Lack of funding discourages half of potential new businesses

Half of would-be business owners (51 per cent) are put off following their dream by a lack of capital, new research suggests.

Of the 2,000 UK adults surveyed, just 45 (2.25 per cent) said they wanted to start their own business but almost a third of them (32 per cent) hadn’t taken the first step because they had no idea where to start, while a similar proportion (30 per cent) didn’t have the confidence.

It’s easy to understand why so few people want to set up their own business; people like to feel secure in their job and being able to switch off outside of working hours.

Therefore, it’s little surprise that one in four didn’t want to lose job security, while 29 per cent couldn’t afford to lose their salary.

If they did actually put their business aspirations into motion, most would focus on food, opening either a bakery, sandwich shop or cafe (18 per cent).

Retail wasn’t far behind with 16 per cent, while six per cent would want to start up something leisure or technology-related.

Doomed to fail

There is a common misconception that half of all new businesses fail within 12 months, but the reality is that half survive at least five years, with a third lasting ten years or more.

Potential start-up owners’ funding fears are well founded, with a lack of bank lending one of the top reasons for new business failures. Separate research found that many businesses lack long term vision, with 61 per cent admitting they had little confidence in achieving three years consecutive growth.

Nick Breton, head of Direct Line for Business, which published the survey’s findings, said: "It’s clear Brits are looking to turn their passions into professions, as cooking and crafting are deemed more popular than businesses that focus on technology for example.

"Funding is key to starting a business, but good advice and support is just as crucial to help new start-ups launch their business and build for the future."