Know Your Money logo

Are we a nation of Entrepreneurs?

Is the UK
a nation of
entrepreneurs?

How many people in the country wish that, one day, they could set up their own business? What, if anything, stops them from doing so? Do people know what it takes to follow their dream - and what do they think of people who are already entrepreneurs?

Know Your Money commissioned a survey in a bid to uncover answers to these questions and more. This feature analyses the answers in detail to highlight the attitudes and trends towards entrepreneurship.

Almost half of UK adults (47.6%) say they would consider starting their own business. This fact shows that a significant number of people across the UK dream of forming their own company - and much more than the one in ten people who actually run their own companies.

Interestingly, the study also shows a strong appetite for entrepreneurship among young people. Of the people asked by Know Your Money, 64.8 per cent of 16-24-year-olds said they would consider starting their own business.

The survey findings suggest that Generation Z – young people born between the mid-90s and early 2000s – might well lead the way in creating a new entrepreneurial wave.

00.0

Almost half of UK adults (47.6%) say they would consider starting their own business. This shows a significant number of people across the UK dream of forming their own company – which is many more than the one in ten who actually do.

Breakdown by
age range

The results show that the older people get, the less they consider starting their own business. 64.8% of 16-24 year olds have considered starting their own business. The highest percentage of any group.

Dan Schawbel, author of Promote Yourself and founder of Millennial Branding, told MailOnline:

Generation Z has everything at its finger tips. You can start taking classes online or connecting with experts before you're 10 years old. Teenagers are now giving influential TED talks, building their reputation and networking before they have even left school. The majority of them would rather be entrepreneurs than employees.

Young tech entrepreneur Christian Owens, 22, who started his first business at 14, told Startups.co.uk:

Being a young entrepreneur certainly had its challenges, especially walking into meetings and handling first impressiosn like, 'He's young!' But it definitely has its advantages too - being young we don't have dependants or huge home/life responsibilities, so it really gives you the opportunity to take a risk and go for it without reservations.

Top 5 entrepreneurial cities in the UK

*% of people from the city saying they would consider starting their own business

Top 5 entrepreneurial regions in the UK

*% of people from the region saying they would consider starting their own business

When it comes to major UK cities, none has the entrepreneurial bug more than Newcastle, with 55.8% of people from the city saying they would consider starting their own business.

So, what’s the secret?

Stephen Patterson, Director of Communications for Business Improvement District Company NE1 Ltd, told us: “Newcastle has always been a hot bed of talent and innovation – it led the last industrial revolution with world changing innovations like the electric lightbulb and the locomotive. This innovative spirit never went away and today is manifesting itself in a strong entrepreneurial drive that runs through the city and the north east and provides a fertile ground for new and highly successful new business start ups.

“Newcastle and the North East is synonymous with a ‘can do’ attitude – culturally we have a strong work ethic and a work hard/play hard mentality, this coupled with the geography of the city offers an ideal environment for new businesses. Newcastle is a small, close knit city and business community and it is very easy to network and to do business.”

This close-knit community is backed up by a buoyant business support network.

The Business and Intellectual Property Centre is based in the City Library and offers budding businesses the benefit of expert advice, a space to work and meet clients and, importantly, the chance to pick the brains of people who have already set up their own businesses.

In 2017, almost 10,000 businesses used its meeting facilities, and there were almost 200 ‘experts in residence’ offering one-to-one sessions covering everything from HR to PR.

John Musham, Business and IP Centre manager, said: “Those are the activities that are valuable to people who might traditionally turn away from setting up a business. I think it enables them to see that there’s help available and that it is accessible.”

This support network also involves reaching out into the community and encouraging ‘grassroots’ enterprise, whether that be startup businesses or groups wishing to take over (or introduce new) local services.

Mr Musham says that many modern businesses have set up online – but stressed that the real-world face-to-face experience that can be shared at the likes of the Business and IP Centre is still essential to help these digital companies to flourish.

Stephen Patterson,
Director of Communications for Business Improvement District Company NE1 Ltd

Newcastle has always been a hot bed of talent and innovation - with the North East it is synonymous with a 'can do' attitude...

John Musham, Manager of the Business and IP Centre

Many modern businesses have set up online – but real-world face-to-face experience is still essential to help these digital companies to flourish.

He added: “There are more businesses starting online because you can set one up quite easily. However, with online and social media it’s such a fast moving area that you really do need access to support to be able to keep up to date.

“There have been a number of changes in Newcastle but one thing that has been consistent, certainly over the last 20/25 years, is that we have had a really good network of support.”

Mr Patterson said Newcastle has benefitted from close relationships with local universities, which help to inspire pioneering startups, while the relatively low costs of setting up a business are also a big factor in the city’s success, along with good road, rail and air connections.

