Being Your Own Boss: Does the Hype Match the Reality?
Despite the reality and hard graft of owning your own business, you can’t seem to kill the UK’s entrepreneurial spirit. But what motivates Brits to start up on their own despite set backs? Read on to discover the challenges businesses face and how to overcome them.
From Richard Branson and James Dyson to Alan Sugar and Ella Mills, Britain is famed for inspiring business leaders. After making it to the top, they endorse, influence, and if desired, turn their hand to thought leadership and public commentary, having earned their position in the upper echelons of the British entrepreneurial elite.
Inspired by their example, more and more Brits are trying their hand at starting their own career as entrepreneurs. In 2020, 726,000 new businesses were founded in the UK – that’s a 14% rise on the previous year.
But is there truth behind the media portrayal of what it is like to run your own business? Does the glamorous image of the celebrity CEO epitomised by the likes of Deborah Meaden, and Duncan Bannatyne on Dragon’s Den match up with the day-to-day reality of running a fledgling business? And is being your own boss really synonymous with the hiring and firing superpowers of Alan Sugar on The Apprentice?
We surveyed 500 business owners and managers to find out what starting a business is really like. Read on to discover the biggest challenges they faced – and how you can give yourself the best chance of overcoming them.
Media glamorisation has its positives
Entrepreneurs surveyed largely agreed that the popular portrayal of being a business leader is more than a little rose-tinted: 91% of them said that being your own boss is glamorised in the media.
But not everyone sees this as a negative. A total of 49% of those surveyed thought that media idealisation plays a valuable role in encouraging prospective entrepreneurial talent, while 47% said there was enough truth in media portrayals for them to be a useful guide, even if certain elements are distorted. Just 11% of participants agreed with the statement that media glamorisation is ‘unhealthy’.
The emerging picture is one of healthy scepticism. While media narratives about running a business may not be entirely accurate, a savvy observer can still take inspiration from them – as long as they separate the valuable advice from the more exaggerated elements.
Our survey also suggests that new talent is entering the world of business as a direct result of media portrayal. Of course, whether that’s a good or a bad thing ultimately depends on whether these newcomers find success.
The real challenges
This all raises the question: what are the sometimes inconvenient realities of running your own business that the media is glossing over? We asked our survey participants to share the trickiest challenges they faced.
According to our results, the first challenge business owners had to overcome was securing financial backing – 52% of respondents said funding was a significant roadblock for them when starting up their business. But it wasn’t the only financial consideration to figure prominently: 40% of those surveyed said that once their business had secured financial backing, growing it to the point of profitability was also a big challenge.
Furthermore, 31% of business leaders highlighted difficulties in choosing the best business insurance, and 52% found it challenging having to compromise on personal financial commitments while setting up their own business.
Unsurprisingly, the COVID-19 pandemic also ranked highly on our list, with 37% of respondents citing it as a major challenge. According to a survey by the LSE’s Centre for Economic Performance (CEP) and the Confederation of British Industry (CBI), sweeping changes to the world of work meant that 60% of UK firms adopted new digital technologies, such as remote working software, and roughly a third added new digital capabilities, notably e-commerce and improved analytics.
This rapid switch to a digital-first way of working impacted companies in all sectors, with 34% of surveyed business owners citing it as a challenge. Meanwhile, businesses reliant on footfall saw their margins dented by lockdowns and enforced social distancing.
Despite the pandemic’s dramatic global impact, financial concerns trumped COVID-19 in terms of what new businesses saw as their biggest challenges, underlining how crucial securing finance is in those critical early stages of setting up and growing a business. Fortunately, there’s plenty of support available. At NerdWallet we provide detailed product comparisons and wide-ranging money advice, enabling entrepreneurs to make informed decisions on business loans and insurance products
Among the toughest realities our respondents faced was the challenge of juggling work commitments with their personal lives.
For 47% of business owners surveyed, the demands of work often took precedence outside of the normal nine-to-five schedule, spilling into evenings and weekends. Similarly, 37% of those surveyed said that they had to regularly miss out on family time, while 43% told us that they were forced to prioritise work over personal commitments.
The media portrayal may be that of ultimate flexibility and being in charge of your own diary but being your own boss is hard work. Entrepreneurs need plenty of commitment and discipline – especially when the business is new and they’re having to wear many hats.
