Our DNA of an Entrepreneur report – an annual study of more than 4,000 small businesses and entrepreneurs across the UK, Europe and the US – has revealed that British business owners see themselves as having ‘the greatest entrepreneurial spirit’ when compared to their European and US counterparts.
In an upbeat snapshot of the UK’s entrepreneurial landscape, the survey also reveals strong growth amongst British small businesses with nearly two thirds (64%) reporting increased revenue and 63% celebrating higher profits over the past year, while 60% remain optimistic about their prospects in the coming 12 months. On the flipside, concerns around bank funding and a perception of a lack of government support continue to trouble small business owners.
Treading an entrepreneurial career path
While it might be surprising to hear the often modest British express such confidence in their entrepreneurial outlook when compared to peers from Europe and the US, one business owner puts this confidence down to a new generation of school and university leavers who have the belief that they can follow a different career path to their parents.
“I think people are coming out of university now with degrees or even not going to university, and they’re thinking ‘what can I do that is entrepreneurial’ and I think that is creating a groundswell of momentum and success,” says Simon Calver (former Mothercare boss and co-founder of Lovefilm, and who now leads tech start-up fund, Business Growth Fund). “The more that those entrepreneurs actually have successes and have exits and then put cash and re-invest that back in the eco-system through angel investing, the more I think we will accelerate entrepreneurship. And I think that is putting the UK right at the top of the pile in terms of that entrepreneurial activity.”
It’s a positive view echoed by Edwina Dunn, co-founder of Dunnhumby (Tesco Clubcard) and CEO of Starcount (an up and coming social media analytics firm): “I think the British are very very good at entrepreneurial business. I think we’re also extremely good at taking our ideas…and taking them all over the world and I’ve seen that from first-hand experience.”
She does however caution that perhaps too many British entrepreneurs sell out too quickly: “I think that is a shame because I think we do the hard yards and then we sell before the peak. Maybe we are encouraged to do that, maybe the backing and investment isn’t there, but I find that really…sad because it is those first years, the hard yards, that are the ones that are really the most difficult and how sad not to see the fulfilment of that business, that capability, that idea.”
No let up in the credit squeeze
Chiming with Dunn’s view on investment, the Hiscox DNA of an Entrepreneur report indentifies funding from banks as an ongoing issue with 16% of the UK’s small businesses (up from 13% in 2015) finding bank lending hard to come by. This credit squeeze has also seen a proliferation of alternative lending with one in ten of the survey’s respondents contemplating crowd sourcing and peer-to-peer lending sites in the coming year. While a higher percentage (17%) are turning to their credit cards to plug the funding gap. For UK small businesses this is hardly surprising given the numbers reporting late payment by their clients has increased from 27% in 2015 to 32% this year.
Government support for entrepreneurs is also seen as lacking with only 35% (a decline of 10% over 2015) believing that government policies are supportive of entrepreneurs with a reduction in direct taxation, simpler accounting rules and stimulation of lending featuring as the top three on the small business wish list. According to Hiscox’s CEO, Bronek Masojada, it’s a finding that Whitehall would do well to sit up and take notice of: “It is notable that small businesses in all the countries covered [by the survey] are now enjoying a positive growth phase, with several indicators pointing to another good year ahead. SMEs are the engines of growth and it is vital their interests are taken into account by policy-makers.”
Other findings in the report include more evidence that cyber crime is increasing with more than one in ten across the survey admitting they had suffered a cyber-attack. Of those, 26% said it had resulted in a serious loss to the company, but only one-in-six (16%) had been able to make an insurance claim. With just 8% saying they have e-risks insurance. In other insurance areas, more UK businesses are covered for theft (67%) although less than half of the business owners surveyed across the UK, Europe and the US buy insurance protection for negligence (professional indemnity cover).
A Brexit bounce?
And what of the Brexit elephant in the room? Although the survey was conducted prior to the referendum, the majority of British entrepreneurs were rather sanguine about the prospect of the UK leaving the European Union, although a significant minority (31%) saw it as a negative. Of those pro-Brexit respondents, more than 41% expected life outside the EU to increase their ability to trade more freely. Many British businesses clearly have the confidence that their entrepreneurial spirit will carry them through any uncertainty posed by the process of leaving the EU.
To find out more and read our full report, visit DNA of an entrepreneur