There remains a difference between the financial preparedness and literacy of female business owners and HNW individuals, according to a study that exmaines some of the forces in play.

A US study of 762 business owners and 581 high net worth individuals by BMO finds that despite meaningful progress, women entrepreneurs are still behind in critical aspects of business financial planning, transition planning and financial literacy compared with their male counterparts. 

Some 64 per cent of women business owners do not have a detailed financial plan for their companies, compared with 59 per cent of men who do. 

Women business owners are significantly less likely to have considered how to manage many financial situations associated with their business, the survey found. 

"The importance for all business owners – but particularly women business owners – to have a financial plan for their companies cannot be overstated," Shannon Kennedy, head, US advisory and interim US chief executive BMO Wealth Management US, said. "Women tend to live longer, face industry-specific financial hurdles and center their wealth planning around their families. Having a detailed financial plan for their business is vital to ensuring continued growth and expansion, business owner's overall personal financial wellbeing, and making certain their families are taken care of.”

The report comes at a time when there are regular calls for the wealth sector to be more open to women in their own ranks of advisors, and to be more focused on the financial needs of women as business owners and holders of wealth. WealthBriefing, this news service's sister publication, recent unveiled its "Winning Women" report for the Middle East to explore such issues, showing how the challenge is a global one.

Only a third (33 per cent) of women business owners have a detailed plan compared with over half (52 per cent) of men, the study found. 

Among the 25 per cent of women business owners who do not have transition plans, the three main reasons cited include not having plans to sell their business (39 per cent), never considering having a transition plan (25 per cent), and not having plans to retire (21 per cent).

Transition planning
Women business owners are 10 per cent less likely to consider strategies on how to transition out of their company without giving up control

Nearly a third (32 per cent) of women business owners have yet to consider or incorporate plans that will create the right incentives to prepare the next generation or key persons to take over the business. And 31 per cent have not yet incorporated plans that allow them to access the equity in their business to help them prepare for retirement and/or achieve other personal goals.

"Business owners have dedicated countless hours and resources to set up and grow their businesses, but many do not have a critical transition plan in place," Kaitlin Skopec, director, Corporate Advisory, BMO Commercial Bank, said. 

The study also explored the financial preparedness of high net worth women who are not business owners. It found that 57 per cent of them expressed that while they know it is important, they admit to finding it difficult to be interested in personal wealth planning. However, despite not owning a business, 86 per cent of HNW women believe that the best way to manage their personal wealth is to treat it like a business.