One of the biggest transformations in the business world in the last decade has been the Start Up Revolution. This reached its height of an incredible 660,000 in 2016 alone, and while it has slowed somewhat since, the numbers are still impressive.
The Cameron-Clegg Coalition was markedly pro-business. Cameron believed it was British business men and women that would pull the UK out of recession and into recovery after the financial crisis of 2010. The Coalition gave new and or increased tax breaks on investment, supported countless start-up initiatives and, in particular, worked with Start-Up Britain, a campaign led by entrepreneurs. SME’s were seen as the future of this country. Business and government were in the most part working together for common goals.
Fast forward to Mr Hammond, and a treasury which appears to neither understand nor support small business. The FSB at the end of last year reported that 14% of small businesses were expected to scale down or stop trading altogether this year, following on the heels of what was a record number of small businesses doing so in 2017.
We have seen large businesses hit too with many household names in particular disappearing from our High Streets. The High Street’s occupants, large and small, have been massacred. Even charity shops are now affected. Pubs and restaurants are hit too with restaurant insolvencies increasing by a horrendous 20% in 2017 alone. Hardly a sector has escaped with manufacturing and construction hit hard too.
We should then be comforted by figures released in a recent Vistaprint survey, which say that British business owners are more resilient in the face of failure than their counterparts in Germany, France or Italy. Nearly two thirds of those surveyed said they would launch another company if forced to close, higher than any other of the four with the French being the lowest at 51%.
But while we may appear to be resilient about trying again, there is a duality of attitude to business failure/ 31% also said they find business failure unacceptable. A high majority said they would not start a business with a failed entrepreneur. And there lies the rub. We still pass automatic negative judgement on those who have failed.
Vistaprint’s research also found that far more women find overcoming failure even harder than their male counterparts. However, perhaps the biggest difference is in responsibility for failure with 44% of the women acknowledging they could have been more strategic in comparison to only 15% of men. Women also cite personal reasons for business failure, especially within the age group of 25-34, which would suggest that there is still not enough support for those trying to balance motherhood and starting their own business.
Never-the-less, nearly double the women surveyed said that the best way to cope with business failure is to shake oneself down and try again, which would point to the women being more resilient. Yet fear of failure that women cite as the main reason for not launching their own companies. And small wonder with the dichotomy of attitudes toward business failure.
It is easy to see where the negative attitude to people having a second attempt at running a business comes from. Most of us have a horror story where we have lost hard earned cash to some company in trouble, only to watch a phoenix company emerge, doing precisely the same thing, sometimes in the same premises, run by the same directors still living in their seven bedroom manor-houses. Providing there is no wrong-doing, it is perfectly legal for an insolvent company to take this route. Fuller restrictions only apply in liquidation. However, the phoenix companies are viewed with moral outrage by many. Any entrepreneur starting another company gets easily tarred with this same brush.
The irony is that one of the most repeated maxims of successful business leaders is that there is no greater teacher than failure. We learn the most from it. We are encouraged to applaud it when it is part of tales of success.
Stories abound of hugely successful entrepreneurs with business failures behind them. Sir Richard Branson has had his share. Bill Gates pre-Miscrosoft business failed. Henry Ford failed twice with the Detroit Automobile Company and the Henry Ford Motor Company. Walt Disney’s first animation company went bust.
We love these stories about how our business heroes rebounded against impossible odds. The greater the success, the more the failures are accepted and even applauded as part of their story. And yet 63% of us Brits still say we would not start a business with an entrepreneur who had failed.
I wonder how many people walked away from Disney, Branson, Gates and Ford after earlier failures.