Many small businesses are more usually run by male directors. However, a new study from KSA Group Limited reveals that UK SMEs run by women are significantly less likely to face insolvency than their male-led counterparts. This research, analysed data from over 4 million UK businesses, and showed interesting insights into the relationship between the gender makeup of companies and the likelihood of their ability to avoid insolvency.
The Gender Gap in Business Failure Rates
Businesses predominantly run by men have an insolvency rate of 0.7%, while women-led businesses show a markedly lower rate of just 0.41%. This means that male-run businesses are 71% more likely to end up in administration or liquidation.
These findings are interesting, but bear in mind that male run businesses are much more common, with the study identifying more than 707,000 male-run businesses compared to just under 77,000 female-run companies—a ratio of approximately 9 to 1.
Understanding the Research Methodology
Robert Moore, Marketing Manager at KSA Group, utilised Creditsafe's comprehensive database of 4 million UK companies to examine the correlation between gender leadership and business insolvency.
The study focused specifically on businesses defining male-run companies as those with either just two men on the board or a male majority of at least 75%. The same criteria were applied to identify female-run businesses.
Single-director companies were deliberately excluded as these are often just the self-employed.
Over a 12-month period, the study tracked:
- 707,598 active male-run businesses
- 76,715 active female-run businesses
- 5,007 male-run businesses that entered administration or liquidation
- 318 female-run businesses that entered administration or liquidation
Consistent Patterns Over Time
This represents KSA Group's third investigation into this area since 2018, with all studies showing similar patterns. This consistency suggests that the gender difference in insolvency rates isn't merely coincidental or sector-specific.
Robert Moore, who used Creditsafe's database for the study, says that while there are gender-based leadership patterns in some industries (for example, construction companies are more likely to be run by men and education companies are more likely to be run by women), the distribution of insolvencies has changed over time. In 2018, property businesses accounted for a higher proportion of women-run insolvencies, while in 2024, retail and education sectors feature more.
Male-Dominated Sectors
Construction continues to be overwhelmingly male-led, The construction industry is known for its volatility, with success often dependent on managing tight margins, navigating complex supply chains, unforeseeable problems in projects, and economic cycles that can dramatically impact building activity.
Other traditionally male-dominated sectors include:
- Manufacturing
- Transportation and logistics
- Technology hardware
These sectors often involve higher capital requirements and can be subject to boom-and-bust cycles.
Female-Led Sectors
Sectors with stronger female leadership representation include:
- Healthcare services, particularly in specialised care and wellness
- Education
- Professional services focused on HR, training, coaching and development
- Specialised retail, especially in fashion, beauty, and household goods
- Food services with focus on sustainability and healthy options
Many of these sectors involve service-based business models with lower capital intensity which might contribute to greater business stability.
Possible Explanations: Skill, Style or Stereotypes?
While the data clearly shows a correlation between gender leadership and business resilience, the causes behind this pattern require further research. KSA Group acknowledges that multiple factors could be at play, not necessarily suggesting that men are inherently worse at running businesses.
However, the persistence of this pattern across years and shifting industry landscapes does raise the possibility of gender-based differences in financial competency or risk assessment. Are women directors perhaps more financially cautious? Do they implement more robust financial controls? Or are they simply more willing to seek advice when facing difficulties?
This last point relates to the idea that men are less likely than women to ask for help or directions. If this trait was applied to business leadership, it could be especially problematic because early action is often necessary for a business to recover.
How to Assess and Manage Risk
Behavioural finance and psychology research has shown over and over that men and women have different ways of assessing risk and managing it.
Studies from institutions like the Global Financial Literacy Excellence Centre suggest that, on average, women tend to:
- Take a more measured approach to financial risk-taking
- Require more comprehensive information before making significant financial decisions
- Maintain higher liquidity reserves relative to operational needs
- Prefer steady, sustainable growth over rapid expansion
- More open to advise from external advisors
These tendencies, if applied to business leadership, could potentially create more financially resilient organisations that are better positioned to weather economic downturns or sector-specific challenges.
Many business failures stem from delayed action when problems first emerge. Leaders who are more open to collaborative problem-solving and external advice may identify and address financial difficulties earlier, increasing their chances of successful business recovery.
Global Research Context
KSA Group's findings align with several international studies on gender and business performance:
- A post-financial crisis study published in the Journal of Business Ethics found that banks with higher female representation in leadership positions demonstrated greater stability during economic turbulence. The researchers suggested that these results might stem from more comprehensive risk assessment practices and lower tendencies toward the excessive leverage that contributed to the 2008 banking crisis.
- Research from the Peterson Institute for International Economics examining nearly 22,000 firms globally found correlations between female leadership and stronger profitability. Companies with at least 30% women in leadership positions were, on average, 15% more profitable than those with no women in senior positions.
- A Harvard Business Review analysis of venture capital investments revealed that while female founders received less than 3% of VC funding, their startups outperformed male-founded companies in terms of revenue generation—delivering twice as much revenue per dollar invested.
These international findings suggest that the patterns identified in KSA Group's UK study may reflect broader tendencies in how gender influences business management approaches.
The Way Forward
For business owners, investors, and policymakers alike, these findings offer valuable food for thought. Rather than viewing this as a simplistic "women vs. men" narrative, the data invites deeper consideration of different management approaches and their outcomes.
For struggling businesses, the research underscores the critical importance of seeking advice early—regardless of the gender composition of leadership. KSA Group's findings suggest that many business failures stem from delayed action and reluctance to seek external guidance when problems first emerge.
As the business world continues to evolve and gender representation slowly balances, further research into these patterns could yield valuable insights for building more resilient businesses across all sectors.
Practical Implications for Business Leaders
The study's findings offer several practical takeaways for business leaders of all genders:
Early Intervention Is Critical
The most important factor in successful business recovery is timely action. As KSA Group's experience demonstrates, businesses that seek professional advice at the first signs of financial distress have significantly more options available to them than those that delay.
Balanced Leadership Teams May Offer Advantages
Organisations might benefit from cultivating leadership teams that incorporate diverse perspectives and complementary approaches to risk and opportunity. Research from McKinsey suggests that gender-diverse executive teams outperform their less diverse counterparts on profitability and value creation.
For existing businesses, this might mean:
- Reviewing board composition with attention to diverse expertise and perspectives
- Implementing structured decision-making processes that challenge groupthink
- Creating formal mechanisms for considering alternative viewpoints on major financial decisions
- Establishing clear risk assessment frameworks that balance growth ambitions with stability considerations
By continuing to explore these questions, researchers can help develop more nuanced understandings of effective business leadership across different contexts.
Conclusion
The persistent pattern of lower insolvency rates in women-led businesses identified by KSA Group offers compelling evidence that leadership approaches matter. While the underlying causes are likely complex, the data suggest that certain management styles—potentially more common among female leaders—may contribute to greater business resilience.
For business leaders facing financial challenges, the message is clear: early action is essential, and seeking professional advice at the first signs of distress can make the difference between recovery and insolvency.
For more information on business insolvency, recovery options, and professional guidance, visit KSA Group's Company Rescue resource centre. Their team of experienced insolvency practitioners can provide confidential advice tailored to your specific business situation.