Financial planning for female entrepreneurs

  • Shunil Roy-Chaudhuri, Personal Finance and Investment Writer
  • 04 December 2023
  • 10 mins reading time

Running your own business can be personally and financially rewarding, but there’s no hiding from the fact it can also be very demanding. Looking after a family is similarly rewarding and demanding. So running a business while raising a family, as many female entrepreneurs do, can be doubly challenging.

The most popular reason, at 46 percent, for women with children to start their own business is to have a more flexible, family-oriented work-life balance. Even so, parental responsibilities are also an obstacle to starting a business. And women are twice as likely as men to cite family responsibilities as a barrier to becoming entrepreneurs (1).

Perhaps it’s unsurprising, then, that rates of entrepreneurship fall sharply for women after the age of 35, when many may be raising a family. There is no similar decline for men (1).

Alice Harmer, Personal Wealth Adviser at Schroders Personal Wealth (SPW), said: ‘It may be stereotypical, but I’ve seen many couples where the mother takes time away from paid employment to raise children. Female entrepreneurs may have limited time off for their offspring, as they might be responsible for looking after their business and bringing income in.’

Katie Nutting, Financial Planning Director at SPW, believes entrepreneurs are often so focused on their businesses they can lose sight of other aspects of their lives, including financial planning. ‘Their savings and investments may not get the attention they require,’ she said. ‘Given that women are less likely to take financial advice and more likely to hold low-returning savings accounts or other lower risk investments, this can be a problem. So female entrepreneurs can face a double whammy.’

There are, then, real challenges for female entrepreneurs. In this article, I’ll first cover some of the financial challenges faced by women. I’ll then go on to consider some of the challenges faced by entrepreneurs. Finally I’ll outline a five-point action plan for female entrepreneurs to consider.

Financial issues faced by women

Our recent Women and Wealth report (2) shows that 38 percent of women have taken breaks from their career, compared to just 22 percent of men. Career breaks can reduce the time people spend in work, hinder their professional prospects and, by extension, limit their income level and pensions savings.

Admittedly, female entrepreneurs may take fewer career breaks than other women, as their businesses may not be able to run without them. But some may have taken extended periods off work before starting their businesses.

The report also shows women typically have lower confidence in arranging financial planning than men. Unsurprisingly, then, significantly fewer women plan for the unexpected than men and they typically feel less confident about their finances than men. This can leave women unprepared for unforeseen events.

Our Women and Wealth report also shows women are more risk aware than men, often keeping money in cash rather than investments. We found a significantly higher proportion of women than men prefer to hold lower risk investments. But we found that similar proportions of women and men hold cash-based savings accounts or cash ISAs (Individual Savings Accounts).

In contrast, just 23 percent of women own a stocks and shares ISA, compared with 45 percent of men. And just 17 percent of women hold a General Investment Account (GIA) or other investments, compared with 33 percent of men. This suggests fewer women are investing in the stock market.

There are situations where a cautious approach to saving and investing is appropriate. But riskier stock market investments have the potential for higher returns in the long term. Holding long-term savings in cash or lower risk investments could mean missing out on the greater returns that could potentially be achieved from higher risk investments. It could even lead to a retirement shortfall. Even so, the value of investments and the income from them can fall as well as rise and returns are not guaranteed. In fact an investor may not get back their initial investment.

To sum up, our report shows women take more career breaks than men. They often also lack confidence in arranging financial plans or in planning for the unexpected, and their cautious approach to investing can hinder the growth of their investment assets. In short, they can be exposed to greater financial risks than men.

Issues of being an entrepreneur

Running your own business can be rewarding, but entrepreneurs miss out on the support employees can receive from the companies they work for. Such support could include a good pension, sick pay, and protection such as death in service benefits and medical insurance.

Someone dependent on their enterprise for their wealth may be relatively secure if they can sell it on. But if a business is not saleable and can’t run without them, then they will need to consider financial protection.

An entrepreneur forced to take time off due to illness could face the prospect of loss of income or even the closure of their business, which could impact themselves and their family. Entrepreneurs may benefit from protecting their income through income protection insurance and, possibly, critical illness insurance. And, if they have a family, they could need life cover in case of death.