It also helps to have tangible example of success to rely on too – and Mr Patterson flagged up two recent success stories that can spur on the next generation.

He said: “A recent addition to Newcastle’s thriving restaurant scene highlights the city’s entrepreneurial spirit. The restaurant group The Fat Hippo has opened two hugely successful restaurants over the past few years, one in the city centre, the other in the local suburb of Jesmond. Both venues are extremely successful businesses but the group does not rest on its laurels, instead it continues to explore growth opportunities including trialling new food concepts such as Fowl Play, which it launched at Christmas.

“Another prime example of Newcastle’s world leading innovation and entrepreneurial flair is tech-company Hedgehog Labs, which was set up in 2007. An award-winning consultancy, Hedgehog Labs design and build software for a whole range of companies all over the world. Launched in Newcastle and still with its headquarters here in the city, the company now has offices all over the world, working with FTSE 500 companies.”

With the Great Exhibition of the North to come in the summer of 2018 – which will be supported by the Business and IP Centre – it seems as though the recipe for success has been well and truly bottled on Tyneside.

Biggest barrier

Lack of personal funds is the biggest barrier for people deciding to start a business.
Just over a quarter (25.5%) identified this as the primary reason.

Given that almost half of the population would consider starting their own business, what holds people back from taking the plunge?


The survey showed that the most important reason was the lack of personal funds, with more than a quarter (25.5%) of people saying that this was the biggest barrier. Fewer than one in eight people said that a fear of taking a risk also held them back.

Just 3.6% of people said that a lack of government support was their biggest barrier, yet the results also revealed that only 15.5% of people think enough support is given to those who do want to start their own business.

Government Support

Is the Government doing enough to support Entrepreneurs?

Only 15.5% of the UK believe that the Government is doing enough to support entrepreneurs.

Is the Government doing enough to support Entrepreneurs?

54.7% of 16-24 year olds believe the Government isn't doing enough to support entrepreneurs.

Is the Government doing enough to support Entrepreneurs?

Cardiff is the city that is unhappiest - 55.8% say they aren't doing enough to support entrepreneurs.

The Federation of Small Businesses believes that this shows that the current system needs funding and reform to spread the word and let people know what they can tap into. While Newcastle’s network of support is clearly achieving success, the story is not necessarily the same right across the UK.


FSB chairman Mike Cherry said: “Local Enterprise Partnerships and, in England, Growth Hubs, do some good work but awareness of the support they offer, including when it comes to starting up, is not good enough in certain areas. They also need long term funding guarantees to ensure they can properly plan for their future.


“Government also needs to foster a more entrepreneurial culture, with larger firms helping smaller counterparts to grow.


“Simplifying the process of complying with regulation, mitigating the impact of rising costs on start-ups and tailoring business support for those thinking about starting a firm, as FSB has done, would go some way to making setting up shop that much easier.”


Despite this, Mr Cherry feels the fact that a large chunk of the population wants to set up a business is positive and shows that the small business sector is thriving.

Mike Cherry, Chairman for The Federation of Small Businesses:

Despite rising costs and flagging consumer demand, we now have more people than ever starting their own small business. The latest 2017 government figures show there are now 5.7 million small businesses and self-employed in the UK – an increase of almost 200,000 from the year before.

How much money does the UK think it takes to start a new business

Underestimate
67.5%

Over two-thirds of the UK underestimate how much it will cost to start a new business.

Overestimate
15.9%

Overestimate how much it will cost to start a new business.

People say that cost is the biggest barrier, but do they actually know how much it takes to get a business off the ground?


Know Your Money’s survey showed that two thirds of respondents underestimated the cost of starting a new business, with 67.5% of people believing the cost to be less than £50,000. This is in contrast to the fact that the average business loan approved for small business, according to the British Banking Authority (BBA) was £68,614 in the first quarter of 2017.

The survey showed that almost one in six people also think that starting a business costs more than £100,000 and, surprisingly, 18.5% of people think they wouldn’t need any money to set up a business. Women (19%) are more likely than men (14.2%) to suggest the cost is between £50,000 and £100,000, an accurate reflection of the average lending figures.

00,000

The average business loan approved for a small business in the first quarter of 2017

According to the British Banking Authority

Looking for a loan for your small business?

Retail Sector

Which sector would you most likely start a business?

Retail is the sector most people would start a business in, with 14.9% of people picking this option.

Which sector would you most likely start a business?

The automotive sector came bottom with only 1.4% of people thinking this sector would be a good option.

Which sector would you most likely start a business?

The sector most popular with 16-34 year olds was arts / entertainment / recreation with 15.75% of the votes.

Although often attributed to Napoleon, it was economist Adam Smith who first coined the phrase ‘a nation of shopkeepers’ in relation to the UK. The survey suggests that this epithet might still apply, with retail the most popular sector when people were asked ‘if you were to start your own business tomorrow, which sector would you go into?’.


