A new survey reveals the reasons why entrepreneurs start businesses and the challenges they face. Image courtesy of: photostock/freedigitalphotos.net
With entrepreneurship being held up as a potential route to drive Britain’s economic recovery, start-ups are being encouraged to take their big idea and put it into action. People choose to make the leap for many different reasons and research of UK SMEs from specialist business insurance provider
Hiscox has revealed what motivates and inspires someone to start up a new business, as well as the challenges they face.
The survey from the insurer, specialising in business and small business owner insurance, found that in the beginning it may not have been about the million dollar idea but as SMEs grew so did their business confidence.
Almost a fifth (18 percent) thought they had a ‘million dollar’ idea before taking the leap. However once the business was up and running, this figure increased with 60 percent of SME owners believing that their product or service was the ‘million dollar idea.’ SMEs learned from early challenges with over half (56 percent) claiming that serious setbacks helped them a lot with their current success.
According to the study, entrepreneurs gained insight on strategy and understanding, with 65 percent claiming that previous challenges had helped them to improve their current business strategy, while 50 percent used their experience to better understand the business environment.
A desire to run the show alone was also a factor for taking the leap according to respondents, with 28 percent saying that a drive to be their own boss played a part in their decision to launch their own business.
The types of challenges new businesses face when starting up was most commonly cash flow and financing (29 percent) while somewhat surprisingly only 8 percent cited red tape - dealing with tax or legal legislation. Positively, 39 percent reported that they had managed to acquire their first client immediately with 26 percent having already lined their initial clients up before they had left their original job.
Evidently, learning from their mistakes and having the confidence to take the jump in the first place is helping entrepreneurs succeed when going it alone.