Killer Facts about Micro Business owners in the UK
Most are Micro
- In the UK, micro-businesses (those with fewer than ten employees) account for 95.2% of all businesses, 26.3% of all employment and 19.8% of all business turnover.
- The vast majority of businesses (77.4% of all) are one person businesses.
- There are 5.5 million micro-businesses (0-9 employees) 210,000 small businesses (10-49), 35,000 medium businesses (50-249) and 7,800 large businesses (250 plus).
- The term ‘SME'(Small and Medium Enterprises) is meaningless as it covers 99.8% of UK businesses. What the general public consider to be small businesses are usually micro-businesses (0-9 employees).
- 3 out of 4 micro businesses are providing services.
- 4.8 million are self-employed which means that 1 in 7 of those in work, or actively looking for work, are now self-employed.
- Self-employment has been increasing rapidly for all age groups since 2001 – from 3.3 million to 4.8 million. The fastest growing age group of self-employed people are those aged 65 and over. This group increased from 159,000 in 2001 to 469,000 in 2016.
- In recent years there have been 600,000 to 800,00 #StartUps per year and more each year are remaining in their new business.
New micro businesses provide most of the new jobs in the UK economy
This increase each year in self-employment (and part-time jobs) are almost totally responsible for Government and national media headlines such as ‘Record employment! and ‘Unemployment at its lowest level ever! The number of people in employment in the UK is measured by the Labour Force Survey and consists of people aged 16 years and over who did one hour or more of paid work per week.
Happy but Poor
- 88% of self-employed people are happier working for themselves than having an employer. This is despite earning considerably less, working longer hours and taking fewer holidays than employed counterparts.
- The distribution of self-employed income centred around £240 a week (about £12,500 per year) in 2016, much lower than for employees, which is centred around £400 a week. The median income (the level where 50% earn less and 50% more) among the full-time, self-employed was £470 per week (about £18,000 per year) in 2016.
- Some surveys show that self-employed people are still earning considerably less today than in 1995 but there are nearly twice as many self-employed people now. More self-employed people are combining their own business by having a part-time job as well.
- In some ways, we appear healthier than employees as 4 out of 5 of us will continue working through illness!!
Don’t wait for wealth to ‘trickle down’ to micro businesses – it never does
- When I started touring a few years ago with my ‘Micro is Magic’ Show 120+ people held as much wealth as the 3.7 billion who make up the poorest half of the population. Today, it is just 26 people. (Oxfam).
- Every year since the financial crash the wealthiest 1% in the world have seen their wealth increase, on average, by 13% per year.
- FTSE 100 bosses earn 120 times more than the average employee.
- 9 out of 10 of the world’s 2043 dollar billionaires are men.
- The wealthiest 1% in the world took 82% of all the wealth created last year. The bottom 50% (including most micro business owners) saw no increase in wealth.
- With 14 million people in Britain living in poverty, approximately one-fifth of the population, it is not surprising that 7 out of 10 people in Britain would like the Government to urgently address the income gap between rich and poor.
- Levelling the playing field for micro business owners with such as #PayIn30Days and lowering costs with such as business rates, utilities, rail fares, broadband, mobile and the cost of compliance with legislation and taxation would be a good start.
Most #StartUps ‘bootstrap’ and don’t borrow
- Three-quarters of #startups (99& are micro businesses) launch with less than £2000 in start up funds.
- 4 out of 5 #startups ‘bootstrap’ by using personal (including such as savings, redundancy payments & pensions) or friends and family ‘loans’ or gifts or ‘in kind’ donations of time and assets.
- Well below 1% pitch to investors or angels and the failure rate is much higher in those that acquire funding from such sources. Even the Government’s Start Up Loan Scheme has had a default on repayment rates of 40%.
- Increasing levels of debt are not just a problem for micro business owners. It is a reflection of what has happened in Britain as ever-increasing levels of poverty have hit all regions. 31% of adults in Britain believe they will not be able to clear their debts during their lifetime and among 18-24-year-olds it is nearly 50%.
Those that are thinking about it or doing it:
- Nearly a quarter of the population aged 18-64 are either involved in entrepreneurial activity (11%) or are thinking about it (13%)
- Men are twice as likely as women to be involved in entrepreneurial activity or to be thinking about it.
- Nearly twice as many (15%) young people aged 16-34 are thinking about starting their own business than older people (8%) aged 35 – 64 but twice a many older people (16%) are currently running their own business compared with younger people (8%)
- You’re just as likely if you’re white or non-white to be running your own business but you’re twice as likely if you’re Asian and three times as likely if you’re of Black Caribbean or Black African origins to be thinking about running your own business, compared to the white population.
