Firms in Trouble: Are Female Entrepreneurs Better Prepared?

A study by the ifM in Bonn asked more than 500 entrepreneurs how companies behave in difficulties. The marginal differences in crisis management and risk thinking could make concrete advice easier in the future.

Firms in trouble in focus

Entrepreneurs and entrepreneurs often differ in the way hierarchies are maintained and brands are built. Companies in Germany run by migrants also deviate from the typical pattern. The Institute for SME Research (ifM) (external PDF link) in Bonn has examined whether these differences are also evident in the crisis. The study provides numerous important figures and insights for advice in the event of a crisis and for young entrepreneurs. In the course of their existence, most companies encounter difficulties or crisis situations that threaten the existence of the company or hit the company hard financially. According to the BMWi, the current corona crisis, for example, affected the work of 3 out of 4 entrepreneurs in May. The longer a crisis lasts, the more severe the damage to the company.

Representative study for Frankfurt am Main

In the ifM study, led by Christian Dienes and Susanne Hawfhorst, around 500 companies around Frankfurt am Main were asked which crises they have to manage, how often these problems occur and how quickly they can be solved. Above all, the comparison was intended to indicate whether women entrepreneurs react differently to crises than entrepreneurs and has drawn a distinction between migrant-led and non-migrant-led companies. 74 percent of those surveyed were entrepreneurs without a migrant background. Over 55 percent of the companies were led by men. All companies employed 3 to 99 people, with the largest groups reporting 5 to 9 and 3 to 4 permanent employees.

Concerns about possible crises and crisis management

In order to obtain the clearest possible statement, companies from all sectors were surveyed. It turned out that only around 10 percent of entrepreneurs and 8 percent of female entrepreneurs work with a formalized risk catalogue. According to the survey, 14 percent of female entrepreneurs had never worried about a possible crisis, while over 12 percent of entrepreneurs did. Around 30 percent of companies were in a state of crisis in 2019. Every third manager should not only suspect that a crisis could be coming, but should have actively dealt with it.

Companies in difficulties due to personal crises and payment defaults

The reasons for crises in companies differ greatly. Around 23 percent of male executives were surprised by unexpected liquidity bottlenecks. 16 percent of the entrepreneurs got into difficulties due to the payment defaults of their customers, also around 16 percent could not cope with the loss of customers. Around 12 percent were also absent due to personal circumstances, although this only affected around 3 percent of the men.

Overall, hardly any differences in crisis management

However, the most important finding was in the overall picture of the study. On average, male-led and female-led companies showed no difference in how often they encounter crises and whether the crisis affected their company over a longer period of time. While male executives maneuvered the company out of the crisis faster in less than a year, women-led companies often had problems for up to 2 years. There were also only minor differences in the manner in which the crises were resolved.

Better advice urgently needed

The study is a good indicator of the fact that women in management consulting must focus more on enforcing payment agreements and on customer loyalty. Men, on the other hand, need additional advice on managing the company’s finances. These differences can strengthen companies in the long term if they are specifically addressed and balanced. It also turned out that the worries of entrepreneurs are quite rational. Not every business gets into trouble, but every company needs a plan to deal with a potential crisis.

Tip: State subsidies can be applied for for companies in difficulty. To restore performance and competitiveness, e.g. For example, a BAFA-funded management consultancy can be used. Suitable management consultants can be found via our service.