While many people are feeling the financial pinch, it seems entrepreneurial millennials are better off now than they were a year ago – and they’re feeling optimistic about the future, says a new report.
A Confident Tone
The findings come from the Hiscox Group’s latest DNA Of an Entrepreneur report, subtitled ‘An Air of Confidence.’ The report from the global insurance group is based on survey responses from more than 4,000 owners and senior executives in SMEs across Europe (France, Germany, The Netherlands, Spain and the United Kingdom) and the USA.
The Hiscox Group’s report ‘reveals a confident tone among small businesses.’
71% said their customer base had expanded in the past year
67% of respondents reported revenue growth
27% planned to hire more staff in the year ahead
16% had taken on more staff in the past year
Winners and Losers
Overall, it seems millennials (those in their 20s and 30s) are the age group to watch. 50% of under-30s and 46% of those aged 30-39 said they are better off than a year ago compared with just a third or less of older respondents. There was a similar generation gap when they were asked about their optimism for the year ahead.
As for geographic factors, while the US and Spanish firms topped the revenue growth tables, with 72% and 71% respectively reporting revenue growth, there was a small decline in the percentage of UK respondents doing so, at just 64%. However, the proportion reporting profit growth is marginally higher (62% compared to 61% a year ago). Businesses in France and the Netherlands also reported sales growth.
Bronek Masojada, CEO at Hiscox, commented: “The report demonstrates that small businesses are now getting their share of growth in all the countries covered. It shows too there is a new generation of risk-takers coming through who are clearly prospering. And it reveals for the first time there is a dynamic core of entrepreneurs, engaged in more than one business, who are likely to be leading the way with exports and innovation. These are the wealth generators on whom our future growth depends, and policy-makers should take note.”
Plans, Products and Problems
26% of respondents said they were running more than one business. Most were among the under 40s and running the larger companies in the study, which looked at businesses with 50 staff or fewer. This group made up 35% of all companies planning the introduction of a new product and 48% of exporters. This paints an optimistic and dynamic picture of small businesses.
There were also signs that finding funding is becoming easier for small businesses, perhaps because those using alternative funding such as crowdsourcing has risen. 6% re-mortgaged their house. 12% said they had raised money from family and friends. As for non-financial help, nearly a third (31%) of small business owners and managers said they’d had a personal mentor and 94% found the experience ‘quite’ or ‘very’ useful.
However, there were some more worrying statistics. 16% of small businesses admitted they depend on one customer for half or more of their revenue and on average, respondents relied on their biggest customer for 26% of their revenue. The figure was higher among sole traders (29%) and the problem was most prevalent in the transport and business services sectors.
Another concern was the 13% of businesses who had suffered a cyber-attack, with nearly half of those firms admitting the attack resulted in a serious loss (up from just 26% last year). The number of UK and US firms saying political instability was having an impact on their business also jumped sharply – from 22% to 31% in the UK and from 31% to 36% in the US. In the UK, a net 5% of small firms still see Brexit as a negative, but in the US a net 7% now believe it will be good for their business. Concern over Brexit is still a big issue in Spain: 21% of Spanish respondents see Brexit as a negative compared with 9% who see it as a positive.
The rising number of start-ups is “hugely positive,” says Msojada. “But it is often forgotten that these are risk-takers – people who are often prepared to stake house and home, work long hours and forego income in order to turn an idea into reality. As the report shows, many rely on outside income to help fund the early stages of their business. It also shows how dependent many are on one large customer. A recurrent complaint is that governments are not doing enough to support them. This is no bed of roses.”
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An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.