No-one should enter into it lightly or selfishly / But reverently and responsibly…
Many of you – peering back through the mists of time – will remember those words. The preface to the traditional Church of England wedding service.
I’ve written many times that starting and building your own business bears a striking similarity to marriage. No-one should enter into it lightly – ‘this is going to be easy’ – or selfishly. ‘Whoop! The cash flow looks OK this month: I’ll lease a Merc…’
As a general rule, I’m all in favour of people starting their own business. But this recent article in City AM set some alarm bells ringing.
At first glance it’s hugely encouraging. And not just for the UK economy…
Two out of three employees plan to start their own business! Wow! There are roughly 30m people employed in the UK. Two out of three…
Even if only 1% of 1% decide they need peer support…
Ring your broker! Buy shares in TAB UK!
But let’s take a step back. Put our rational hat on.
What does the article say? ‘Two in three Brits plan to start their own business at some point in the future.’ That’s fine – you suspect that two in three Brits also plan to lose weight and get fitter. But let’s not be cynical: one in ten of us are planning to start our own business this year.
Among younger people (18-34) 80% of people who replied to the survey ‘have always dreamed of starting their own business at some point.’ And the dreams don’t age and wither: over half the respondents between 35 and 54 want to start their own business, and a third of those over 55.
What about motivation? Why do people want to work for themselves? A year ago the two top reasons were simple: ‘choose the work I want to do’ and ‘earn more than my boss.’
A year of the pandemic and what people want has changed – with ‘a better work/life balance’ coming out on top and money dropping to seventh in the list.
So far, so all very rosy. Do the new generation of entrepreneurs have any worries? Apart from ‘the financial burden of setting up a business’ the main ones seem to concentrate on dealing with tax and national insurance – especially ‘making tax digital.’
…And there’s the clue. If you haven’t guessed it by now, the survey was sponsored by a company that provides accounting software for small businesses.
Like the vast majority of surveys, the person paying the piper seems to have the tune he wants. It all depends on the question you ask. After all, 90% of people want to start their own business this year…
Do you want the freedom that comes with running your own business? The chance to do what you really want to do? To build a business that you eventually sell for millions?
…And, just as easily, almost no-one wants to go it alone.
Do you want to put your house up as security? Work 70 hours a week? Lie awake at night worrying? Not be able to relax on holiday…
As everyone reading this blog knows, the truth is somewhere in the middle. But I do worry that far too many people will see the pandemic as a reason to commit time, money and anguish to a business – with very little idea of the reality.
I’ve quoted this stat – albeit anecdotal – many times. Eighty per cent of new businesses fail in their first five years. Eighty per cent of new franchise businesses are still going strong after five years.
Why? Obviously it’s a combination of factors, but two must be significant: having an established track to run on – with the pitfalls clearly marked – and having other successful entrepreneurs to turn to for advice.
Running a business can be a very lonely place. Making tax digital and national insurance are certainly concerns, but they’re nothing to making enough sales, finding out if people will work for – and with – you, whether your business model is sustainable…
…And waking up with those worries at three in the morning.
As I said in the introduction, building a business is exactly like a marriage. It’s a long term commitment and is emphatically not to be entered into lightly. I won’t make my annual – and forlorn – plea for entrepreneurship to be taught in schools but we do need to make sure new entrepreneurs are aware of the pitfalls, both financial and psychological.
It doesn’t matter if the business is one day old or has been established for 20 years. Owners and directors of SMEs need advice and support. That’s never been more true than it is right now.
I applaud anyone starting their own business. And five or ten years down the line some of the businesses started this week and this year will be members of TAB UK. But there’ll be a lot of casualties as well. So if you get the chance to speak to a budding entrepreneur, take it. Let’s do everything we can to help the next generation of entrepreneurs.