Read more: Have your protection policies got you fully covered?

Entrepreneurs also need to consider paying into a pension for their retirement. As we explain below, this can be a particularly tax-efficient form of remuneration for company owners.

Business owners wholly reliant on their company for income, capital withdrawals and inheritance could find themselves and their families exposed if the business struggles. So they may benefit from holding investments, as an alternative source of wealth. A financial adviser can help create an appropriate investment strategy to try to ensure you and your family won’t be unnecessarily exposed to hardship if your business falters.

Five-point action plan for female entrepreneurs

1. Plan for your absence

If you intend to take time off for your family, then you may want to make plans to ensure the business can run in your absence. You may also want to ensure you are financially prepared for time away from the business. An adviser can work with you to help create an appropriate financial plan.

2. Review your pension

Check whether you can make tax-efficient use of your company’s profits by paying some of it into your pension. This can help fill in any pension gaps for women, who may have bigger pension shortfalls due to maternity or lower pay. Unlike company dividend payments, HMRC often allows these pension contributions to be deducted from profits for tax purposes, reducing your company’s taxable earnings. This means your company may not have to pay tax on the money it pays into your pension.

But the rules are complex and you may benefit from speaking with an accountant here. Moreover, the retirement benefits you receive from your pension plan depend on several factors, such as the value of your plan when you decide to take your benefits. This value isn’t guaranteed and can go down as well as up.

3. Review emergency funds

Businesses can face industry and economic challenges. SPW Chartered Personal Wealth Adviser Makala Green said: ‘You may want to consider setting aside emergency funds to help keep the business functioning smoothly if times become challenging.’

4. Think about succession

Makala also says entrepreneurs should look at the end goal of the business and plan for succession. She says you might want to assess whether your children or your partner will take over the business after your death and factor this into your will. Businesses can get 100 percent relief from inheritance tax (3), so succession planning can form a part of inheritance tax planning. Even so, appropriate tax planning varies according to individual circumstances tax rules could change in the future.

5. Check whether your company can pay for protection

In some circumstances, your company could get tax relief on insurance cover such as life cover, income protection insurance and key person insurance. So you may want to see if you can get these kinds of insurance paid for tax-efficiently by the company rather than on a personal basis. But HMRC says it ‘disallows any expenditure not incurred wholly and exclusively for the purposes of the trade, profession or vocation’ (4). Once again you may benefit from speaking with an accountant here.

Self-employed entrepreneurs

This article has, for the sake of simplicity, focused on business owners. But entrepreneurs can include people who are self-employed as well as company owners. If you’re a self-employed entrepreneur, then please note that business tax reliefs referred to in this article won’t relate to you. They relate solely to directors or owners of limited companies.

Being a female entrepreneur can be daunting, particularly if you have a family to look after. But there are steps you could take to help ensure you are prepared for the unexpected. At SPW one of our principles is to have regular reviews with financial advisers. This can be particular important for female entrepreneurs, who can be very time-pressured and may well have complex financial planning requirements.


(1) HM Treasury, ‘The Alison Rose review of female entrepreneurship’, 2019, pages 36 and 56.

(2) Schroders Personal Wealth, ‘Women and Wealth Report’, September 2023.

(3) Gov.uk, ‘Business relief for inheritance tax’, 10 November 2023.

(4) Gov.uk, ‘Business income manual, BIM37007 - Wholly and exclusively: overview’, 20 September 2023.

Important information

This article is for information purposes only. It is not intended as advice.

Fees and charges apply.

Protection policies have no cash-in value at any time. If you don’t pay your premiums on time your cover will stop, your benefits will end, and you’ll get nothing back. If the benefit amount has not been paid out by the end of the selected term, the policy will end and you’ll get nothing back.

Personal and corporate tax advice are not offered by Schroders Personal Wealth. These are complex area and we recommend that you weigh up all the positives and negatives, and take professional advice before committing to a course of action.

Cash savings and investments are protected to the value of £85,000 per person per institution by the Financial Services Compensation Scheme (FSCS). However the value of investments may fall as well as rise.

Any views expressed are our in-house views as at the time of publishing.

This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or part) without our prior written consent.

In preparing this article we have used third party sources that we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.

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