Lack of contacts, confidence and cash stops SMEs taking off
New research shows Cambridge-based entrepreneurs are the most confident when it comes to turning a business idea into an actual business. The survey also identifies that 25-34 years is the age when most entrepreneurs get a moment of inspiration - but it takes them on average up to three years to launch.
It takes up to three years for an entrepreneur to launch their business following their ‘lightbulb’ moment, new research* from the 2018 International Business Festival has found. It revealed the main stumbling blocks to launch are an absence of contacts, confidence and cash.
Barriers to launch
In the survey, 67% of SME leaders lacked the know-how to run a business before they could get up and running, 55% didn’t have the confidence to make the leap into a new career path and 59% were reliant on their regular income. Furthermore, over a quarter (27%) said they struggled to find the right suppliers and partners and half (52%) lacked the right contacts they needed to kick start their company.
Entrepreneurs in Liverpool are the quickest in getting their business off the ground. Lively Liverpudlians were three times more likely to launch their business in just six months compared to entrepreneurs in Cambridge, Manchester and Birmingham.
Moreover, Manchester’s entrepreneurs are most likely to cite lack of experience or expertise as their main barrier to launching a business (76%), more than any other part of the UK. While Cambridge is the most confident, with only 45% of entrepreneurs saying this was an issue for them when looking to launch compared to 63% of Brummie business owners who suffered a crisis of confidence.
The golden age of discovery
The survey also revealed most (47%) entrepreneurs get their moment of business inspiration aged between 25 and 34, thereafter ideas for enterprise are rarer with just 12% landing on a business idea aged 35 to 44.
The 18-24 years age bracket was also shown to be an active time for ideas generation, particularly in the Capital with 43% of London-based entrepreneurs hitting on a commercial idea at this age compared to a national average of 35%.
Paul Moorby, Managing Director of smart cities tech firm Chipside, “I wanted to run my own business from a very young age, however, I only had £10 to launch when I started Chipside. I initially turned away work if it required taking out a bank loan, something that was risky but paid off as this gave us a firm financial footing in turbulent times.
“Forming mutually beneficial partnerships has been important for my business and allowed us to outlast our competitors and survive through sector disruption and change, which highlights the importance of making connections. Anyone can succeed in business with the right mentoring, that is what entrepreneurs need more of in the UK and it will give them the confidence to launch.”
With access to finance being a key concern for every entrepreneur, the survey uncovered the most common ways SMEs fund their business. Over half (52%) of business owners fund growth through asset finance, followed by debt (46%) and equity (40%). Only a third (32%) use cash reserves.
Max Steinberg, Chair of the 2018 International Business Festival, adds: “Every business starts with a lightbulb moment but it requires specialist knowledge and expertise to successfully turn ideas into enterprise. Entrepreneurs with great ideas can be hindered by a crisis of confidence, which is why human connections are important to provide reassurance and inspiration. No entrepreneur is an island and going it alone doesn’t need to be lonely.”
*Research was conducted by Coleman Parkes. 500 owners, directors and senior managers of SMEs with 9-100 employees across the UK were surveyed between March and April 2018.
About the International Business Festival
The International Business Festival is the world’s biggest business Festival. Hosted every two years in its home city of Liverpool, the festival captures the dynamism and diversity of the global marketplace. The goal is to give businesses the space, support and expertise they need to make connections, do deals and realise their potential.
Held from the 12th-28th June 2018, the third edition of the International Business Festival will have a programme focused across nine key industry sectors such as manufacturing, global economics and creative industries. The International Business Festival is supported by UK government through the GREAT Britain campaign and by its commercial partners British Airways and HSBC.