In his first budget, Alistair Darling, the Chancellor of the Exchequer, announced that he was setting up a new £12.5 million fund to encourage more women to set up their own businesses. How exactly the fund will work is not yet clear: we do know that the Government's contribution will be matched by funds from venture capitalists, but how prospective businesswomen can get their hands on a share of the cash is a detail due to be announced this summer. It is thought that the funds could be targeted specifically at new mothers who are unable to return to their old jobs because they now require more flexible working arrangements.

The fund was created to redress the gender imbalance among entrepreneurs. This is a big ask for a £12.5 million fund: at present, a mere 14 per cent of UK businesses are run solely by women or by a management team predominantly consisting of women. By contrast, 54 per cent of businesses are led by men-only teams. Not only do women in the UK lag behind the men, they are some way behind their sisters in the United States, where 30 per cent of businesses are run by women.

A quick look at the Sunday Times Rich List reveals that there are plenty of wealthy women about, but few of them are self-made. The majority are there by virtue of their marriage, or thanks to family money. JK Rowling, who comes in at number 144 overall and 12th among the women, is one notable exception.

The reasons for the dearth of female business owners in the UK are complex, but while women often tend to do better in terms of relationship building, as well as in engaging and inspiring staff during the difficult start-up period, funding is still a key problem. "There are some barriers for women who are trying to start businesses," says Andrew Haigh, managing partner of the entrepreneur group at Coutts. "There is often a question around funding for entrepreneurs in general."

"When people are financing a businesses, they will be asking not just whether the idea is a good one, but whether you are the type of person who will have the drive and commitment it takes to implement that idea." Andrew Haigh, Entrepreneurs, Coutts.

The problem, Haigh says, is not with the business ideas that entrepreneurs put forward, but with financiers' perceptions of whether they possess the resolve and commitment to implement their ideas. "Because of programmes like Dragon's Den, we have this view that being an entrepreneur is all about the big idea," Haigh says. "In reality, if you talk to venture capitalists, they will tell you that the value within a business is usually only around 5 to 10 per cent in the idea itself – the bulk of the value comes from the implementation of that idea. So when people are financing a business, they will be asking not just whether the idea is a good one, but whether you are the type of person who will have the drive and commitment it takes to implement that idea."

There are other problems, too. Some commentators argue that women are not aggressive enough when asking for money or presenting their business plans. Whereas men will promise exponential growth in a relatively short space of time, women tend to make more cautious predictions about their prospects.

Access to the right sources of funding can also be a problem. Business angels – successful business people out to make a second fortune by investing in small, unquoted, start-up firms – are an essential source of capital for entrepreneurs. The best way to meet these people, as well as venture capitalists and private equity investors – is through business angel networks, some of which may feel a little like a closed shop. "Some are more like private clubs than others," Haigh says.

While the details of the Government's new fund for women in business have yet to be announced, there are doubts about how much of an impact they will really have on female entrepreneurship. "The fund has taken a lot of flak in the press and people are unsure as to what the real objective is," Haigh says.

Some observers, including Tanya Hine, the president of the British Association of Women Entrepreneurs, have argued that the Government's fund is likely to help those starting up ‘lifestyle businesses rather than firms that will create employment and make a significant contribution to the economy. For those sorts of businesses, women are likely to have to pursue more traditional funding routes.

"Whereas men will promise exponential growth in a relatively short space of time, women tend to make more cautious predictions about their prospects."

The first stop should be one's own resources. "Most people start out with an idea, then they tap their savings, they mortgage their house and they call on friends and family to help," Mr Haigh says. "Once the business takes off you seek third party finance to drive growth: this is how successful businesses and entrepreneurs are created."

There are three main sources of funding for new businesses: banks, business angels and venture capitalists. "The bank is many people's first port of call," Mr Haigh says. "If the terms do not seem very good, you have to remember that the risk of failure in start up is quite high. You have to understand the risks of your business and how you are going to share that risk with the bank."

Business angels can put as little as £10,000 into a company, but they are usually looking for larger investments of around £100,000. There is a number of business angel networks in the UK, the best known of which are the British Business Angels Association and Envestors with whom Coutts runs numerous business angel investing events. (Click here for more details)

Business angels are important for entrepreneurs not just as a source of capital. "They often act as mentors and will serve as directors on the board," Haigh says. "It is essential for new business people to talk to those who have done it all before. They can also help you pull together a business plan, which is a critical part of getting started. It should not be a few words on the back of an envelope, but nor should it be a 300-page tome." A good business plan describes your business in a concise and lively way, detailing your product, the market and your financial forecasts in as clear a manner as possible. To create a perfect business plan click here for advice from Envestors.

Finally, remember to play to your strengths. "It is a huge generalisation, but women often tend to do better in terms of relationship building and inspiring staff," Haigh says. "Know your strengths and sell those to investors - and build up a team around you to complement you in areas where you might not be so strong."

By Paula Hawkins