Small Business Survey 2012

Focus on New Businesses

May 2013

Survey details

• Small Business Survey 2012– 5,723 CATI interviews with SME business owner/managers, June to

September 2012– Sampled and weighted to 2012 BPE– Main report is based on SME employers only

• Themed analyses– No employees (report/presentation)– Wales, Northern Ireland (reports)– Exporting (report)– Social enterprises (report)– Credit risk analysis (report)– Family businesses (report/presentation)– Business support (presentation)– Access to finance (presentation)– Growth (report/presentation)– New businesses (presentation)– Mentors (presentation)– Manufacturing (report) 2

Presentation outline

• Profile of new businesses

• Business performance

• Growth

• Business capability

• Access to finance

• Obstacles to business success

• Business support

• Working for the public sector 3

4

Profile of new businesses

5

Definition of a new business

Based on one question:• A6) How many years has this firm been trading?

This includes under all ownerships and all legal statuses

– If trading up to three years, they were classified as a new business

11% of SME employers were new businesses; 7% in SBS 2010

3% were aged up to one year;

as in SBS 2010

6

How did new businesses differ from established businesses in terms of profile?

• They were smaller businesses:– Micros (1-9): 94%; 82% established businesses– Small (10-49): 6%; 16%– Medium (50-249): 6%; 3%

• They were more likely to be single site organisations (90%; 87% of established businesses)

• They were more likely to be private limited companies (58%; 51%), to be sole proprietorships (31%; 26%) and less likely to be a partnership (4%; 13%)

• They were less likely to be family businesses (52%; 63%)

• They were less likely to have registered for VAT (69%; 79%)

• They were less likely to have made a profit or surplus in the last financial year (61%; 73%)

7

Sectors with the highest concentration of business start ups

Base = all SME employers

8

Leadership

• New businesses were more likely to have just one partner/director (57%; 44% of established businesses)

• Although less likely to have any female partners/directors; they were more likely to be women-led (27%; 18%)

• They were more likely to be MEG-led (11%; 7%)

Starting a business: reasons/motivations

9Unweighted base (where involved with decision to start up business) = 236

• Main motives re: business opportunity:• Greater independence/own boss (29%)• Increase personal income/more money (29%)• Passion/challenge (27%)

• Main reasons re: no better choices:• Found no job suiting skills (27%)• Took redundancy (15%)• Poor working conditions in previous job (15%)

10

What would have made it easier to start the business?

Unweighted base (where involved with decision to start up business) = 236

11

Business performance

Numbers employed compared to 12 months ago

• By size, new businesses were more likely to have increased their workforce than established businesses in each size band; – Micro (33%; 15%

established)– Small (50%; 26%)– Medium (48%; 37%)

12Base = all SME employers trading for at least one year (bases shown in brackets). B1/B2

Numbers expect to employ in 12 months time

• Micro new businesses were significantly more likely to expect to increase their workforce than micro established businesses; – Micro (39%; 16%

established)

• Small and medium-sized new businesses were also more likely to expect workforce growth– Small (36%; 28%)– Medium (61%; 33%)

13Base = all SME employers (bases shown in brackets). B5/B6

Turnover now compared to 12 months ago

• Micro new businesses were more likely to have increased their turnover than micro established businesses; – Micro (48%; 24%

established)

• Also differences (but not statistically significant) amongst small and medium-sized businesses– Small (57%; 37%)– Medium (81%; 50%)

14Base = all SME employers trading for at least one year (bases shown in brackets). P2

Expectations of turnover in 12 months’ time

• Again, micro new businesses were particularly more likely to expect to increase their turnover than micro established businesses; – Micro (68%; 30%

established)

• Also more positive amongst new businesses that were small and medium (but, again, not statistically significant);– Small (65%; 43%)– Medium (81%; 54%)

15Base = all SME employers (bases shown in brackets). P7

16

Growth

Whether aim to grow business over the next 3 years

• Sectors in which business start ups were particularly aiming for growth include:– Information/

communications (100%)

– Manufacturing (98%)

– Other services (97%)

17Base = all SME employers (bases shown in brackets). F1

18

Planned activities that may lead to growth

Base = all SME employers. F3

19

Business capability

20

Business strengths

Base = all SME employers. F4

21

Innovation: Proportion that have introduced new or significantly improved products/services in the last 12 months

Base = all SME employers [half sample only] (bases shown in brackets). J1/J2

Higher than average in the information/ communications

sector (72%)

22

Innovation: Proportion that have introduced new or significantly improved processes in the last 12 months

Base = all SME employers [half sample only] (bases shown in brackets). J1/J2

Again, higher than average in the information/

communications sector (59%)

