Funding seen as main barrier for entrepreneurship among public, according to research from American Express and The Entrepreneurs Network
It’s considerably more affordable to set up a business than people think, according to new research by American Express and The Entrepreneurs Network, a think tank. The survey reveals that Brits estimate on average it costs £34,000 to start a business, while about one in seven think it costs more than £50,000.
The reality is far different, according to previous analysis by The Entrepreneurs Network, as on average it costs around £5,000 to set up a business in the UK – meaning the public are overestimating start up costs by almost 600%. American Express and The Entrepreneurs Network surveyed over 1,500 adults and 250 UK business owners to uncover what we really think about entrepreneurship.
Misunderstanding on costs may be preventing would-be entrepreneurs from starting their own businesses, with lack of funds (27%) found to be the biggest barrier for people. This is followed by the absence of a solid business idea (21%) and reluctance to take risks (20%).
However, the study found those willing to make the leap are reaping the rewards, with about two thirds (67%) of entrepreneurs surveyed believing they’ve made more money as a result of setting up a business than they would have done if they’d chosen an alternative career path. Other reported benefits include the freedom to manage their own work (51%), having a better work-life balance (42%) and feeling happier and more fulfilled (38%).
The research also revealed the majority of entrepreneurs are willing to ‘pay it forward’ and support budding business founders, with three quarters (75%) stating they would be comfortable lending money to friends and family to start a business.
The survey also asked people what they thought the ideal age was to set up a business. About two-thirds (65%) of entrepreneurs and half (53%) of the public surveyed said aged between 18 to 35 is best to start a business – with the optimum age, on average, put at just over 30 years old.
Stacey Sterbenz, General Manager, UK Commercial, American Express, said: “Entrepreneurs and the businesses they create deliver huge value to our society and the economy. However, our research shows there are significant misconceptions around how much financial firepower is required to start a business. But what’s clear is the many benefits felt by those who have made the leap. Our focus at Amex is on backing those inspiring individuals, whether at the start of their journey or as they grow their businesses to reach full potential.”
The research informs a new report Entrepreneurs Unwrapped, published by The Entrepreneurs Network, in collaboration with American Express, which uncovers what Britain really thinks about entrepreneurship. To read the full report, click here.
Public support for entrepreneurship is strong
The survey also found strong support for entrepreneurship among the general public. Eighty-six percent of people believe entrepreneurs make an important contribution to the economy, and three times as many respondents (36%) say successful entrepreneurs’ accomplishments are because of effort rather than luck (just 12% of respondents). Perhaps because of this, 61% agree that entrepreneurs deserve the money they make.
Philip Salter, Founder, The Entrepreneurs Network, added: “It’s so important to recognise the benefits that entrepreneurship has for society, offering a crucial source of innovation and fresh thinking. Our polling provides key insights into the opportunities and barriers around becoming an entrepreneur in the UK today, helping us have a better understanding of the conditions required to allow new enterprises to flourish. The research also shows that there are still many myths that need busting about what it really takes to start a business. You don’t have to be a rich whizz-kid to be an entrepreneur, and the more people that understand that the better.”
Commenting on the research, entrepreneur Dana Denis Smith, Founder of legal services business Obelisk Support, said: “It’s important to debunk the myth that it costs tens of thousands of pounds to start a business – the reality is it can be much less: I started my business with a budget of just £500. The UK could be losing out on great new business ideas because people don’t feel they have the necessary capital to start out. And with that, they also miss out on the many benefits of becoming an entrepreneur, such as the flexibility and work/life balance that allowed me to see my child grow up – at the same time as running my business.”