A new study by Oracle NetSuite has found that entrepreneurs are not a dying breed in the UK. 85% want to start their own business, and 18% plan to do so in 2022. The findings come in a research report entitled: “State of Entrepreneurship Report: How Founders Are Adapting and Succeeding”. The full report is available here (registration required).
The study was based on a survey of 2005 UK workers (502 of which have already founded businesses) conducted by Vitreous World with further insights from The Founding Network. The report consists of only nine pages that give insight into how existing entrepreneurs and the wider workforce consider the state of the sector and its use of technology.
One of the key findings from the report, and not a surprise considering who commissioned it, is the importance of cloud-based technology in the success of existing startups. In 2021, those startups that are not using technology failed to grow; only 25% of those using cloud technology didn’t grow. Startups using cloud-based technology are 50% more likely to expand their goto market channels and almost twice as likely to grow internationally.
Starting a business
Why do people want to start a business? The most common reason cited was that people wanted to become their boss (62%). However, getting control over work-life balance (43%). The third most common reason is that 27% of people want to turn the hobby they love into a business. It is easy to start a business but also easy to fail. 60% of small businesses fail in the first five years, 8 in 10 due to cash flow issues.
Respondents were also quizzed about the skills they needed to learn to make their business a success. The most common reasons were
- Customer service – 56%
- Marketing and communications skills – 49%
- Finance and accounting processes – 45%
- Sales and lead generation – 40%
While cash flow is important, finance skills are not perceived as the top priority. However, Accountancy and Bookkeeping is the most outsourced skill (31%). The question is whether more time should be spent on it so leaders can better understand how their business is performing. Again cloud-based solutions are critical here, where the accountant can see the same figures as the business leader and identify where potential challenges arise.
James Sutcliffe, Founder, The Founding Network, commented: “With so many people making the transition from corporate roles to life as an entrepreneur, all ‘workers’ could be viewed as potential founders. This is more evident than ever before, with the rise of side hustles – a clear sign of both entrepreneurial spirit and growing confidence amongst the younger generations.
“However, despite the optimism, many founders find that starting a business is more challenging than they expect. A key issue the founders in our community face is gaining visibility over their entire business operations to deliver on their vision and goals. Those who master this are the ones who will go on to have the greatest success.”
Looking ahead
The authors rightly point out that the business climate is changing in 2022. The report cites growing inflation and concerns about a recession, both of which now seem more likely. Consumer price inflation has now hit 7.9% (Source ONS May bulletin), and its further rises seem inevitable, despite the Bank of England’s attempts to mitigate it. That has brought changes in business strategy from the early days of the pandemic, where the most common goals were:
- increased growth plans (26%)
- new customer engagement models (26%)
- increased focus on cash flow (25%)
In 2022 the top goals are now:
- Improving profits in 2022 (45%)
- Revenue growth (41%)
- Cost management by 30%
For 76% of respondents, this has meant their strategy has changed. The report highlights that the older the founder, the more conservative and the less likely the change was. At the extremes, 18-24-year-olds have changed strategy from 2 years ago, whereas only 59% of those over 55% have done so.
This quantitative survey does not show is whether the older generation, having seen recessions before, were already concerned by the impact of covid and has already made strategic changes. A qualitative interview might have highlighted some of the reasons behind this point.
Despite the caution around cost management, entrepreneurs are still naturally confident. Over 70% believe they can improve revenue, their use of technology and profitability. However, with 20% unable to effectively manage cash flow, it seems likely that there will still be a business failure for some.
Technology
Many see technology as vital to their success, with 64% of existing entrepreneurs sayings technology is vital for running their business. Amongst those planning to start a business, that rises to 98%.
With COVID still rampant, one suspects that many see eCommerce and an online presence as vital. However, the report did not ask what kind of business they would start. Cloud tech technology is also critical. 87% of founders using cloud technologies see the benefits. 75% of those already using cloud technology grew profits in 2021. Other benefits noted included:
- The ability to run their business remotely (38%)
- connecting data for an accurate view of the business (27%)
- conducting accurate financial reporting (25%)
This finding is not surprising, with NetSuite offering a complete business platform with its solution. What is unclear is the nature of the applications that entrepreneurs are focused on.
Is it financials/Enterprise Resource Planning (ERP), inventory management, HR, professional services automation and omnichannel as supplied by NetSuite? Or other solutions such as video conferencing, collaboration and office automation where NetSuite is not a market leader?
Nicky Tozer, EMEA Senior Vice President at Oracle NetSuite, commented: “It’s inspiring that the culture of entrepreneurism that the UK is famed for is alive and well. Many workers are taking definitive steps towards starting a new venture, but as current business founders report, the economic climate at the moment is challenging.
“The results of our study clearly show that most UK business leaders using cloud technology said they are better placed to adapt, be more productive and efficient, and carve out new opportunities. We also found that the next generation of UK business founders understands the critical role technology will play in their success.”
Enterprise Times: what does this mean?
The report makes an interesting read. It identifies the challenges and goals of would-be and existing founders. It demonstrates that the next generation of businesses will continue to emerge. That can only be good news for the economy. One challenge for small businesses in the UK not pulled out in this research is the inability to scale.
Founders are looking to cloud-based technology for their success. However, if they plan to grow rapidly, they need to carefully consider whether they want to invest in a solution that meets the needs of today and for future growth. NetSuite is used by more than 31,000 organisations that are both small, scaling and large. This report highlights the need for cloud-based technology, but there is choice. NetSuite is just one of the solutions available, though its platform is one of the most comprehensive.
