Advancing with confidence and ingenuity
There is a strongly bullish tone to this our eighth annual DNA of an Entrepreneur report. For the first time in many years, the majority of small businesses in all six countries are advancing in lock-step, with rising revenues, growth in new customers and improving order books. Investment has beaten expectations, particularly in continental Europe. While new job creation has lagged the upturn in the past year, one-in-five firms says it intends to hire in the year ahead.
Our own experience mirrors these findings. We have been offering small business insurance for more than 20 years and now insure around 366,000 small businesses worldwide. In the past year, the small businesses we work with have increased their combined turnover by 11%, to £51 billion. This is the second year running where we have seen our small business customers generate double-digit growth. It is noteworthy that in the UK their wage pot has also grown by 10% compared with a 3% reduction in the prior year.
Several themes stand out in this year’s report. The larger firms we contacted are unquestionably doing better than the smallest, which continue to find bank funding difficult to access. Many are responding with the ingenuity that is characteristic of entrepreneurs and turning to alternative sources of finance – some good (peer-to-peer lending and crowd funding, for example) and some not so good (credit cards).
The report reinforces the message that small business owners and managers see long hours and hard work as the key to success. Nearly half say they always expected to start their own business one day, and those same people feature prominently among those working the longest hours. But it is striking that, for the majority, money is not the prime motivator. Flexibility over where and when to work and the feeling of being in control of their lives – these are the key considerations that keep them on their chosen path.
There is much in this year’s report for policymakers to absorb and consider. While the overall tenor of the report is positive, large numbers of the business owners and managers we spoke to see their government as unsupportive and more than a third say political instability in their country is having a negative impact on their business. This should be of concern to us all. Small businesses play a critical role in economic growth and repeated studies have shown they regularly account for two-thirds or more of new jobs created.
The findings in this report are certainly important in helping us at Hiscox understand the many issues our small business customers face, not least in their vulnerability to cybercrime where one-in-ten respondents reports an attack. There is a wealth of information on attitudes and lifestyles as well as the hard financials. All is important in helping us tailor our services to meet our customers’ needs. But above all we hope the report helps promote a better understanding of what makes small businesses tick among those who have a role in supporting and sustaining this all-important sector.
Chief Executive Officer, Hiscox