Description
An Optimistic Outlook The Hiscox DNA Of An Entrepreneur Report 2015
An optimistic outlook
The Hiscox DNA of an Entrepreneur Report 2015
A new air of confdence pervades our seventh annual DNA of an
Entrepreneur Report. Nearly two-thirds of the small businesses we
spoke to are optimistic about the year ahead – they are innovating,
expanding and exporting with real success. Where last year’s report
showed encouraging signs of recovery, this year’s shows a genuine
sense of buoyancy in many of the countries we surveyed.
We see this frst-hand from the 268,000 small businesses we insure
worldwide, who together have a turnover in excess of £42 billion.
Combined, our small business customers have increased turnover by
18% year-on-year through a combination of hard work and determination.
Innovation is a particularly prominent theme this year. The rate of new
products and services launched by small businesses has picked up
markedly in the past year – and is set for further acceleration in the
coming year. This is particularly heartening given that the part that small-
and medium-sized businesses have to play in global innovation is well
chronicled. They are a nursery for new ideas. With the freedom to pursue
innovations that might never be sanctioned in a bigger company, small
businesses consistently generate a disproportionately large number of the
new patents granted globally each year and as that continues so does the
chance that today’s micro-business becomes tomorrow’s top corporation.
Of course, not all in the garden is rosy. Many smaller companies
still feel swamped by government bureaucracy, crippled by high
taxation and constrained by infexible labour laws. Policymakers
should take heed. Small businesses are an important growth
engine and in the current economic climate must be encouraged
by what is possible rather than dissuaded by red tape.
Our fndings gauge the hopes and fears of the small business sector,
lay bare its biggest concerns and set out its agenda for supportive
change. From the small businesses we insure worldwide, we know that
the people we cover are as important as the businesses. Understanding
their challenges, opportunities, wants and needs helps us to provide the
products and services they need – both now and in the future. In the
same vein, our hope is this report is also valuable for others involved in
supporting, analysing or nurturing the vital small business community.
Bronek Masojada
Chief Executive Offcer, Hiscox
Foreword
Innovating for growth
Optimism levels reach three-year high.
As many as 62% of small business owners
and managers say they are positive about
the year ahead when it comes to their
business prospects. US respondents are the
most positive at 69%, while the Dutch and,
remarkably, the Spanish are not far behind,
at 65% each. Only in France are the optimists
in the minority at 43%, with no movement
in optimism levels in three years. The feel-
good factor of running your own business is
most keenly felt by UK and US respondents,
with 40% and 45% respectively saying
they feel better off than a year ago.
Innovation is the self-help solution. Small
businesses are increasingly viewing innovation
as the best form of self-help. The proportion
launching a new product or service has grown
from 36% to 41% in the past year and for the
year ahead, just over half (51%) say they are
planning to introduce a new product or service.
The urge to innovate is particularly strong
among frms that export, with two-thirds (65%)
having introduced a new product or service in
the past year and 72% planning to do so in the
year ahead. Innovation, expansion and exports
are enabling many to capture the upswing.
Revenue growth is accelerating… but proft
growth is patchy. Almost two-thirds (65%) of
frms have experienced sales growth in the past
year and a quarter (25%) report double-digit
sales growth. The proportion seeing double-
digit growth in their order book or workload
has also risen, from 15% to 24%. However, a
signifcant minority of small frms in Spain, the
Netherlands and particularly France continue to
see no growth in proft. The improvement in all
three economies is relatively recent and may be
taking time to flter down to smaller businesses.
No signs of a hiring spree yet. Nearly two-
thirds of frms (64%) report no increase in
employee numbers in the past year. Of the
six countries surveyed, small businesses
in Spain were more likely to have added to
staff numbers than any other nationality. For
the year ahead, almost two-thirds of frms
(64%) plan to stick with their existing staff
numbers and among the 22% that do plan to
hire, the majority have openings for juniors,
apprentices or interns – good news for school-
leavers and those entering the jobs market.