- The higher your level of education and the more privileged your background the more likely are you to be involved in entrepreneurial activity.
- Of those involved in entrepreneurial activity around 70% are self employed and 30% own or part own a business.
- You’re more likely to be a risk taker, (and there is a real risk in going it alone) if you’re male, aged between 25-44, with a degree or higher and in social economic groups A,B or C1.
Those who have their reasons….
- The top three motivations, in rank order, (top being most cited) for those thinking about starting a business are:
- Freedom to adopt their own approach to work
- To challenge themselves
- Wanting to make more money
- The top four motivations for those already running their own business are:
- Freedom to adopt their own approach to work
- Always wanted to be their own boss
- Wanting to challenge themselves
- Making more money than they were earning before
- The fears that most stop people going it alone are mainly money related:
- Getting the finance for the business
- Fear of getting into debt
- Losing the security, income or promotional prospects from current job
The Golden Entrepreneurs are doing it too!
- Over one third of the 50-64 age group are not earning from being an employee or from self employment (but only about a fifth of these want to be retired).
- Eleven per cent of the 50-64 age group are self employed and running their own businesses ( Tony – the UK isn’t that good at having an entrepreneurial culture).
- Those aged around 50 who are made redundant have a one in ten chance of becoming an employee again. Job satisfaction, however, increases with age and it is interesting that most over 50s are employed in smaller organisations.
- The 50-64 age group appears to be 40% more entrepreneurial in the South East or the South West of England than those in the West Midlands or Yorkshire and the Humber.
- Just under 50% of all self employment in England is in the 50-69 age group.
- Businesses that start off with the owner 50 or above have an equal or better chance of success as owners in other age groups.
- 40% of people over the age of 50 have delayed retirement for financial reasons.
- 28% of people aged 50+ would like to be able to work later than the current retirement age.
- 11% of over 50s would like to work from home if they had to work past the current retirement age.
- Self employment for people over 50 is on the increase and there are more training and loans available to them than ever before. No wonder and a good job looking at killer facts 1-9 above!
10 Qualities that Entrepeneurs Need
- Has to think of new ideas and deliver them to a market at a profit.
- Has to lead their team against established competition with minimal resources.
- Has to raise finance without a track record, collateral of internal experts.
- Has to constantly stake their personal reputation and give guarantees.
- Has to pay their staff and only pay themselves when it is prudent to do so.
- Has to be prepared to lose everything if things go wrong.
- Is personally threatened when the bank of creditor puts on pressure.
- Has to be harder, more flexible and more streetwise than in their previous corporate life.
- Has to be good at multi-tasking, as initially they will have to do everything.
- Has to take full responsibility for whatever happens.
More than a third (35%) of UK entrepreneurs raise money from their own resources, 16% of these raise capital by re mortgaging their own homes. Other popular sources of cash are venture capital firms (28%), bank loans (20%) or personal contacts (18%).
The overwhelming majority (88%) of entrepreneurs started their enterprise before the age of 44, and 20% before reaching the age of 24. Nearly a third of UK entrepreneurs (30%) are involved in their second, or more, enterprise.
A little more than half (55%) of entrepreneurs have a university degree, but say that attending university made no significant financial difference to the success of their firm.
Microsoft founder Bill Gates is the most likely person to be named as an inspiration or role model by UK entrepreneurs.
(Survey by Ernst & Young and London School of Economics into 500 of the UK’s most successful entrepreneurs.)
A Question of attitude
- I need a monthly salary
- I need a good pension scheme
- I want a promotion
- Thank God it’s Friday
- If I qualify I can get a good job
- I want a better job
- What do you want me to do?
- I have a great idea
- I need a secure job
- I look forward to retiring at 65
- I want a high status
- I want to stay on the boss’s good side
- I like to keep to my strength area
- I feel great frustration
- I need a fixed income
- I want a higher salary
- I’ve done my best
- I need to make a profit
- I need a capital gain to retire on
- If you want to get to the top, start here
- God, is it friday?
- I could employ well qualified people
- I have a dream
- What needs doing
- Here is my new product
- I want to be financially free
- I never want to retire, but I’ll be able to soon
- I want to control my own destiny
- I want independence
- I need creativity and variety
- I have incredible job satisfaction
- I’m expecting unlimited income
- I want capital gain
- Never Give Up
Which kind of operator are you?
Their motive is to work at their personal passion.
Their focus is on money making. It’s their prime, often only, objective.
