One in five small business owners in Hampshire turned to the bank of 'friends and family' for start-up capital, and more than three quarters (76%) launched their new business ventures with working capital of £2,000 or less, according to a survey of small business owners.
Of the 5,000 small business owners polled online freelancer marketplace PeoplePerHour, 75% said they had to use their own personal savings as working capital, while 12% said that redundancy money provided their start-up funds. Only 3% of small business owners polled said they were able to secure a bank loan to get their business off the ground, highlighting the banks' reluctance to lend to riskier start-ups.
The number of people starting businesses has risen significantly in the past few years with the number of new small businesses based in Hampshire registering on the site more than double in the past 12 months.
When small business owners were asked what the biggest obstacles they faced when starting out, nearly half (48%) said struggling to maintain cash flow was a chief concern, while nearly a quarter (24%) said access to funding was the main problem. One in seven (15%) said the lack of business support and advice was an issue, while 9% admitted government red tape was holding them back, and 4% had problems recruiting skilled staff.
Xenios Thrasyvoulou, founder and CEO of PeoplePerHour, said: "The challenge of launching a new business is no better illustrated than by the number of business owners in Hampshire who are having to rely on friends and family to raise start-up capital, largely because of the void left by the banks shutting up shop.
"It helps that it's never been easier or cheaper to start a business from scratch, opening up the self employed route to a whole new generation of aspiring entrepreneurs. Businesses are being launched from kitchen tables across the country, as the online revolution has knocked down the barriers to entry.
"Businesses still face the same issues though – top of the list a failure to get to grips with cash flow. It is essential that business owners follow sensible business practices from day one, to ensure that they don't over stretch themselves.
"This includes not taking on too many full time staff, in their desire to expand quickly, putting undue stress on the company's financial position. A growing number of small businesses are now recognising the benefits of having a flexible workforce, tapping into a global pool of skilled talent through online freelancer platforms - hiring people when and if they need them.
"Starting a business from scratch is no longer the daunting prospect it once was, and that should encourage a lot more people to give it a go."
Written by Kate Fox
Published by www.The-Bottomline.biz
26th Feb 2013
Is last sentence true?
Views: 48
Replies
is it only one in five that turns to friends and family?
i'd have thought 80%
I know that I couldn't have set up Plantpassion without support from friends and money from family.
"Starting a business from scratch is no longer the daunting prospect it once was, and that should encourage a lot more people to give it a go."
I think the only thing that has made it easier is the internet. Banks are'nt lending and can family afford to lend money when everyones income and assets are being squeezed?
I never borrowed any money from family or friends but when I started in 1984 it was my Mum, who worked as a stewardess at our local golf club, who created many leads for me.
I don't think the last sentence is true. Yes, the internet has made it easier in some ways but if it's 'easier' then more people will do it and thus competition is harder. Setting any business is up is quite often the easy part. Anyone can have a good idea but making it work is another matter entirely. It's very hard to keep going sometimes!