Two-thirds of women-led businesses in Scotland are failing to progress beyond the start-up phase, according to alarming new research published today.
The authors of the survey highlight that whilst more women than men are starting businesses, proportionately few women-led businesses are making it through the post-start-up phase to establish and grow.
Women-led business start-ups have increased to 54% of all start-ups in Scotland, but the post-start-up pipeline has a high attrition rate of 61% (2023-24), and women-led employer businesses have dropped to just 20% of all employer businesses.
This declining trend in Scotland is at odds with the global increase in established women-led businesses and exposes a key disconnect between Scotland’s thriving start-up culture and the failure of many of these businesses to move through to the established and growing phase.
Carolyn Currie, CEO of Women’s Enterprise Scotland said; “A perfect storm of economic conditions and structural inequalities is halting the progress of women-led businesses, despite their start-up successes.
“What we are seeing is an alarming number of new women-led businesses failing to thrive. They are simply falling into an abyss, leaving their economic potential and the ambitions of their founders unfulfilled.
“The WES survey reveals a clear demand for needs-based business support, with the majority of respondents advocating for a Women’s Business Centre model.
“Many of the issues – and suggested actions that need to be taken – have been highlighted in research numerous times over the past 30 years.
“We can continue to watch talented women entrepreneurs leave the market, taking billions in economic potential with them, or we can implement the evidence-based solutions this study provides. The choice is clear – the community has spoken, and we need to listen. The time for action is now.”
Tackling this declining trend and improving current outcomes for women-led start-up businesses has the potential to unlock an estimated £17bn reward for the Scottish economy every year.
This is the equivalent of almost two-thirds of the current public sector spending deficit, which now stands at £26.2billion, according to the latest Government Expenditure and Revenue Scotland (GERS) report. Achieving parity would equatd to over 80% of the deficit.
Successive governments in Scotland have committed to inclusive growth and women’s entrepreneurship, most recently in response to the Pathways Report, with up to £2.6m released for support in 2024 to 2025 and at least £4m pledged for support in 2025 to 2026.
However, the report notes that women’s entrepreneurship has not benefited from long-term investment in support provision anywhere near the levels seen in other areas of business, despite the economic opportunity represented by women as 51% of the population.
The WES survey found that economic conditions are threatening business sustainability and reveals a devastating cost for women-led businesses; 78% cannot recover all their increased costs, 41% cannot recover any cost increases, 55% are using personal savings to capitalise their businesses and 52% are making no pension provision, threatening retirement security.
The study also highlighted inequities in COVID-19 business relief distribution, with women-led businesses receiving only 10.6% of grant funds, despite comprising 15.4% of all businesses – an inequality that remains unaddressed three years later.
Experiences of discrimination have doubled since 2016, with 68% of survey respondents reporting that they had experienced discrimination as a woman business owner.
Key structural challenges identified include funding inequalities, with women-led businesses receiving just 2.8% of equity investment; caring commitments, with 29% starting up to work around care responsibilities; support mis-match, with 58% saying mainstream support does not meet their needs, and a digital divide with just 15% being able to access relevant funding, despite 78% wanting digital investment.
Despite these conditions, aspirations for growth are evident, with 62% of respondents anticipating a degree of growth in turnover over the next 12 months, underlining the potential to boost the potential economic contribution presented by women-led businesses if they were able to access strategic, tailored business support.
Jo Chidley, founder of Beauty Kitchen and WES Ambassador commented: “In the eleven years since launching Beauty Kitchen, I’ve seen how women-led businesses can transform our economy when the right support is in place.
“The latest WES Survey makes it clear that we’re still falling short, relying on short bursts of activity and disconnected programmes when we could be building something far greater. There is a clear appetite from women entrepreneurs for a strategic, long-term model of support, with gender focus embedded at every level.
“If we settle for mediocrity, we accept wasted potential and lost opportunity. Together, we can build an enterprise ecosystem that nurtures ambition, unlocks talent, and ensures women-led businesses thrive for the long term.”
The WES Survey of Women in Enterprise 2025 was funded by the Scottish Government. It provides a practical resource for policymakers and the wider business support landscape to close the ongoing gender gap in enterprise participation.
It considers the social, economic, business and policy conditions in Scotland and reviews international comparators.
The report makes a range of vital policy recommendations. These include nationwide coverage of expert, women-centric business support through digital and hybrid models, structured mentorship and role model programmes, strengthened financial support and investment access, as well as mandated gender-disaggregated data collection for 100% of publicly funded business grants and investment.
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