women’s entrepreneurial poverty will form part of my submission to the UK government’s public inquiry into female entrepreneurship this spring.

I spent two years interviewing more than 50 women in London from various backgrounds. They had established their enterprises in diverse sectors, with the hope of generating at least a living-wage income.

Elusive

But a self-sustaining income proved an elusive goal for most. Only four had matched or surpassed their former salary in employment. This was less than 8% of my sample. A further three managed to bring in about £2,000 a month – similar to a living-wage income in London at the time.

Eight women paid themselves (sometimes) around £1,000 a month, despite working for their business full time. A similar number generated up to £100 a week. The rest – more than half the sample – took no income at all.

While some were in early-stage entrepreneurship, many had been investing labour and resources into their venture for four or more years without generating pay for themselves. Some women were supported by partners or savings, others relied on state benefits, paid employment or drastically reduced their living standards.

Lian, for example, moved into her business premises to slash her living costs. Lucy had not socialised for four years and Rebecca complained that her house was “falling apart”.

Bleak about the future

Coping on a low entrepreneurial income was not simply a question of foregoing discretionary spending. At 49, Rebecca admitted she often felt “really bleak about the lack of a pension”, while Lucy, 39, worried that she would end up “penniless in the gutter”. As few women were investing in a pension, the research suggests that, in the UK at least, women’s entrepreneurship could worsen both gender income gaps and long-term financial equality.

Notably, most women had received support from enterprise programmes and business advisers. Four women took loans from the UK government’s Start-up Loan Company, which lends up to £25,000 at commercial rates, and targets non-traditional founders such as women and young people.

However, three had returned to paid employment to service the loan, reducing the time they had to grow the business. This included Stacie, who said: “Forget my time, I’ve never paid myself. Never. Basically, the money that came in went straight back to the loan.” Stacie’s entrepreneurship journey had nonetheless been packaged into a celebratory success story on the Start-Up Loan’s website.

Analysing social patterns in household economic structures and women’s entrepreneurial income suggests two things.

First, it is now relatively easy for women in the UK to borrow money to start a business. But it is very difficult for them to raise enough funds to develop an income-generating enterprise.

Second, women who had salaried partners or family wealth could afford to invest their labour into growing their business. This gives them a substantial advantage over single women. Single mothers especially face a stark choice between investing their time in their business or in employment to meet household needs.

While many male entrepreneurs also struggle to generate income, my research highlights specific gendered issues.

Notably, gendered norms around social value mean women often disguise disappointment with low incomes and make a virtue out of non-financial rewards.

Reflecting on the £100 a week she earned from her craft business, Maggie said: “I just love … talking to people and hearing about their lives and just having a good chat.” But having a good chat does not pay bills. Maggie, a widower, was anxious to grow the business to replace her former income of £38,000 a year and come off benefits.

Second, fear of violating gendered norms may inhibit some women from pursuing profit. Most women were adamant they must not appear “greedy”.

Greta, for example, had switched her for-profit business plan to a social value buy-one-give-one model because she feared that being seen as “profiteering” would derail her brand story. Yet, the extra costs of a social-value buiness model imposed serious constraints on her future income.

The income disappointment women revealed is not reflected in the public discourse. Lian, Stacie and many other non-earning interviewees were publicly hailed as successful, contented, female entrepreneurial role models at enterprise events as well as in digital and traditional media outlets.

As Deanna remarked: “Founders are the new celebrities.” Such role model stories, devoid of any facts about income, feed a pernicious myth that entrepreneurship is a desirable, feasible and sustainable career for all women.

But my research also indicates ways of approaching the hidden financial impact. We need much better evidence about incomes for women business owners – and we need to make this public. Conversations about what holds women back from talking about the income they need is important. Paying yourself a decent income is not greed.

It should also be made clear that social value goals can harm income prospects.

And, given the UK’s goals of financial equality, we should be honest and ask if encouraging women to open businesses is even the right thing to do.

This article was first published on The Conversation