Government bureaucracy and direct taxation
remain key bugbears. Once again, these
two issues top the list of concerns in most
countries. The UK is an exception though,
with issues around the education system
coming frst. The top three demands from
small businesses overall are reduced direct
taxation, simpler and fewer accounting
rules, and stimulation of bank lending.
The US is seen as being the most
entrepreneurial country. For the frst time,
we asked each country which of the six
countries surveyed they thought was the most
entrepreneurial, and the results were almost
unanimous. Respondents in fve of the six
countries agreed it was the US. Spain came
bottom in all six countries… including Spain.
Executive summary
Pulses are beating faster
Optimism reaches three-year high
The tentative pick-up in sentiment in last year’s survey has fowered
into outright optimism in fve of the six countries surveyed.
Overall, optimism levels are at a three-year high,
with 62% of respondents saying they feel positive
about the year ahead for their business compared
with 57% a year ago and 52% two years ago. Only
in France are the optimists in the minority, with
no movement in optimism levels in three years.
The US looks to be the most buoyant, with 69%
of respondents saying they are optimistic – 7%
more than the global average. The Netherlands
and, remarkably, Spain are close behind at 65%
each. In both these economies the current reading
marks a dramatic turnaround from the picture
two years ago, and these fgures provide support
for the European Commission’s current forecast
of real GDP growth of 1.8% this year. This is
according to European Economic Forecasts,
published by DG ECFIN in spring 2015.
There is however a real distinction between
those businesses set up before and after the
2008 downturn, with post-recession businesses
thriving. Owners and managers of businesses set
up since the downturn in 2008 are signifcantly
more upbeat about their prospects than those in
charge of older businesses (70% for post-recession
businesses compared with 59% at older frms).
62%
52%
57%
All
59%
60%
61%
Germany
43% 43% 43%
France
51%
58%
64%
UK
60%
47%
65%
Spain
49%
52%
65%
Netherlands
57%
63%
69%
US
Optimism for the year ahead 2015
2014
2013
6 The Hiscox DNA of an Entrepreneur Report
Pulses are beating faster
Almost three-quarters of
frms (71%) report growth in
new customers in the past
year, compared with 59% a
year ago. US, German and
Spanish frms have been most
successful in gaining new
customers at 74% each.
Customer growth in the past year
67% Netherlands 68% UK 68% France 74% US
(71% All countries)
74% Spain 74% Germany
Revenue growth
is accelerating
Around two-thirds of frms (65%) have
experienced growth in the past year, and
a quarter (25%) report double-digit growth
in revenue (up from 16% a year ago).
Encouragingly, the number reporting growth
of 20% or more has doubled from 5% to 10%,
and the proportion seeing double-digit growth
in their order book or workload has risen from
15% to 24%.
Encouragingly, the number
reporting revenue growth
of 20% or more has doubled
from 5% to 10%.
Growth in proft is generally more muted.
One-in-three frms still report no growth
in proft, and in France this fgure rises to
43% of respondents. Across all six countries,
the numbers experiencing double-digit proft
growth have gone up in the past year from
15% to 22%.
Job opportunities for
apprentices and interns
The improved outlook has yet to translate into a hiring
spree at all levels. Nearly three-quarters of frms (73%)
report no increase in employee numbers in the past year,
similar to the previous year at 74%. Remarkably, a higher
proportion of Spanish frms have seen an increase in
employee numbers than any other nationality at 28%.
Spanish frms are also more likely to be hiring in the
year ahead, with 27% anticipating headcount growth.
A similar proportion of German, UK and US frms say
they are likely to hire new staff at 23%, 22% and 22%
respectively. In contrast, only 15% of Dutch frms plan
to add to employee numbers.
The best place to be an
apprentice or intern? Germany.
Among the 22% of small frms that do plan to hire in the
year ahead, 10% say they will be looking for junior people
and 9% say they will be taking on apprentices or interns
– good news for school-leavers and those entering the
jobs market. Only 6% are looking to fll senior positions.