This is particularly important when you consider the resources available to most UK business owners. While the media presents an image of entrepreneurs supported by tens, or even hundreds, of employees, the reality is that over 75% of UK businesses operate without staff, leaving the entire workload on a founder’s shoulders, according to the FSB (Federation of Self Employed and Small Businesses). Even if owners outsource tasks or responsibilities to third parties, they are ultimately still accountable.
Balancing these responsibilities with a personal life is never easy, and sometimes it’s just plain impossible. So, it’s understandable that 92% of respondents felt guilty about times when they were forced to put their work first.
The holy grail of a perfect work-life balance was predictably elusive: just 2% of those surveyed said they never had to prioritise work over family.
Overcoming the challenges
Not only were respondents forthcoming about the challenges they faced, they also shared their tips on how to get around them.
Be prepared to compromise
Respondents displayed a nuanced attitude towards personal financial compromise. While the necessity of putting a lot of money into the business – and thus having less to spend on leisure, friends and family – was the biggest compromise for 52% of those surveyed, it’s also the case that 57% were ‘very’ willing to put their personal finances on the line to see their dream business become a reality.
Our survey revealed an attitude of justified risk-taking among British entrepreneurs, where the benefits of risks are weighed against the consequences if they don’t pay off. This involved some significant compromises, with 33% of participants reporting:
- Living from paycheck to paycheck.
- Borrowing from friends and family.
- Taking on a major loan.
- Putting their life savings, mortgage or house on the line.
- Relying on credit cards.
- Not turning a profit in year one.
It’s an unfortunate reality that most new businesses fail: roughly 10% in year one and close to 60% in the first five years, according to data on businesses launched between 2014 and 2018 from the Office for National Statistics.
Of course there’s arguably no such thing as total failure, and even when a business endeavour doesn’t work out, everyone involved gains valuable experience that they can take with them into the future. Nevertheless, it’s crucial that entrepreneurs keep risks fully in view and don’t overcommit themselves financially.
Resilience: protecting the entrepreneurial spirit
There’s no shortage of stories of business leaders tasting failure before making it big. Alan Sugar famously failed an aptitude test with IBM before going on to launch his own company and take significant market share in the home computer sector. In keeping with this wisdom, 44% of respondents said that the advice they would give to new business owners is to learn from their mistakes and come back stronger.
So, what practical tips can you follow to foster a resilient attitude? The common theme among the business leaders surveyed was looking after body and mind. Some 40% of respondents said exercise helped them pick themselves up after a setback; 37% opted for wellness and self-care; and just over a third (34%) said the best bet is to take some time away from the business, which could range from a brief holiday to a complete change of direction and rethink.
Get expert advice to understand the risk
Though 16% of respondents had a business degree or qualification, the majority went into their ventures without previously receiving any formal business training. So, where did they go for advice?
Generally, they turned to the experts. The most popular choice (54%) was seeking counsel from a financial planner or adviser. Other sources of advice were banks/insurance providers (43%), business/trade publications (42%), and mentors/coaches (38%).
Despite high profile business owners gaining quasi celebrity status and a platform from which to share their wealth of knowledge and advice, just 28% of respondents said they got their business tips from celebrity CEOs including influencers or Instagrammers. Though that’s just over a quarter of people, it’s still fewer than the number of respondents who sought advice closer to home, with 40% turning to friends and family as their first port of call.
Our survey reveals that UK business owners are savvy when it comes to media depictions of celebrity entrepreneurs. They understand that the reality is more challenging, with significant obstacles – some foreseeable, some not – that tend to get left out of popular narratives.
Yet the overriding mood was one of positivity. Responses showed that Brits are up for the challenge of starting their own business. More than that, they’d do it all again – even knowing in advance the problems they’d have to contend with.
Clearly, a resilient approach can be a strong bulwark against repeated setbacks. Compromise is also crucial: entrepreneurs should make sure any regrets about missed opportunities are outweighed by the satisfaction of seeing their business benefit. These traits, tempered by a sensible attitude towards risk, give business owners the best chance of success.
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Disclaimer: The market research was carried out between 9th – 20th July 2021 via an online survey by market research agency, 3Gem. The survey was run to a representative sample of 500 business owners and board level directors, in companies of 5 + employees.
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Finance Director at NerdWallet UK and business adviser to SME's Nic is spokesperson for small and growing businesses with a strong understanding of the financial needs of business Read more