- 38% of small business owners are optimistic about the year ahead, down from 48% a year ago.
- Only one in ten small businesses plan to take on new staff in the coming year – but nearly two thirds expect to avoid redundancies.
- Nearly one in three (29%) launched a new product or service in the past year – and two thirds of those are planning another in the next 12 months as small businesses look to gain competitive advantage through innovation.
- Despite the introduction of incentivised lending schemes, over three quarters (78%) of respondents say that finance for a new business is hard to find.
- While the average small business owner works 41.1 hours a week, those in Britain work the shortest week at 37.6 hours and have the most elastic definition of what constitutes 'work'.
- Small business owners have a clear agenda for governments: reduce direct taxation, simplify accounting rules and stimulate lending. The British are the least critical of all six countries of government bureaucracy and labour laws.
London, UK (3 September 2013) - International research released today by specialist global insurer Hiscox has revealed the true resilience of small business owners – who are responding to challenging trading conditions with new products or increased efficiency. This is the message from findings of the fifth DNA of an Entrepreneur report, based on responses from 3,000 small business owners in the UK, US, Netherlands, Germany, France and Spain.
Bronek Masojada, CEO at Hiscox, explained: “Our research findings support the idea that small businesses are adapting to 'the new normal', anticipating tough trading conditions rather than expecting any early return to the boom years of the last decade. They are responding to the changing business environment with determination and inventiveness – launching new products or services that put them ahead of the competition, and investing in training and up-skilling. They also have a clear agenda for government, something policy-makers would be wise to study as they work towards securing a sensible and sustained economic recovery in each of these countries.”
Battle weary and trimmed to the bone
The findings shine a light on the tough trading conditions faced by entrepreneurs. Although just over a third (37%) said that revenues had increased in the past year, that figure has fallen from 46% in 2012. At the same time, just under half (47%) reported customer growth compared with 60% in 2012, and just over half (51%) said their customers were taking longer to pay – putting increased strain on already vulnerable businesses.
Finance is still proving tough to come by. Over three quarters of respondents (78%) said they had found securing finance for a new business difficult, with only the British saying that securing finance is easier this year.
Against this backdrop, optimism levels have generally fallen back since last year's study, though there continue to be more optimists than pessimists. While 38% of respondents said they were optimistic about the year ahead, compared with 48% the previous year, the number who said they were 'not optimistic' rose from 27% to 33%. The greatest decline in optimism was in the Netherlands, with a fall of 19 percentage points between this year and last (61% in 2012 versus 42% this year). Only in Spain were optimism levels unchanged, at 28%.
Not surprisingly, respondents had a keen eye on staffing. Only one in ten intended to increase headcount in the year ahead, compared with 15% a year ago. Encouragingly, 63% of all respondents expected to avoid redundancies - a slight increase on last year's 60%.
Responding with innovation and determination
The research found that nearly one in three respondents (29%) had developed a new product or service in the past 12 months. The American response was the lowest at 19% and the Spanish the highest at 39%. More than half (51%) of the innovators said their sales expectations had been fulfilled and nearly two thirds (64%) planned further innovation in the coming 12 months.
More than half of respondents or their colleagues (55%) had engaged in some form of training or professional development in the past year. The proportion was lowest in France (40%) and highest in the Netherlands (67%) and Spain (66%). The average time spent on training and development was just over six days, and the Spanish were the most committed in this area, investing an average 9.9 days. Most popular was trade, technical or professional skills development, undertaken by as many as 41% of respondents.
Despite the challenges they faced, more than half of respondents continued to prefer running their own ship to being an employee. The most commonly cited benefits were greater flexibility in working hours, the ability to influence the direction of the business, more control and pride in one's work.
Small business agenda for government
Against a challenging trading environment, 38% of entrepreneurs said that a lack of government support is their biggest fear for the year ahead. In addition, and for the first time, the study asked respondents to rank on a scale of one to ten the key policy initiatives they wanted to see from governments. Reduced direct taxation, simpler accounting rules and stimulation of new lending topped the agenda. Interestingly, the British were the least critical of government bureaucracy and labour laws. On these issues, together with taxation and a risk-averse national culture, they have become less critical over the past two years. They are the only national group to have done so on all four issues.
What constitutes 'work'?
The research also asked respondents what activities they felt constituted 'work' and highlighted major variations between countries.
Surprisingly, 45% of all respondents counted travelling to and from work as work, and 37% considered they were working if they ate lunch at their desk. The British had the most elastic definition of work in three categories: lunching, networking and attending to emails out of hours.
And, while the average small business boss works 41.1 hours a week, the British work the shortest week at 37.6 hours – six hours less than their German counterparts.
Masojada concluded: “As a small business insurer, we work with nearly 200,000 small businesses across these six countries and see firsthand their optimism and resilience. They are innovators, they are adapters, but the importance of their survival and success should not be underestimated.”
A copy of the full DNA of an Entrepreneur report can be accessed at www.hiscoxdnareport.com.
For further information please contact:
+44 (0) 20 7448 6619
Caroline Cecil Associates
+44 (0) 20 7610 4110
Notes to editors
Sample and methodology
The Hiscox DNA of an Entrepreneur report 2013 examines the attitudes and behaviours of small business owners annually. Conducted for Hiscox by The Survey Shop, the findings are based on responses from 3,000 owners or partners in businesses with fewer than 50 employees. It is made up of 500 respondents from each of the following countries: the UK, US, Netherlands, Germany, France and Spain.
The sample was drawn from online panels contacted between 22nd May and 2nd June 2013. Statistical accuracy: +/- 1% to +/-1.5% for the whole sample of 3,000, and +/- 2% to +/-4% for each country’s sample of 500. Some figures may not add up to 100% due to rounding.
Hiscox is an international specialist insurance and reinsurance company with offices in 11 countries, 1,400 staff and customers around the world. With over 100 years of underwriting expertise, we work with businesses and individuals to provide cover that is tailored to suit often complex and unusual insurance needs. This includes the needs of small businesses of all shapes and sizes; from tech start-ups and media agencies to landscape gardeners and interior design consultants.
Hiscox currently works with almost 200,000 SMEs, professionals and consultants across the UK, Europe and the US and dealt with over 3,000 small business claims in 2012 alone.
For further information, visit www.hiscoxgroup.com.