More than half (55%) of frms who say they plan to take
on apprentices or interns will be paying them in full,
with a further 26% paying them their travel and other
expenses. Government schemes will ensure another
8% get payment or reimbursement of expenses. The
best place to be an apprentice or intern? Germany,
where 65% of frms will be paying them a full wage.
The UK is not far behind at 61%. In both cases, the
fgures are based on a small number of respondents.
23%
22%
All
19%
17%
Germany
15%
17%
France
22%
23%
UK
23%
24%
Spain
22%
26%
Netherlands
27%
28%
US
Hiring: past and planned Hired in past year
Hiring in year ahead
8 9 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Pulses are beating faster Pulses are beating faster
But do we feel any better off?
The uplift in optimism has yet to be accompanied by a general
feel-good factor among small business owners and managers.
On the plus side, the number who say they feel better off than
a year ago (36%) outweighs those who feel worse off (23%)
by a clear margin, but nearly two-in-fve respondents (38%)
say there has been no change in their fnancial situation.
Those who set up their business
since the 2008 crisis are more likely
to be feeling happier with life.
There are several indicators of increased wellbeing. For a
start, it helps if you are operating in the US or UK – economies
that have been in recovery mode for the longest time. Some
45% of US and 40% of British respondents say they are
personally better off than a year ago, while in contrast only
19% of French respondents say they are better off.
Bank funding getting more
diffcult on balance…
There is little evidence of easier access to
credit. Nearly a ffth of respondents (19%) think
that bank fnance has become more diffcult
to access in the past year. Just 7% say it has
become easier (rising to 11% in Spain) and
the remainder say it has stayed the same or
that it doesn’t affect their business (which is
the case for nearly half of the smallest frms
in our sample). Dutch and French frms are
the most negative on the availability of bank
fnance at 34% and 26% respectively.
Spanish, French and German
banks appear to be the most
supportive of small businesses.
Despite that, one-in-six respondents (16%)
say they have sought money from a bank
in the past year and a further 15% are
thinking of doing so in the year ahead.
Spanish, French and German banks appear
to be the most supportive; 25% of Spanish
respondents said they turned to their bank
in the past year, as have 22% of French
and 19% of German respondents.
…so more small business
owners get inventive when it
comes to accessing fnance
A clear indicator of the continuing squeeze
on lending to small frms is the fact that 15%
of small business owners and managers say
they have used their credit card to help fund
their business in the past year – and a further
8% are thinking of doing so. US and Spanish
respondents have been particularly keen to
borrow on their card, with 21% of respondents
in each country admitting to doing so.
US and Spanish respondents
have been particularly keen to
borrow on their credit card.
In addition, 10% have raised money from family
and friends (with a further 8% thinking of doing
so), 3% have turned to crowd-sourcing (with
9% more thinking of doing so) and 3% have
gone as far as remortgaging their house.
I am better off than last year
36%
Netherlands
33%
Germany
19%
France
40%
UK
45%
US
32%
Spain
In addition, it is clear that innovators who have launched
new products in the past year and fnd bank fnance
easier to access are more likely to say they feel better off.
Those who set up their business since the 2008 crisis
are also more likely to be feeling happier with life.
Owners and managers with the smallest businesses (those
with a turnover of up to £100,000) are having the toughest
time. Just over a third (34%) say they feel better off, but
almost a quarter (24%) say they are worse off. The sense
of prosperity generally rises with size of company.
Types of fnance sought in past year
5%
Government
(national or local)
and agencies
15%
Credit card
10%
Family and friends
16%
Bank
3%
Remortgaging
house
3%
Crowd
sourcing/peer-
to-peer lending
2%
EU
2%
Venture
capital
funds
10 11 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Pulses are beating faster Pulses are beating faster
Late payment cited as a big
problem across Europe
Late payment appears to be a particularly severe problem
in parts of Europe. In France and Spain nearly half of
respondents (47%) say their customers are paying later
than they were, and in the Netherlands and Germany the
comparable fgure is 43%. More than a quarter (27%) of UK
frms said late payment is a problem, despite repeated efforts
by government to increase transparency on large companies’
payment practices and toughen existing codes of practice.
