Hi all, this is Naomi Burgess, just writing a quick post about why so many start-up businesses have failed in the UK in recent years.
The UK is considered to be the best place for start-ups in Europe, and given, for example, the new mobile apps invented daily, coupled with UK’s massive sales of mobile devices, it would indeed seem like an excellent place for new SMEs to thrive and develop. Yet over half of them fail within their first year. Why?
The changing economic factors
Let’s leave aside the economic factors for now and consider the human factor. Almost all of us have those ideas that could potentially be money makers to help with retirement. But I guarantee – only about half of you actually consider capitalising on them, and very few of you do anything about that. Nonetheless, those few are still a significant number of people. Problem is – those people are all different, and while I myself am all for differences shaping the world and unique businesses, there are certain character traits that distinguish a good entrepreneur from a bad one. Resilience, for one, is a particularly important one. It takes a lot of work and mistakes that you learn from to run a successful venture, and some people just don’t have that in them. Also, good entrepreneurs are good leaders and decision-makers, and not just anyone has those qualities – some people perform better under other people’s supervision and have no desire to have an unpredictable schedule, and that’s absolutely fine.
Invest on enterprises
It’s important, therefore, to be absolutely sure that you’re capable of launching and investing most of your time into an enterprise, because if not, you might very well end up just another figure in the sea of statistics comprised of failed SMEs. However, having the right personality isn’t enough. We all know that the economy is rarely kind to industry newcomers and often, large chains and corporations eventually make relatively successful SMEs shrink and disappear. The competition is tough in all the industries, and it’s incredibly hard to compete against a well-established brand nationwide, or even on a regional scale.
The UK has quite a few programs that support start-ups and beginner entrepreneurs, but not much is being done for those SMEs that are currently struggling. Unfortunately, given the current political and economic climate, this is unlikely to change anytime soon. Unless, of course, some budding determined entrepreneur launches their own support scheme!
The importance of running a business
This lack of support system for SMEs, together with frequent lack of entrepreneurial experience, can also result in faulty business models and lack of understanding of how to meet the needs of the target market. Anybody – a CFO, a student, a truck driver – can have an amazing idea and the personality to make it into something that makes money. But quite often, those people don’t have the necessary knowledge and experience to run a business, despite having the right personality for it. It is very important to have a solid yet flexible business model and development strategy, understand the needs of a target audience, and know how much to save and to spend, amongst other things. This is why UK’s budding entrepreneurs need all the support they can get – and this applies to financial, as well as skills development support.
Having the right knowledge and skills combined
Just to sum up, having a great idea isn’t always sufficient; developing the right knowledge and skills, as well as possessing certain personality traits might give you a chance to succeed as an entrepreneur. However, there are also quite a few external factors involved – economic, political, social… And last, but not least – luck. I don’t love saying that luck plays a factor, but the reality is – it does, and there is no avoiding that.