Starting a new business is both challenging and exhilarating, often in equal measure. However, setting up a business is invariably the easy part. Entrepreneurs need to grow their companies, scale them, or simply keep them running. The sad fact is, many small businesses fail before they really get started.

A report from the London School of Economics predicted that more than 900,000 UK small businesses were ‘at risk’ of failing by April 2021 as a result of the pandemic. Whilst this equates to 1 in 7 businesses, small business success rates didn’t fare any better before the UK economy was subjected to numerous lockdowns and restrictions.

In fact, a 2019 article published in The Telegraph, reported 1 in 5 of all small businesses will fail in their first year, with 60% failing within the first three years of business.

The UK’s small businesses landscape

Setting up a small business in the UK is extremely attractive for many entrepreneurs based on a strong legal system, relative political stability now that a Brexit deal has been finalised, and the fact that English is spoken by around 20% of the world’s population.

According to The Federation of Small Businesses (FSB), at the end of 2020, there were 5.9 million small businesses, an increase of 1.9% on the previous year. However, where the UK falls behind is when it comes to helping those small businesses and start-ups to grow.

While the Organisation for Economic Co-operation and Development (OECD) ranks the UK third in the world for the rate of business start-ups, we are only 13th when it comes to helping them scale and grow.

According to the Office of National Statistics, in 2019, London had the highest business birth and death rates. The largest proportion of failed businesses were in the professional, scientific, and technical industries, with management consultancy activities making up 40.2% of the business deaths.

Why do small businesses fail?

A survey by CBInsights that covered employees and founders from 101 start-ups analysed the reasons why those companies failed.

  • There was no market for the services on offer (42%)
  • Ran out of money (29%)
  • Inexperienced team running the business (23%)
  • Competition was too great (19%)
  • Pricing and cost issues (18%)
  • Poor product offering (17%)
  • Lacked a business model (17%)
  • Poor marketing (14%)
  • Ignored customers (14%)

Other reasons a small business might fail early on is:

  • It is targeting the wrong market
  • Staff are demotivated
  • Business owners are overwhelmed
  • The business lacks understanding of vital business concepts
  • It doesn’t value or use the right sort of data and KPIs

What support is available for small businesses?

Local authorities have received and distributed funding to help small and medium businesses in England during coronavirus, but there seems to be little support for start-ups or information about financial assistance from the government to get businesses off the ground. In the wake of Brexit, the UK has also lost several EU-funded programmes for start-ups and SMEs, such as the New Enterprise Allowance.

However, financial boosts are not the only way to ensure a small business thrives, especially if business owners don’t know how the money should be spent on the business.

Knowing which areas of the business are underperforming is vital to the growth and development of any company. However, small businesses don’t know what they don’t know, often finding it near impossible to identify weaknesses and troubled areas without 3rd party support. This is why many entrepreneurs turn to business advisers, strategists and accountants for help, due in no small part to their critical knowledge gaps and time restrictions.

With around 63,000 business consultants in the UK and 81% of the consulting turnover related to services offered for the domestic market, there is a wealth of advice and support out there for small businesses.

However, identifying the cause of business inefficiencies or slowed growth is only half the story. Small businesses need actionable solutions and quick resolutions if they hope to overcome the known and unknown pitfalls of their particular industry.

How Hubbix can help advisers and small businesses 

Hubbix helps the adviser to identify all of the knowledge gaps and vulnerabilities a business might have by asking the right questions to get a clear and accurate picture of where the business is at, at that moment in time. All of the important questions that surround the 8 main areas of business are addressed:

  1. Offering – review existing services, products and opportunities
  2. Goals – explore KPIs, business standards, and exit strategies
  3. Management – understand team structures and identify roles, functions and future investment opportunities for the business
  4. Administration – establish effective operations around HR, Health and Safety, Quality Control and other operational functions
  5. Finance – implement a finance plan and bookkeeping strategy before reviewing profit and loss within the business
  6. Risk – review and implement insurance policies, computer systems and mitigation strategies
  7. Marketing – conduct customer research and competitor analysis before establishing a brand strategy and online presence
  8. Sales – create effective sales funnels, CRM systems and evaluate performance

By asking the important and ‘high risk’ questions early on in one or all of these areas, any issues, weaknesses or pitfalls are quickly detected and communicated to the business before the situation manifests into a costly one. With traditional advising, these issues are often not foreseen and/or not enforced by the business owner.

By counteracting vulnerabilities and identifying opportunities, the Hubbix Strategy Builder produces an Action Plan which offers the client actionable tasks in priority order. It takes businesses from damage control to damage prevention, ultimately saving a lot of time and money in the long run.

While some business owners might choose to up-skill – to address and work on business issues themselves – they can also choose to use professional services to help with a specific problem.

Overall, business advisers or accountants using the Hubbix software will help their clients set actionable goals, improve processes, and increase productivity and performance, meaning every business advice session will be easy to structure and target current or long-term issues.

For further information, support and guidance, please contact us.

See how Hubbix can save you time and make you more efficient