Entrepreneurs start again after Business Failure
Almost nine out of ten British business owners would set up a new venture of their current business failed – in spite of the economic climate.
A Barclays Local Business poll of 503 business owners revealed that 87% said they would be keen to start another business should their existing enterprise go under. The poll revealed that the majority would also only wait an average of only four months before getting started with their new venture.
Recent research from credit ratings firm Equifax found that the number of UK businesses going bust increased by nearly a third (29%) in July, compared with the same month last year. Barclays Local Business marketing director John Davis said:
“The UK’s small business owners are operating in more difficult conditions at the moment and, unfortunately, as the credit crunch begins to bite, there’s a risk that some entrepreneurs will find their livelihood under threat,”.
“However, it’s heartening to know that their desire to ‘bounce back’ from failure is so strong. It takes determination, commitment and tenacity to run your own business, and these qualities clearly stand entrepreneurs in good stead if they’re forced to start all over again.”
According to the Barclays research, entrepreneurs learn valuable lessons if they have been through a business failure. The survey found that 73% of entrepreneurs believe they would be less likely to make the same mistakes again next time around, while 31% believed that business failure would make them more risk–averse.
Chief executive of the National Federation of Enterprise Agencies (NFEA) George Derbyshire agreed that business owners could benefit from the experience of their business going under.
“Experience shows that many successful entrepreneurs have a history of previous ventures behind them. There is no question that previous experience of running a business, either directly as an employee of a small business or through businesses in the family circle, is a positive contributor to success.”
However, Derbyshire urged all entrepreneurs, regardless of their previous trading history, to do their homework.
“Embarking on a new business is not something to be taken lightly. Adequate preparation, in terms of planning, reviewing your skills and listening to trusted advisers is very important.”
Commenting on the research, Simon Underwood, partner at insolvency practitioners Benedict Mackenzie, said there is currently no restriction on ex–company directors setting up new businesses, as long as they had not been convicted of adverse conduct under the Company Directors Disqualification Act (478k PDF).
“Equally, there is no minimum time frame that might restrict entrepreneurs from setting up new businesses,” said Mackenzie.
“One area to consider is the re–using of company names,” he added. “If a director is involved in a company with the same trading name going forward, you will need consent from a court, or have notified all creditors. If those conditions aren’t met, and that company fails, it’s a criminal offence, and directors could become personally liable.”
For more information on insolvency procedures, visit the Insolvency Service website