23

Exporting

• Lower levels of exporting amongst new businesses:– 15% sold goods or services or licensed products

outside of the UK; 19% of established businesses

• Although:– Greater than average in information/communications

(48%) and manufacturing (40%)

• 5% planned to export (3% of established businesses)– Main reason for not exporting was not having a

product/service suitable (66% of non-exporters)

24

Training

• Similar levels of training amongst new businesses:– 58% trained at all in the last 12 months; 60% of

established businesses– Greater than average in administration services

(78%) and other services (84%)

• 29% trained managers (32% of established businesses)– Main reason for not training managers was not

considering it a priority (54% of those not training managers; 58% of established businesses)

25

Technology

• New businesses as likely as established businesses to have access to broadband– 90% had access; 91% of established businesses

• New businesses were more likely than established businesses to seek general business advice (66%; 58%) and advice on regulation (68%; 63%) online

• 74% of new businesses had their own website (70% of established businesses)

26

Environment

• New businesses were less likely to have taken steps to reduce their environmental impact– 55% had taken steps; 68% of established

businesses– Increased to 82% of small new businesses (77%

of small established businesses)– Higher than average in the construction sector

(75%)

27

Access to finance

28

Whether sought finance in the last 12 months

Base = all SME employers (bases shown in brackets). H4

Higher than average in the information/ communications

sector (48%)

29

Finance sought

• New businesses and established businesses sought finance for similar reasons (mainly working capital, cash flow, 59%; 55%)

• New businesses were more likely to have sought a bank loan (58%; 46% of established businesses), but otherwise were similar to established businesses in this respect

• They were more likely to experience difficulties (58%; 45%) because of poor (18%; 7% of established businesses) or no credit history (19%; 2%)

30

Eventual outcome of application for finance

31

Relationship with the bank

Base = all SME employers (bases shown in brackets). H1

51% of businesses aged up to 3 years had

a good relationship with their bank; 62% of businesses aged over

3 years

32

Obstacles to business success

Obstacles to business success

• 79% of new businesses mentioned the economy as an obstacle (78% of established businesses)

• More of an issue for new businesses were:– Taxation, VAT, PAYE, NI,

business rates (63%; 56%)

– Cash flow (59%; 49%)

– Obtaining finance (55%; 36%)

33Base = all SME employers (bases shown in brackets). G2

Main obstacles cited :

34

Business support

35

Awareness of public sector organisations offering business support

Base = all SME employers (bases shown in brackets). K1

36

Whether sought information or advice in the last 12 months

Base = all SME employers (bases shown in brackets). K2

Higher than average in Transport, retail

and distribution sector (53%)

37

Information and advice sought

Advice• Both new businesses and established businesses are

most likely to seek advice on business growth (37%; 28%)

• Followed by financial advice for general running of the business (25%; 23%)

Information• Financial information for general running of the

business predominates (30%; 27%)• Followed by tax/national insurance law and payments

for new businesses (17%) and employment law/redundancies for established businesses (15%)

England and Wales only

38

Sources of information and advice

Advice• Accountants predominate for both new

businesses and established businesses (46%; 38%)

• Followed by consultants/business advisers for both new and established businesses (both 15%)

Information• Accountants also predominate (29%; 35%)• Followed by friends/family for new businesses

(16%) and banks for established businesses (10%)

England and Wales only

39

Use of business mentors

Base = all SME employers (bases shown in brackets). K15

38% of new businesses that had not used a mentor would be interested in doing so; 24% of established businesses

40

Types of business mentor used

Unweighted base = where used a business mentor (bases shown in brackets). K17

41

Working for the public sector

Whether expressed an interest in, or bid for, public sector contracts

• 13% of new businesses have expressed and interest in, or bid for, any contract advertised by the public sector (15% of established businesses)

• 21% have actually done some business for the public sector (27% of established businesses), increasing to 32% of new businesses in the business services sector

42Base = all SME employers (bases shown in brackets). L2

Have actually done any business for the public sector in the last 12 months:

Nature of work for the public sector

• 48% of new businesses that have worked for the public sector did so as prime contractor (55% of established businesses)

• They are most likely to have worked for local authorities (48%; 53% of established businesses), followed by the Health Service (17% for both new and established businesses)

• Awareness and use of websites advertising public sector tender opportunities:– Scotland: 43% aware of Public Contracts Scotland website;

64% of these have used it– Northern Ireland: 13% aware of the e-sourcing NI website;

16% of these have used it– Wales: 45% aware of Sell2Wales website; 45% of these have

used it 43

Thank youFor further information contact:

June Wiseman, Steve Lomax, Emma ParryBMG Research LtdTel: 0121 333 6006

www.bmgresearch.co.uk