While much media attention is given to the trials and tribulations of big retail chains, recent years have seen independent stores open up to fill the spaces they left.


A study from the Local Data Company (LDC) and British Independent Retailers Associations (Bira) showed that independent stores increased 15 per cent in 2016 across 500 British town centres – which meant an overall rise of 36 per cent from 2015.


Director at the Local Data Company, Matthew Hopkinson, told the Fashion United website: “Independents are becoming ever more important to our high streets. Year by year, the net gain of small businesses is accelerating, even as the net loss of chain stores increases. They are changing the face of our towns as well, as barbers and bars replace clothing shops and newsagents, with service and leisure gradually substituting for comparison shops.”


Not only is retail popular, but so too is going into business with a friend or family member, with 52.4% saying they would rather do this than ‘go it alone’. However, the stats show a gender split on this issue. In total, 56.9% of women say they would choose to start a business with a friend or family member but only 47.7% of men said they would. In fact, slightly more men (50.9%) would rather set up a business by themselves. There’s also an age split here, with 64.9% of people aged 16-24 saying they would set up a business with a friend or family member, compared to 41.3% of 35-44s.

Business Partners

00.0

Two heads are better than one. On average, the UK would rather go into business with a partner than on their own.

Men would prefer to go into business alone, 50.9% opting for this.

Whereas 56.9% of women would rather go into business with a partner.

Innovative thinking, creativity and intelligence are the three most important character traits for entrepreneurs, according to survey respondents. This suggests that people tend to have a positive view of those who set up businesses, with factors such as ‘arrogance’ much lower down the list in the survey.


These results show a gender split too – with men more likely than women to think that you need to be ruthless or arrogant to be an entrepreneur and women more likely than men to believe that friendliness is important.

The 16-24s – who are keenest to set up their own business – are most likely to say that intelligence is a key trait.

The chance to be your own boss was held up as the biggest reason for becoming an entrepreneur – with people keen to set their own working hours and conditions. People aged 25-34 are most likely to be ‘sick of the 9-5’ and women are more likely than men to want to be able to set their own work/life balance.

Top 3 reasons for being entrepreneurs
  • Being your own boss
  • Chance to earn more money
  • Freedom/independence
Top 3 character traits for entrepreneurs
  • Innovative Thinking
  • Creativity
  • Intelligence

The survey showed serial entrepreneur Sir Richard Branson to be the nation’s favourite entrepreneur. The man behind the Virgin Group was knighted for his services to entrepreneurship in 2000 – following high profile forays into the world of retail, travel and music – and was voted as the UK’s ‘celebrity dream boss’ in a poll for Cancer Research in 2009.


Branson, said to be worth more than $5 billion, told Business Insider: "When somebody comes to me who's interested in starting a business, I think my first question is, 'Do you have an idea that's going to make other people's lives better?' If you do, you have a business. And my second bit of advice would be, 'Screw it, just get on and do it.'"


He added: "I'm a great believer in just getting out there and trying. Sometimes you fall flat on your face; sometimes you succeed."


Overall, Lord Alan Sugar was second and Sir James Dyson third. However, women were less likely to say Sir Richard Branson than men and more likely to say Lord Sugar was their favourite UK entrepreneur than male respondents. They also prefer Victoria Beckham to Sir James Dyson. Similarly, Lord Sugar came top among 16-24-year-olds.


Survey respondents were also asked which country they think produces the best entrepreneurs. Of those people who selected a country, the UK was the most popular, with the US second and China third. Women and the 16-24s, however, put the US ahead of the UK.

Sir Richard Branson,
Founder of Virgin Group

When somebody comes to me who's interested in starting a business, I think my first question is, 'Do you have an idea that's going to make other people's lives better?'

Summary

So, what have we learned about the UK’s attitudes to entrepreneurship? Here’s a summary of the key takeaways from the Know Your Money survey:

  • Almost half of UK adults would like to start their own business. This shows that this is an incredibly common goal, but also means a huge number of people hold this ambition and aren’t able to follow their dream.
  • The desire to set up a business is most common among 18-24 year olds.
  • Newcastle is the UK's most entrepreneurial city. Experts say a strong support network and close-knit business community are key for this.
  • A lack of personal funds is the biggest thing holding people back from starting their own business - but only a sixth of people actually know how much it would cost.
  • Just 15.5% of people think entrepreneurs get enough help – but only 3.6% of people say that a lack of government support is the biggest barrier to following their ambition.
  • Given a choice, most people in the UK would start a retail business.
  • Most people would rather start a business with a friend or family member – although this is more common among women than men.
  • People believe it takes innovative thinking, creativity and intelligence to become an entrepreneur, with a generally positive view about what it takes to set up a business.
  • Our survey respondents named Sir Richard Branson as their favourite British entrepreneur.