Fear of failure puts off potential UK entrepreneurs
Small businesses are the lifeblood of the UK economy. According to the latest House of Commons briefing paper on business statistics, more than 99% of businesses in the UK were SMEs and 95% of those were micro-businesses, employing nine or fewer people. SMEs accounted for 60% of employment and 47% of turnover in the UK.
Despite this, a new study has placed the UK way down the rankings when it comes to entrepreneurial spirit. The research, by consumer goods company Amway, looked at the desire people had to start a business in the first place, the chances that they would be put off doing so by friends and family, and their confidence in actually getting a new business up and running.
The UK came 24th out of 44 countries surveyed – a little below halfway and way behind the top 3 of India, China and Thailand. European neighbours including Finland, Denmark, Greece and Ireland also ranked higher than the UK.
UK respondents listed a lack of money and business knowledge as factors that would put them off starting a business but the number one reason, given by seven in ten would-be entrepreneurs, is the fear of not succeeding.
It’s true that many businesses do fail. According to the business statistics briefing paper there were 346,000 new businesses formed in 2013. In the same year – the latest for which the Office for National Statistics has provided figures – 238,000 businesses folded, with many of them requiring the services of an insolvency practitioner. Acting early at the first sign of financial trouble can help to limit any negative impacts that might be felt but long term survival and success is never guaranteed.
The ‘business death’ rate has remained reasonably steady at around 10% since 2001, although it did dip to a low of 12% in 2009, in the wake of the financial crisis.
The fact that many businesses do fail is a fact of life but that doesn’t mean that the fear of failure is necessarily a bad thing.
By Phil Smith