Small businesses reveal what they would do differently

Small businesses reveal what they would do differently

A new survey carried out by Direct Line for Business has revealed the top tips successful SME owners would give themselves if they were given the opportunity to start their business again, with a strong focus on planning, research and collaboration.

The survey conducted by Enterprise Nation on behalf of Direct Line for Business interviewed a total of 180 SME owners from across the UK.

When asked if there was anything they would do differently if given the chance to start-up their business again, 21% said they would have taken more time to get the foundations right. 

Mistakes learnt from rushing in at the start include failing to build a pipeline of work before leaving full time employment, failing to have enough products at launch and doing more research before starting.

One respondent stated that given their time again they would “go easy on the bright ideas, even though sticking with what’s profitable does get boring.”

The second most popular piece of advice SME owners would give themselves would be to manage their finances better (17%) and improve their planning (17%).

The key financial advice involved charging more, securing investment upfront and getting a better control on cash flow. 

One in nine (11%) small business owners say they would have asked for help from either a mentor or a business partner, while 5% say that they would have done more marketing of their product or service.

One in five (19%) business owners, however, claimed that there was nothing they would have changed about the way they had set up their enterprise.

 

Table One:  The most frequently cited tips business owners would give themselves if they were to start their company up again

Type of advice

Percentage of SME owners

Slow down (e.g. build up company more steadily)

21%

Manage finances more closely (e.g. secure funding, don’t undercharge)

17%

Plan the business better (e.g. focus the business on a core product, conduct more market research)

17%

Ask for help (e.g. find a business mentor, seek financial advice earlier)

11%

Other advice

15%

Those who would not change anything

19%

Source: Survey conducted by Enterprise Nation on behalf of Direct Line for Business, March 2016

Nick Breton, head of Direct Line for Business said: “This research shows that entrepreneurs should not be deterred from starting up their own businesses.

"With the average SME taking 18 months to turn a profit, this should encourage those in the early stages of developing a business – or those who are considering a start-up – to persevere with their business plan.

"However they are to be reminded that success can certainly be aided by the best possible preparation in the early stages of starting up.”

The research also looked at the length of time it took a small business to turn a profit. With the average age of businesses taking part in the study standing at four and a half years, respondents claimed that it had taken them 18 months before the business started making money.

Profitability was achieved slightly quicker amongst sole traders (1 year and 5 months), while businesses with a larger employee base and therefore higher outgoings – took longer to start making profits.

Businesses employing between 6 and 10 staff take an average of 2 years and 3 months to turn a profit and those employing more than 11 people taking 2 years and 7 months.

The most frequently cited tips for start-ups from existing small business owners are:

  • Know your market – Many SMEs state that they would do more research into their chosen market before starting up again. This includes researching competitors, networking and developing an understanding of related issues such as tax and recruiting issues, or competitors.
      • Slow down and plan your approach – A large number of business owners say that they would change how they approached their start-up. Whether it be working part-time while they were building up the business, growing their business more steadily or simply starting sooner, the way you approach your business can have a long-lasting impact on its success.
          • Ask for help – Starting up your own business can be a liberating experience, but this doesn’t mean that you have to go it alone. Indeed, one in ten small business owners say that they would ask for help more if they were starting their business again, whether it was from a mentor, a financial adviser or a business associate.
              • Manage your finances – Whether it is sourcing funding or getting an accountant, it is imperative for start-ups to have a good understanding of their financing. Many SME owners claim that they wish they had invested more in the developmental stage of their business, whilst others warn against under-pricing their product.