They tend to go for an established small business format that can be bought or setup quite easily, such as a franchise or network marketing agency.
These are people planning to create a very large company, in the manner of Bill Gates of Richard Branson. Their motivation is usually a mix of creativity coupled with commercial practicality, strong independence, power and influence.
The people who originate new products, services, artistic work or inventions.
Small Business Headaches
The biggest headaches for Britain’s small business bosses are:
Dealing with the lack of cash flow: 79%
Increasing sales turnover: 68%
Funding the purchase of new equipment: 59%
Proportion of new firms failing within the first 3 years of trading: 33%
Ten Steps to your big idea
- Buy a notebook – keep it in your pocket, beside the bed and even take it to the loo. Ideas can strike at any time. Write them down.
- Ask a close friend – what they would buy from you, what you are good at and what you should avoid.
- Avoid the hobby habit – many people feel that their hobby holds the key, but are there enough people who share your passion with money to spend?
- Watch the weather – will your idea appeal to your customers all year round? Selling christmas decorations or hiring bikes might not keep you in groceries for a full year. Consider two businesses.
- Read books – see how businesses started, often in a small way. Record what impresses you in that note book.
- Open your eyes – all around you are people running businesses. What do you think you could do better? You may not want to be a newsagent but thinking about how the one you frequent operates will be a useful exercise.
- Stroll in the park – and other places you rarely visit. Watch what people do, what’s missing? Your business must appeal to people.
- Travel – you don’t need to go far. Visit local trade fairs and see what businesses are there. Pose as a buyer and ask questions. Constantly consider why, how, where and when could you make a difference.
- Check your CV – most people actually start a business in an area in which they have worked before. Don’t take this for granted, but accept it as a possibility all the same.
- Shake the pig – emptying your money box on the bed is the ultimate reality check for the budding entrepreneur. If Aunty Violet has just died and left you a million, your choice is wide. For most of us though, ready cash will constrain our start-up plans.
10 Strengths you will need
- Vision – without a clear picture of what you want your world to look like, it will be difficult to create. Thank about the finest details, bring it back to life.
- Determination – you want to do this don’t you? Deal with your doubts before you start; usually, once committed it is difficult to turn back.
- Fitness – you cannot afford time off sick when you work for yourself.
- Mental Health – although many will say you are mad, you mustn’t be! Starting a business is stressful and you need to be resilient.
- Love – you are going to need a shoulder to cry on. If you have someone to share the thrills and the spills, you’ll enjoy if far more.
- Cash – inevitably your business will take longer than you think to pay you a wage. The bigger your cash reserve, the longer you can wait before drawing income from your business.
- Flexibility – usually when you start a business it is just you. That means you make the coffee, clean the loo and pick up litter.
- Humour – you are going to make some mistakes; we all do. The ability to laugh them off, learn quickly and move on is crucial.
- Caution – sometimes it is easy to recognise the opportunities but hard to spot the threats. You need to be cautious, without being risk averse.
- Generosity – when you enjoy success, invest in those who made it possible. Parties, thank-you gifts and treats for you, your friends and family will it make it seem worthwhile.
10 Worries you may have
- I’m not bright enough – well, sometimes you can be too bright to succeed. Innocence and naivety can actually protect you from fear.
- I’m not pushy enough – do you like doing business with pushy people or do you prefer to deal with nice reasonable people like yourself?
- I’m not rich enough – one of the best ways to watch your costs is to have no money to waste. Many wealthy people start businesses that lose money.
- I’m not good at sums – relax, spreadsheets and accounting software make the numbers easy to work out. Always take time to work it out before you jump into an opportunity.
- I can’t spell – literacy is great if you want to write a book, but less important if your business communicates with customers verbally.
- I’ll fail – maybe you will, but equally you won’t make your first million if you don’t try. Remember too that building a business is great training.
- The big rival will eat me alive – in fact the opposite is usually the case. Young, small and ambitious businesses can duck and weave beneath the fists of those nasty big competitors.
- I’m naturally pessimistic – so, you won’t make false assumptions and step into the dark without a torch will you! A glance at the downside puts the upside into perspective; just be sure to see both.
- I don’t take risks – running a business is like crossing the road. You can jaywalk, wear dark clothing and get squashed, or push the button and follow the Green man when the traffic stops.
- I know my failings – incredible though it may seem, we all know we’re not so good at and we all underestimate the value of our strengths. No one is perfect – and nor is any business. That’s why there’s room for you too. Self-confidence is built from relevant knowledge and positive experience. Rather like riding a bike or playing an instrument, the more you learn and practice the better you get.