Only 35% of women-led businesses exit in 12 months

The resilience of women is revealed in a lower business closure rate before the twelve months of 2024, Global Entrepreneurship Monitor (GEM) shows.

According to the 2023/2024 Women’s Entrepreneurship report “Reshaping Economies and Communities” by GEM, only 35 percent of global women-led businesses exit in twelve months, unlike 39.5 percent of men’s exit.

“Women were 21 percent less likely to report a business exit than men on average, with higher rates in low-income countries and the lowest rates in middle-income countries. The global average exit/entry ratio is 35 percent less for women than for men, suggesting that women are creating new sustainable businesses at a much higher rate than men,” it said.

In the report, the exit rate is lowest for women in middle-income countries (3.8 percent) and highest in low-income countries (6.9 percent).

“Exit ratios are higher for women than for men in nine countries such as Canada, Colombia, Germany, Guatemala, Hungary, Latvia, Poland, South Africa, Switzerland, and the United Kingdom,” the report added.

Further analysis shows that Germany stands out with a large gender and high exit/entry rates for women compared to men (0.49% vs 0.30%). The highest exit/entry rates for women were found in Poland (1.33%), South Africa (0.83%), China (0.62%), and Canada (0.62%).

“Business exits can occur for many reasons as most women often lack profitability. High exit/entry rates suggest economic volatility and potential political instability, especially in cases where exit/entry ratios exceed parity, as in Poland,” the report added.

Also, lack of financing is another reason for business discontinuation. Despite the disproportionate access to business financing challenges reported for women, they were about 6 percent less likely than men to report business closure due to lack of financing.

“Job scarcity has also motivated women startups to exit their businesses to pursue better jobs with the understanding of business ownership as a primary option for income generation in low-income countries,” the report concluded.