Growing a new business in an uncertain world

Entrepreneurs and small business owners are the engine of the UK economy. SMEs account for 99% of the UK’s business population, or almost 5.7 million companies, making their success fundamental to the wider economy.

 

However, today’s climate doesn’t make it easy. Inflation, higher borrowing costs, global instability and ongoing economic uncertainty continue to weigh on confidence and investment decisions. According to research by The Harris Poll on behalf of Shopify, 27% of UK founders cite economic uncertainty as their biggest barrier to growth, placing Britain among the most pessimistic of the 5 markets surveyed.

 

Founders are not deterred, though; 85% would start a business again today, while nearly nine in ten say they would reinvest in new businesses if the policy environment made it easier.

 

Clearly, the UK’s founders do not have an ambition problem. Their issues instead stem from a lack of support, and they need all the help they can get to overcome the barriers in their way.

 

 

The barriers facing founders are changing

AI-powered commerce has lowered barriers to entry and made it easier than ever to launch a business. Entrepreneurs can now use AI tools to create content, build storefronts, automate customer service, generate product descriptions and analyse customer behaviour at a fraction of the cost previously required, reducing the time, expertise and upfront investment needed to get started.

 

For years, the focus of the entrepreneurship conversation has been on helping more people start businesses. That’s clearly still important, but the findings suggest the challenges are expanding beyond simply starting.

 

Scaling a business is another matter entirely. Growth requires both established investment and access to opportunity, all of which become harder to secure during periods of uncertainty.

 

This is why understanding the practical barriers facing SMEs matters. Supporting business creation is only part of the equation. Creating the conditions that allow businesses to expand, invest and compete successfully is what ultimately drives wider economic growth. Those 5.7 million businesses previously mentioned have an estimated combined revenue of £2.8 trillion. Their economic value cannot be ignored.

 

 

Customer acquisition has become a growth challenge

While economic uncertainty dominates much of the conversation around SMEs, many founders are grappling with the more immediate challenge of finding customers.

 

More than one in five UK founders (21%) say finding new customers or sales is now a key barrier to growth for them. That figure is significantly higher than in Germany (8%) and Canada (11%), suggesting UK businesses are facing particular challenges when it comes to accessing demand and growing their customer base.

 

This problem should not be viewed as simply a commercial issue for individual businesses to solve. Customer acquisition sits at the heart of growth. Businesses invest in new products, expand into new markets and hire new employees when they have confidence in future demand.

 

 

SMEs are looking for practical support to scale

A vital way to stimulate growth is by attracting and nurturing the right talent, so it is critical that the UK preserves its homegrown entrepreneurial talent. In an increasingly competitive global economy, countries cannot assume entrepreneurial talent and innovation will stay put. The UK needs to create the conditions that encourage businesses not only to start, but to grow. 

 

Initiatives such as the government’s Backing Your Business plan, alongside the introduction of the Regulation for Growth Bill announced in this year’s King’s Speech, are promising signs that the government is looking to create the conditions that help businesses innovate and scale.

 

The opportunity now is to continue building an environment where ambitious businesses have the tools and support they need to scale successfully.

 

Support doesn’t necessarily have to mean funding. Founders’ priorities are practical and focused on removing barriers to growth. While two in five (41%) said they want better access to grants and low-interest finance, almost a third (31%) specifically called out a need for streamlined regulatory processes that can cut the red admin load on their business.

 

Taken together, these findings call for rational policies that make growth easier to achieve in practice. Giving founders access to the skills, training and tools they need to grow, while making it easier for businesses to innovate, can be just as important.

 

Reducing unnecessary complexity allows founders to spend more time focused on customers, innovation and long-term growth. In turn, by cutting barriers, the chances of entrepreneurs repeating their successes can increase.

 

 

Reinvestment can unlock repeat growth

Entrepreneurship rarely ends with a single venture. Nearly nine in ten respondents said they would reinvest in new businesses if the policy environment made it easier. Founders who build successful businesses accumulate experience, networks, capital and confidence. Those assets often flow into future businesses, creating more jobs, more economic growth and potentially inspiring and supporting the next generation of entrepreneurs.

 

Despite ongoing uncertainty, founders continue to demonstrate a willingness to build and invest in their country. The key now is ensuring they have the conditions needed to grow.

 

Helping SMEs access finance, reach customers, reduce unnecessary friction and reinvest in future ventures is not simply good for entrepreneurs. It is critical to drive the UK’s long-term competitiveness. 

 

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Deann Evans is Managing Director, EMEA at Shopify

 

Main image courtesy of iStockPhoto.com and marrio31