GraphicSprings has analyzed data from the Global Entrepreneurship Monitor to find out the percentage of 18-64-year-olds who indicated that fear of failure would prevent them from starting a business. In 42 of the 54 countries analyzed, at least 30% of wannabe entrepreneurs said they were scared to take the plunge. You can view the interactive piece here.
To delve into this deeper, GraphicSprings decided to conduct a survey to find out what people’s biggest fears are when it comes to starting a business.
Having a great business idea and actually seeing it through are two very different things. Unfortunately, many great ideas never become a reality, with various fears often preventing aspiring business owners from starting up. The top five fears cited by those who were surveyed are:
- Financial insecurity (31%)
- Start-up Costs (25%)
- The stress of running a business (21%)
- The current political climate (11.6%)
- A lack of self-confidence (11.4%)
Financial insecurity came out as the top fear, with people from the US (32%) slightly more fearful of this than Brits (30%), and with an average of 26,000 businesses going bankrupt each year from 2013 to 2017 in the US, it’s easy to see why.
Start-up costs are the second biggest fear for those wanting to start a business, with 1 in 4 people stating this as a top concern. According to one study, when taking into account incorporation costs, accountants’ fees, some legal costs, HR overheads, and general administration, the average UK startup spends £22,756 in its first year. This does not include the money spent on business-specific activities, such as buying stock or developing a product.
Over a fifth of respondents cited stress as a major fear when it comes to starting a business. Further research suggests entrepreneurs stress more about running their business than raising their kids, with many business owners stating that their workload often affects their sleep. In fact, 42 percent of millennials have reported they have had a nightmare about their business failing.
Other notable fears include political climate, with 11.6% of respondents overall selecting it as a top fear. When broken down further, we found that Brits were more concerned than wannabe entrepreneurs in the US, with 15% listing it as a fear. Factors such as Brexit are a likely influence, with two-thirds of UK small businesses that trade with the EU claiming that a ‘no-deal’ Brexit would have a negative effect on their ability to do business.
Lack of confidence
Another surprising fear that came top in our result was lack of confidence, with 11.4% of people stating this as a fear when it comes to setting up a new business. Further research suggests that women are more reluctant to start their own businesses compared to men, with self-confidence being the third biggest hurdle for women when starting up their own business.
Evan Fraser, GraphicSprings Marketing Manager comments “It’s a shame fear can hold people back from wanting to start their own business and being their own boss, however, there are definitely certain things you can put in place to ease fears like financial insecurities and startup costs. Having said that, it’s good to recognize these fears before taking the plunge because it helps you to plan and prepare. Hopefully, our findings will show people that these fears are not uncommon and shouldn’t put you off setting up a business.”
Entrepreneurial fear around the world
GraphicSprings also took this data on fear in entrepreneurship and mapped it geographically to find out which countries are most fearful and fearless when it comes to starting a business.
Most fearful country
The most fearful country when it comes to starting a business in the United Arab Emirates with 61% of 16-64s citing fear as a reason not to start a business. This may come as a surprise as a business set up in the UAE is easier than the rest of the Middle East and it only takes eight days and six simple procedures to start a company in UAE. For those brave enough to take the leap of faith, some of the top industries to invest in at the moment are construction, hair, and beauty, and real estate agencies to accommodate the growing wealth and lifestyle of Dubai and similar places.
Fear in the US
In the US, entrepreneurship plays a vital role in the growth of the economy, however, 33% of 18-64s cited fear of failure would prevent them from starting a business. While the failure rates for new startups are high, business failure rates are actually in a pattern of long-term decline. According to Entrepreneur, the rate that entrepreneurs in the US have failed has fallen by 30 percent since 1977.
For those who do have the entrepreneurial bug, then industries experiencing disruptive technological advancements are ripe for the picking. According to a report from inc, which looked at data on the fastest-growing sectors, as well as interviews with industry experts, investors, and entrepreneurs, industries including beauty tech and eSports are the best industries for a starting a business in 2018.
Fear in the UK
Across the pond in the UK, 36% of 18-64s indicated that fear of failure would prevent them from starting a business, but this hasn’t stopped everyone, as across all industries, the UK achieved Europe’s highest growth for startups over the last 5 years, with technology leading the way, according to reports.
Most fearless countries
Ecuador, on the other hand, came out as homing the people most likely to take a plunge into the business world with 30% of 18-64s listed as new entrepreneurs. This was followed closely by Guatemala, with 25% of the population listed as new entrepreneurs. These may not be the first places you would think of starting a business, but due to the lack of formal job opportunities, Ecuadorians are often spurred on to create their own opportunities by developing new and innovative businesses.