French and Spanish respondents are
most likely to report cash fow problems
as a result of late payments.
Interestingly, late payment is cited by fewer one-person
and really small frms (those with between one and four
employees) than by bigger ones. Those businesses
that export are also more likely to be suffering from late
payment by customers than non-exporting frms.
More than half (51%) of those frms suffering from later payments
say it is having a ‘signifcant impact’ on their cash fow. A
further third (33%) say it is impacting ‘occasionally’. By country,
French and Spanish respondents are most likely to report
cash fow problems as a result of late payments (68% and
62% respectively), and by sector it is people in manufacturing
and leisure/catering who appear to be the hardest hit.
However, small companies are no angels. For the frst time we
also asked companies whether they were paying their suppliers
later than they were a year ago. Some 15% of respondents
said ‘yes’, with the biggest offenders being French frms where
nearly a quarter (24%) confess to paying later. Considerable
numbers of Dutch, Spanish and German respondents (19%,
17% and 16% respectively) also said they were doing so.
So what’s keeping them
awake at night?
Asked to select their ‘biggest fear for the year
ahead’, nearly a quarter of respondents (23%)
say they are concerned they might not be
able to attract new clients (the fgure rises to
27% among the smallest frms in the sample).
However, these numbers are down on the
previous year in all six countries surveyed.
UK and Dutch frms are the most concerned
about the fow of new clients (25% in both
countries, but less than the 28% and 32%
respectively reported for the previous year).
The second most widely mentioned concern
is not being paid by clients (cited by 17%
of frms). The possibility of not having the
resources to keep the business going ranks
third, mentioned by 11% of respondents.
A different picture emerges from France, where
17% of frms say their biggest fear is that they
will not have the resources to keep going.
UK and Dutch frms are
the most concerned about
the fow of new clients.
Concern at having to pass on cost increases
to customers is cited by 9% of respondents,
up from 8% a year ago, suggesting that
the defationary era is slowly passing. This
concern is particularly acute among bigger
frms in the sample (17% of frms with a
turnover of between £1m and £5m and 14%
of those with a turnover of more than £10m).
20% 20%
All
18%
19%
Germany
16%
14%
France
18%
21%
UK
20%
22%
Spain
23%
22%
Netherlands
23%
22%
US
Investment: past and planned Increased investment in the past year
Planning to increase investment in the year ahead
Paying suppliers later than last year
17%
Spain
11%
UK
19%
Netherlands
24%
France
10%
US
16%
Germany
15%
All
Steady pick-up in investment
One-in-fve (20%) increased investment in their
business last year and the same proportion
plan to do so again in the coming year. The
proportion of frms expecting to cut investment
in the coming year is 11%, which compares
with 14% who say they cut spending last
year. Nearly half of frms (48%) expect to hold
investment levels steady in the year ahead.
Investment levels
generally rise in line with
the size of business.
Spanish, Dutch and US frms are most
likely to have increased investment in their
business last year, and Spanish and US frms
are most likely to do so again this year.
In contrast, 28% of French frms say they
have not invested in the past year or the
year before and around a third (32%) are not
planning to invest in the year ahead. This
is disappointing for the French economy.
A quarter of the smallest frms in our sample
(those with a turnover of up to £100,000)
have not invested in their business in
either of the past two years and are not
planning to invest in the year ahead. This
indicates that investment levels generally
rise in line with the size of business.
12 13 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Pulses are beating faster Pulses are beating faster
What’s holding small
businesses back?
67%
Government bureaucracy is
a major barrier to setting up
a small business
28%
My country's recent/
upcoming elections will
result in more favourable
policies for entrepreneurs
53%
There are infexible labour
laws in my country
47%
Culturally, we're not inclined
to take risks in my country
64%
Our education system doesn't
encourage individual ideas and dreams
64%
Our taxation system does not
favour someone wanting to
set up their own business
How small businesses view their own country
Rules, regulations and tax
The message is clear; governments are
doing too little to help. Asked to agree
or disagree with a series of statements
about their own country, a substantial
majority of all respondents (67%) agreed
that ‘government bureaucracy is a major
barrier to setting up your own business’.
