Redundancies and innovation drive small business startups

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New research from specialist small business insurer Hiscox finds that: - 17% of UK startups launched as a result of redundancy and, - 77% of small businesses were created based on improvements to existing ideas

“Starting up can be daunting, but if you work hard, understand your risks and keep your self-belief, you can succeed.

With unemployment rates at 7.7% in the U.K., new research by specialist business insurer Hiscox has found that 17% of small businesses were established following a redundancy, demonstrating an opportunity in adversity. It also found the majority of startups are not original ideas, but are based on new approaches to existing businesses.

Key findings from the research:

  •          Being your own boss and living the dream: Almost half (48%) of small business owners cited either being their own boss or living their dream as the reason for taking the risk and starting their own business, with 28% wanting to be their own boss and 20% wanting to live their dream.
  •          Not new, just better executed: 77% of small business owners and operators surveyed said that their business idea was not new, but an improvement on existing offerings. Almost half (47%) reported that offering a higher quality of service or product than their competition was their key differentiator - rather than lower prices. A further 22% differentiate themselves by investing time in meeting face-to-face with clients. However, for startups there was a low investment in R&D (5%) and even less in marketing (2%).
  •          Million dollar idea: Almost a quarter (22%) believed they had a 'million dollar' idea when founding their business. After taking the leap, nearly two-thirds (61%) now feel confident or very confident that their business is indeed the 'million dollar' idea.

“Our research shows that entrepreneurs are starting businesses to take control of their future, whether they have experienced a redundancy or want to pursue their dreams. They don’t always need to reinvent the wheel, but offer a fresh perspective on an existing idea – it’s often about hard graft and differentiating yourself from the competition,” said Alan Thomas, small business insurance expert at Hiscox.

“Starting up can be daunting, but if you work hard, understand your risks and keep your self-belief, you can succeed. When it comes to risks, it is important that small business owners use proper planning to protect their million dollar idea while they grow their businesses.”

Hiscox has launched Leap Year, a new comedy web series about 5 friends turned entrepreneurs each experiencing the highs and lows of starting their own businesses. Click here to watch the latest episode: http://www.hiscox.co.uk/leapyear

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Johanna Boland
Hiscox
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