Founders of young companies are feeling much more confident than more established businesses, new figures from the Institute of Directors reveal today [Thursday]. In a survey of 628 members of the IoD99, a group for entrepreneurs set up in 2015, over four-fifths (83%) say they are very or quite optimistic about the prospects for their business over the next 12 months. By contrast, only half (56%) of the businesses in the IoD’s overall membership feel optimistic about their own companies, in a separate survey of 687 individuals.
Both groups of business leaders report lower confidence about the economy in general, with only 4 in 10 in the start-up group, and a third among the IoD’s whole membership, saying they are optimistic about the UK’s performance over the next 12 months.
Amongst the entrepreneurs, the UK’s uncertain trading status with the EU tops the list of challenges to growth. Their concerns about the ongoing Brexit negotiations were centred around people, both in the immediate and long-term future. A preferential agreement with the EU on the movement of labour was the top Brexit priority (48%) for members of the IoD99, closely followed by the need to maintain the rights for EU citizens in the UK and vice versa (44%). The latter continues to be the leading priority for the wider IoD membership.
Meanwhile, access to finance was identified as the 99ers’ second biggest challenge to growth. This was combined with low awareness of key Government initiatives aimed at promoting investment in younger companies. When provided with a list of flagship schemes to support investment – including the Enterprise Investment Scheme, Start-Up Loans and the ‘Help to Grow’ loan programme – no scheme was recognised by more than half of those surveyed. Knowledge of the British Business Bank, although a relatively new institution, stood at a worryingly low 17%.
The release of the survey results coincides with the IoD99 becoming the UK’s official representative in the G20 Young Entrepreneurs’ Alliance. This is a role in which the IoD will work with business representatives from around the world in order to identify and overcome the obstacles to start-up growth globally.
Commenting on the figures, Stephen Martin, Director General of the Institute of Directors, said:
“Even in light of the uncertain political climate, our start-up founders are demonstrating that the British entrepreneurial spirit is alive and well. In fact, I have no doubt that the IoD99 will be at the vanguard of those seizing the opportunities that arise in the years to come as we leave the European Union. Whatever the long-term outcome, the next couple of years will be bumpy for businesses as politicians haggle over the Brexit deal, as we’ve seen this week.
“In some ways, confidence must come naturally to an entrepreneur. The twin requirements of a healthy appetite for risk and enough conviction to weather the storm of starting a new business are not traits found in timid people. Change is not always bad for business and we need to have a different perspective for these ever-changing times. Only creative thinking will lead to the new products, services and ways of doing things that can transform our lives.
“However, their concerns around access to people and skills are well-placed, and certainly something they share with the other 30,000 membership of the IoD. We continue to urge the Government that now is the time to do right by EU citizens already residing in the UK, as well as to ensure that any new post-Brexit immigration system does not act as an impediment to those establishing and growing businesses here.”