The age-old problem of accessing finance to set up a business is no longer the biggest obstacle to enterprise according to a poll of early stage start-ups, which overwhelmingly rated credit management as the key barrier.
The study, carried out by the Better Payment Practice Group, quizzed over 200 small enterprises about the main difficulties when starting and growing a business into a thriving success.
A similar small business enquiry by Enterprise Insight, the group behind the forthcoming Enterprise Week, recently found half of young people with a good idea failed to implement it due to trouble in accessing funds.
But respondents to the BPPG poll said credit management problems hampered start-up and expansion of their commercial venture more than anything else.
Over a third (35 per cent) said they suffered because of poor credit management, while just 19 per cent found accessing capital the biggest blight to their business.
A smaller number of early stage entrepreneurs said their biggest barrier was knowing how to get their idea off the ground, followed by those who suffered from finding it difficult to source ongoing business support.
Just over one in ten owner-managers complained they lacked the relevant skills for effective start-up and company growth, yet this was the least cited reason for difficulty in starting and running a business.
The BPPG also called on employee’s views about the challenges new entrepreneurs face, revealing that the majority perceive accessing finance to be the biggest barrier to start-up success.
These full-time workers said the second biggest barrier they detect for people to set up and run a business was credit management, proving that employees and young people feel the same about the toughest test for new entrepreneurs.
Richard Wilson, chairman of the BPPG, reflected: “Although business owners know from experience the restrictions that cash flow problems can place on a new or growing business, the survey highlights that employees and budding entrepreneurs do not realise the importance of credit management.
Taking a business idea forward is a rewarding experience, but entrepreneurs must ensure they have good credit management practices are in place to help reduce the risk of closure, resulting from late payment or bad debt, Mr Wilson added.
“We hope that entrepreneurs will take the advice from those already in business to take action in the early stages of business life to avoid problems in the future,” he said, alluding to BPPG’s free advice on credit management for start-ups.
Overall, findings from both business polls indicate new entrepreneurs or enterprising individuals must consider the longer-term vision of their enterprise dream – often achievable by listening to established firm owners and business managers.
“The BPPG suggests that those considering a new business venture enforce the essential techniques in credit management to minimise their exposure to slow payers and bad debts.”
Nov 10, 2005
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