Women in Business 2025 | Why Female-Led SMEs Are Declining in the UK

Fewer Women at the Helm

A recent report from The Times shows that only 14 percent of small and medium-sized enterprises in the UK are now led by women. That figure has fallen from 15 percent in 2024 and 19 percent in 2021. It is a surprising trend in a country that prides itself on innovation and enterprise. While more women are joining the workforce, fewer seem to be taking the step into business ownership.

Why the Numbers Are Falling

There is no single cause behind this shift. Access to finance continues to be one of the biggest barriers. Research from the British Business Bank shows that women-led companies attract less than three percent of venture capital funding in the UK. This lack of financial backing limits how far many promising startups can grow.

Rising living costs and expensive childcare add another layer of difficulty. For women balancing business and family responsibilities, inconsistent support systems can make entrepreneurship feel out of reach. Some founders also mention that key business and investor networks still feel closed to newcomers, particularly women who are building businesses outside traditional industries.

Government Action and Gaps

The government has introduced the Invest in Women Taskforce, chaired by financier Baroness Helena Morrissey. The initiative aims to increase private investment in female-led businesses and create better access to growth opportunities. It has been welcomed by many in the sector, but business groups say more needs to be done.

Suggestions from economists and entrepreneurs include greater transparency in how government SME funding is distributed, more affordable childcare options for business owners, and the expansion of investment programs that focus on women-run companies. These proposals are not about creating special treatment but ensuring that the same opportunities are available to everyone with ambition and potential.

The Economic Case for Change

Encouraging more women to start and grow businesses is not just a social goal. It is a matter of economic growth. The Alison Rose Review estimated that if women founded and scaled companies at the same rate as men, the UK economy could gain as much as 250 billion pounds. That level of growth would have a clear impact on productivity, jobs, and regional development.

Looking Ahead

Progress depends on action that is consistent and practical. Publishing clear gender data on SME support programs would help measure where investment is going. Expanding access to funding and mentorship could give more women the confidence to launch and grow their ventures. Improving childcare and flexible working options would remove some of the most common barriers faced by entrepreneurs.

The decline in women-led SMEs over the past few years is a reminder that economic inclusion needs constant attention. Supporting women in business is not a political talking point but a chance to unlock potential that benefits the entire economy.