How to survive as an entrepreneur against the odds

Start-ups are sexy. From innovative apps like Uber to funky craft brewers Brewdog, there’s rarely a day when they’re out of the news. But there’s a scary statistic lurking behind that high profile: more than half of all start-ups fail within the first five years, according to research by commercial insurer RSA.

"The UK economy relies on a balance between start-ups and high-growth businesses, but our research reveals a worrying imbalance, and there remain major barriers to achieving growth," says David Swigciski, SME Trading Director at RSA

What are those barriers? The UK tax system is number one, say SMEs interviewed for the report, closely followed by lack of bank lending (despite the government’s Funding for Lending scheme) and too much red tape – again, despite the government’s Red Tape Challenge.

Supporting small business, says Ben Dellot, senior researcher in the Royal Society of Arts' Economy, Enterprise and Manufacturing team, is about "creating an economy where those who exercise their creativity to the max get justly rewarded. 

"Achieving this means stripping away the regulations, tax arrangements, public sector procurement and monetary policies which keep unproductive bigger businesses alive at the inevitable expense of new smaller players."

Read: How easy is it to be an entrepreneur in 2015?

Government help, then, needs to be the right sort of help. The Federation of Small Businesses (FSB) wants to see practical solutions, including enforcing a prompt payment limit of 60 days, using the tax system to reward entrepreneurs and promoting alternative forms of financing.

"Small business confidence will be crucial in driving the economy and job creation," says John Allan, National Chairman for the FSB. "To do this, they need further reassurance from government and policymakers that they will back them, reducing the risk while minimising the burdens that will hinder their growth."

But aside from waiting for government action, there’s plenty that small businesses can do to help themselves.

There’s been a huge rise in resources available for start-ups: from organisations like national campaign Start Up Britain to workspaces such as TechHub. Funding, as well, is no longer just about waiting for the bank manager to give the OK – the rise of crowdfunding sites like Seedrs is helping entrepreneurs to raise capital themselves.

Any entrepreneur who doesn't have a mentor should think about getting one now. Research has shown that 70 per cent of small businesses with a mentor attached survive for five years or more – double the rate of those who haven’t got a mentor. Organisations such as MentorsMe.co.uk will help small businesses to find someone suitable.

Read: Three misconceptions about entrepreneurs which prevent success

Dragons Den entrepreneur Levi Roots says that mentoring has been the key to his business success – from the support of the grandmother who brought him up to the help he got from Dragon Peter Jones. "Everyone needs a mentor," he says. "The Reggae Reggae products have sold millions – but I still have a mentor in Peter Jones."

Next, small businesses must be brave. There’s a popular perception that UK entrepreneurial culture is risk-averse when compared to the US. But taking a calculated risk can be the difference between survival and going under.

"My message to British entrepreneurs is clear: more of them need to take a well-calculated risk on growing their businesses – not settling for merely ‘good’, but striving to become ‘great’, the business success stories of the future," says Sir Nigel Rudd, chairman of Business Growth Fund (BGF), an independent company set up to make long-term equity investments in British SMEs.

Most of all small buysiness should remember that it’s always possible to start again. "It’s not about money or connections," says serial entrepreneur Mark Cuban. "It’s the willingness to outwork and outlearn everyone when it comes to your business. And if it fails, you learn from what happened and do a better job next time."

This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details. Thumbnail from gettyimages.

Comment

Our Companies

Quick Links