New SME research released by iwoca, one of Europe’s largest business lenders, reveals that the top reasons for starting a business were to have the opportunity to “work for myself” (69 percent), “love what I do” (31 percent) and “spend more time with family” (23 percent) – representing 79 percent of small businesses in the study.
A significant one in ten started their businesses because they didn’t like working with other people.
As part of this new UK business owner survey, iwoca also reveals the daily challenges SME owners face, such as dealing with banks, having cash-flow issues and deciding who to turn to for extra finance.
According to UK SME owners, the most popular reasons for starting a business were:
- Work for myself (according to 69 percent)
- So that I can love what I do (31 percent)
- Spend more time with family (23 percent)
- To be a successful entrepreneur (20 percent)
- Saw a gap in the market (17 percent)
- Don’t like being told what to do (17 percent)
- Don’t like working with others (10 percent)
- I can do a better job than my boss (8 percent)
- To be rich (8 percent)
- To make my family proud (7 percent)
The list reveals that almost one in five SME owners started their business because they “don’t like being told what to do”, with 10 percent of respondents claiming a dislike of working with others was their main motivation – the equivalent of over half a million SME owners. The notion of being more independent and improving personal wealth also featured, with eight percent both claiming to be able to do a “better job than my boss” and hoping that their new business would make them “rich”.
Outside of the top ten, six percent simply “weren’t sure what else they could do”, with four percent of respondents saying they started a business because they “got fired”. Only three percent of businesses started their venture to “create the next big thing” or because they felt they were “unemployable”. One business owner said, “it’s better to be the head of a chicken than the tail of an ox”.
Helping business flow
The research also looks to uncover how fast and seamless access to finance actually matters to Britain’s 5.7 million SMEs. When asked what some of the largest obstacles to running a business were, “uncertainty around Brexit” only concerned 15 percent of business owners, whereas “lack of finance” (21 percent), “late invoice payments” (19 percent) and “red tape” (18 percent) were all deemed larger obstacles.
Although only 16 percent of business owners said they found it difficult dealing with the banks, almost six in ten (58 percent) reported that the time it would take to access finance was important (iwoca has processed and funded it’s fastest loan in three minutes and twenty six seconds). It also seems that “ghosting” isn’t just a term associated with the dating world. Almost one in five business owners (19 percent) reported that the worst thing about having cash-flow problems was being “ghosted” by customers who didn’t pay them on time. However, the “uncertainty” or “stress” was the worst thing about cash-flow problems in their business, with almost four in ten (37 percent) reporting it as an issue.
Seema Desai, Chief Operating Officer at iwoca said:
“More and more people are becoming aware that deriving a clear sense of purpose from your work, whether you’re a business owner or an employee, is a hugely important motivator.
“Managing cash-flow is critical to many businesses, and this is something we’re solving with seamless and simpler access to finance. We are here to fill the gap left by the banks and give businesses the opportunity to move in the right direction, whatever the motivation.”
According to the BDRC’s SME Finance Report, only 53 percent of SMEs in Q4 2018 were aware of other initiatives such as crowdfunding or peer-to-peer lending options. To help address this gap, iwoca has launched its first ever out-of-home advertising campaign – “Helping business flow”. The branding activity, based on the concept that “flow” is what happens when business is moving to where you want it to go, has started with tube and bus ads alongside radio, with the aim of increasing awareness amongst SME owners of non-bank options to increase competition in the market.