Two fifths of small business owners who set their company up in the past three years are already finding themselves in financial trouble, research finds.
Some 52 per cent of these people admit they ‘got a bit carried away’ with spending on equipment and supplies, while a further 48 per cent admit they rented or purchased an expensive property, according to the study by VoucherCodesPro.co.uk.
The survey was conducted as part of an ongoing study into the financial circumstances of businesses around the UK, with 732 British small business owners quizzed.
The respondents, all of whom had launched their company within the past three years, were asked ‘What was your main reason for setting up your own company?’ to which the most popular responses were ‘I wanted to be my own boss’ (37 per cent) and ‘I wanted the flexibility to work as and when I wanted, for my family’ (32 per cent).
A fifth (21 per cent) said they ‘wanted to get rich’. All respondents were then asked about the financial state of their company, to which two fifths (42 per cent) stated they were in ‘financial trouble’ and only a third (33 per cent), that the company’s finances were ‘going from strength to strength’.
All business owners who stated that their company was in financial trouble were asked what they thought had gone wrong and what they’d change if they had the chance to go back and do it again. When provided with a list of possible responses and told to select all that applied.
After overspending on equipment and supplies and overspending on a property, popular answers include hiring too many staff too soon (39 per cent), not charging enough for services or products (38 per cent) and not being able to get enough business/clients/customers (33 per cent).
According to the poll, out of those who admit to being in financial trouble, 51 per cent say that they weren’t sure if they could bounce back and save their company.
Of these people, 25 per cent are optimistic that they can learn from their mistakes and would look to set up another company when the time was right.
All respondents were then asked ‘Do you regret setting up your own company?’ to which one quarter of respondents, 26 per cent, stated ‘yes’. Similarly, all respondents were then asked if they would ever consider working for a company where they weren’t the boss, to which 82 per cent of said ‘no’.
Nick Swan, founder and CEO of VoucherCodesPro.co.uk says, ‘Launching your own company is always going to be a massive risk, whether it’s your first time or you’ve got a whole portfolio of successful businesses. It’s about believing in yourself and venturing out to try something new and show the world what you’re made of.
‘Like the results of this study show, even if the company does fail, it’s not necessarily a failure if you learn from the mistakes you made and try again. Business is unpredictable, it always has been and always will be, and the economy doesn’t always help, but you won’t know if you can do it unless you try.’