Fewer UK businesses would fail if owners had more knowledge of the world of business prior to taking the plunge and setting up themselves, according to two thirds (63%) of SME owners.
Small business owners are now calling for more education for those in the process of setting up in business, as research today reveals many directors went into business blind and confess they made big mistakes along the way.
The research, conducted by Just Cash Flow PLC spoke to 250 small business owners, and 80% admitted that they didn’t know everything they needed to when they first set up their business; with a further half (48%) admitting they lacked knowledge when it came to financial and business planning.
Small and medium sized businesses employed 15.2 million people at the start of 2014, and had a combined turnover of £1.6 trillion – highlighting the strong correlation between the success of SMEs and our local economies.
Holly Porter, Director and Founder of Surface to Air Architects set up in business 11 years ago with very little knowledge and experience in business. She said “To be honest I knew absolutely nothing about basic business planning when I started the business so there are a lot of things I wish I knew before setting up. Especially how difficult it is to get paid -the reality is that just giving an invoice for a service you have provided, doesn’t automatically mean they’re going to pay it.”
The areas of concern that SME owners wish they’d known more about before setting up in business have been revealed to be finance (30%), planning (29%) and forecasting (23%). However cash flow management (36%) has been flagged as the top concern that business owners face. The lack of business knowledge has resulted in 14% of those surveyed admitting to making mistakes that have put their business at risk, and 10% have made errors that have cost their business dear.
John Davies, Director of Just Cash Flow and one of the minds behind the report, is calling for more education to be put in place for those looking to set up a business: “We get to see many excellent applications for finance but unfortunately we also receive requests from Directors that clearly don’t understand basic business fundamentals. Our experience and this research shows a national qualification for Directors would be really beneficial.”
A report from October 2014 revealed that over half of UK start-ups fail in the first five years, yet secure measures have not yet been put into place to ensure that this figure decreases, something that is confirmed in this report.