DNA of an Entrepreneur Report 2015

An optimistic outlook

Foreword by

Bronek Masojada

Chief Executive Officer, Hiscox

Innovating for growth

A new air of confidence pervades our seventh annual DNA of an Entrepreneur Report. Nearly two-thirds of the small businesses we spoke to are optimistic about the year ahead – they are innovating, expanding and exporting with real success. Where last year's report showed encouraging signs of recovery, this year's shows a genuine sense of buoyancy in many of the countries we surveyed.

We see this first-hand from the 268,000 small businesses we insure worldwide, who together have a turnover in excess of £42 billion. Combined, our small business customers have increased turnover by 18% year-on-year through a combination of hard work and determination.

Innovation is a particularly prominent theme this year. The rate of new products and services launched by small businesses has picked up markedly in the past year - and is set for further acceleration in the coming year. This is particularly heartening given that the part that small and medium-sized businesses have to play in global innovation is well chronicled. They are a nursery for new ideas. With the freedom to pursue innovations that might never be sanctioned in a bigger company, small businesses consistently generate a disproportionately large number of the new patents granted globally each year and as that continues so does the chance that today's micro-business becomes tomorrow's top corporation.

Of course, not all in the garden is rosy. Many smaller companies still feel swamped by government bureaucracy, crippled by high taxation and constrained by inflexible labour laws. Policymakers should take heed. Small businesses are an important growth engine and in the current economic climate must be encouraged by what is possible rather than dissuaded by red tape.

Our findings gauge the hopes and fears of the small business sector, lay bare its biggest concerns and set out its agenda for supportive change. from the small businesses we insure worldwide, we know that the people we cover are as important as the businesses. Understanding their challenges, opportunities, wants and needs helps us to provide the products and services they need – both now and in the future. In the same vein, our hope is this report is also valuable for others involved in supporting, analysing or nurturing the vital small business community.

Bronek Masojada

Chief Executive Officer, Hiscox

DNA of an Entrepreneur Report 2015 Download the report

Executive summary

  • Optimism levels reach three-year high

    As many as 62% of small business owners and managers say they are positive about the year ahead when it comes to their business prospects. US respondents are the most positive at 69%, while the Dutch and, remarkably, the Spanish are not far behind at 65% each. Only in France are the optimists in the minority at 43%, with no movement in optimism levels there in three years. The feel-good factor of running your own business is most keenly felt by UK and US respondents, with 40% and 45% respectively saying they feel better off than a year ago.

  • Innovation is the self-help solution

    Small businesses are increasingly viewing innovation as the best form of self-help. The proportion launching a new product or service has grown from 36% to 41% in the past year and for the year ahead, just over half (51%) say they are planning to introduce a new product or service. The urge to innovate is particularly strong among firms that export, with two-thirds (65%) having introduced a new product or service in the past year and 72% planning to do so in the year ahead. Innovation, expansion and exports are enabling many to capture the upswing.

  • Revenue growth is accelerating…but profit growth is patchy

    Almost two-thirds (65%) of firms have experienced sales growth in the past year and a quarter (25%) report double-digit sales growth. The proportion seeing double-digit growth in their order book or workload has also risen, from 15% to 24%. However, a significant minority of small firms in Spain, the Netherlands and particularly France continue to see no growth in profit. The improvement in all three economies is relatively recent and may be taking time to filter down to smaller businesses.

  • No signs of a hiring spree yet

    Nearly two-thirds of firms (64%) report no increase in employee numbers in the past year. Of the six countries surveyed, small businesses in Spain were more likely to have added to staff numbers than any other nationality. For the year ahead, almost two-thirds of firms (64%) plan to stick with their existing staff numbers and among the 22% that do plan to hire, the majority have openings for juniors, apprentices or interns – good news for school-leavers and those entering the jobs market.

  • Government bureaucracy and direct taxation remain key bugbears

    Once again, these two issues top the list of concerns in most countries. The UK is an exception, though, with issues around the education system coming first. The top three demands from small businesses overall are reduced direct taxation, simpler and fewer accounting rules, and stimulation of bank lending.

  • The USA is seen as being the most entrepreneurial country

    For the first time, we asked each country which of the six countries surveyed they thought was the most entrepreneurial, and the results were almost unanimous. Respondents in five of the six countries agreed it was the USA. Spain came bottom in all six countries ... including Spain.

  • Optimism levels reach three-year high

    As many as 62% of small business owners and managers say they are positive about the year ahead when it comes to their business prospects. US respondents are the most positive at 69%, while the Dutch and, remarkably, the Spanish are not far behind at 65% each. Only in France are the optimists in the minority at 43%, with no movement in optimism levels there in three years. The feel-good factor of running your own business is most keenly felt by UK and US respondents, with 40% and 45% respectively saying they feel better off than a year ago.

  • Innovation is the self-help solution

    Small businesses are increasingly viewing innovation as the best form of self-help. The proportion launching a new product or service has grown from 36% to 41% in the past year and for the year ahead, just over half (51%) say they are planning to introduce a new product or service. The urge to innovate is particularly strong among firms that export, with two-thirds (65%) having introduced a new product or service in the past year and 72% planning to do so in the year ahead. Innovation, expansion and exports are enabling many to capture the upswing.

  • Revenue growth is accelerating…but profit growth is patchy

    Almost two-thirds (65%) of firms have experienced sales growth in the past year and a quarter (25%) report double-digit sales growth. The proportion seeing double-digit growth in their order book or workload has also risen, from 15% to 24%. However, a significant minority of small firms in Spain, the Netherlands and particularly France continue to see no growth in profit. The improvement in all three economies is relatively recent and may be taking time to filter down to smaller businesses.

  • No signs of a hiring spree yet

    Nearly two-thirds of firms (64%) report no increase in employee numbers in the past year. Of the six countries surveyed, small businesses in Spain were more likely to have added to staff numbers than any other nationality. For the year ahead, almost two-thirds of firms (64%) plan to stick with their existing staff numbers and among the 22% that do plan to hire, the majority have openings for juniors, apprentices or interns – good news for school-leavers and those entering the jobs market.

  • Government bureaucracy and direct taxation remain key bugbears

    Once again, these two issues top the list of concerns in most countries. The UK is an exception, though, with issues around the education system coming first. The top three demands from small businesses overall are reduced direct taxation, simpler and fewer accounting rules, and stimulation of bank lending.

  • The USA is seen as being the most entrepreneurial country

    For the first time, we asked each country which of the six countries surveyed they thought was the most entrepreneurial, and the results were almost unanimous. Respondents in five of the six countries agreed it was the USA. Spain came bottom in all six countries ... including Spain.

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