Entrepreneurial spirit set to be alive and well in 2005

Dec 24 2004 by Nic Paton Print This Article

As many as one in five people are planning to start their own business in 2005, according to a survey.

The research by business recovery firm Begbies Traynor has suggested people are still attracted to the idea of going it alone, with one in five of the 500 people polled saying they planned to switch from full-time employment in the New Year.

But many still go into a new business without enough thought or preparation, the company has warned.

Of those intending to start up, nearly half - 48 per cent - already have had a business plan in place and have had it reviewed by a professional advisor.

Six out of 10 of the potential entrepreneurs said their main motivation was simply the thought of working for themselves, with one in ten citing a belief in their entrepreneurial credentials. Just under half said they planned to fund the business start-up through a loan, 23 per cent would rely on savings and 19 per cent planned to turn to friends and family for support.

Most of the entrepreneurs polled were, perhaps unsurprisingly, optimistic about their prospects, with six out of 10 believing it will take them just two years to make a profit. This is despite the fact that the average for a new business is five years.

More worrying was the lack of preparation among many of those polled. Some 16 per cent said they not thoroughly researched their market, with a similar percentage admitting they did not understand their legal duties as a prospective employer.

Only just over half were intending to hire a lawyer, with 81 per cent claiming to understand their company’s tax and accounting filing responsibilities. Around 84 per cent were planning to hire an accountant.

Begbies Traynor London partner Nick Hood said: “It’s great to see so many people taking the initiative and planning to set up their own business in 2005. However, I am concerned that some of these entrepreneurs appear unprepared.”

He added: “As business rescue experts, we see a significant number of businesses in trouble every year and key failings include having no business plan, insufficient market research and poor cash planning.”

Forty per cent of all new businesses failed in the first two years, and the figure could be much reduced if more followed these essentials, he argued.