Complaints that ‘our taxation system does
not favour someone wanting to set up
their own business’ and ‘our education
system doesn’t encourage individual ideas
and dreams’ also ranked highly, being
cited by 64% of respondents each.
Nine-out-of-ten Spanish
respondents criticised their
government’s bureaucracy
and tax system.
There were, however, differing perceptions in
each country. Nearly nine-out-of-ten Spanish
respondents criticised their government’s
bureaucracy and tax system (89% and 88%
respectively). In France, similar proportions
cited the same two issues – but alongside
‘the infexibility’ of their labour laws (86% in
respect of each issue). Around three-quarters
of French respondents also cited an ‘education
system that fails to encourage individual
ideas and dreams’ and agreed that ‘culturally,
we’re not inclined to take risks in my country’
(cited by 77% and 76% respectively).
Concerns relating to the education
system were also mentioned by 73%
of German respondents and ranked
as the number one concern in the UK
(cited by 57% of respondents).
14 15 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
What’s holding small businesses back? What’s holding small businesses back?
Red tape still too onerous
There is general consensus that government
regulation consumes a disproportionate
amount of the average small business person’s
week. The bad news from this year’s survey is
that the problem appears to have got worse,
not better. The average amount of time spent
dealing with red tape is now three hours 13
minutes per week – up from two hours 55
minutes a year ago. The average is boosted
this year by a small rise in the number of
people saying they spend more than fve
hours a week on government regulation.
Only in Spain do people report spending
less time on this than the previous year.
The average amount of
time spent dealing with red
tape is now three hours
13 minutes per week.
UK and US small business owners get off
relatively lightly – spending less than two-and-
a-half hours a week on red tape. In contrast,
French respondents say they spend more than
fve hours a week dealing with regulation – a
fgure that has risen by nearly three-quarters
of an hour compared with the previous year.
Governments must do more…
Asked whether they believed their government’s
policies were supportive of entrepreneurs, only 30%
of respondents said ‘yes’ or ‘in most cases yes’.
The British are the most content with 45% believing their
government’s policies support entrepreneurship.
Larger companies are generally more
likely to say things have improved.
In contrast, just over two-thirds of French (67%) and 70%
of Spanish respondents say their government’s policies are
not supportive. Globally, a quarter (25%) of small business
owners and managers say ‘more can be done’.
…but there are
encouraging signs
Will governments heed the message?
There are certainly some encouraging signs.
Among those who see their government
as generally supportive, optimists far
outweigh pessimists (46% versus 10%).
Among those who see their government’s
policies as generally unsupportive, there
is a rough balance between optimists and
pessimists in most countries. The one
big exception is Germany. Here, 41% of
respondents expect things to get worse,
with only 7% saying they will get better.
Overall, the Spanish, followed by the
British, are most convinced things will
get better (35% and 32% respectively).
My government’s policies support entrepreneurs
14%
Spain
45%
UK
22%
Netherlands
13%
France
37%
US
32%
Germany
30%
All
There is a big divide when asked whether conditions
have improved in the past fve years. Nearly half (45%)
of those who believe their government is supportive
of entrepreneurship believe the political approach has
improved in the past fve years. The biggest proportion
of them are in Spain, the UK and France. Larger
companies (those with 20 to 50 employees) are generally
more likely to say things have improved. However, the
same proportion (45%) of those who say government
is not supportive believe conditions have got worse.
55%
Relaxing the
employment laws
71%
Financial underpinning
or stimulation of new lending
by banks to small businesses
74%
Simpler and fewer
accounting rules
83%
Reduced direct
taxation of businesses
43%
Subsidising training
courses and professional
development
Entrepreneurs’ wishlist
So what should
governments do to help?
Respondents were asked to choose from
a menu of government policy options
and rank the fve they considered most
important in encouraging small business
growth. As in prior years, the wish list
is dominated by three key changes.
DReduced direct taxation of business
(mentioned by 83% of respondents).
DSimpler and fewer accounting
rules (mentioned by 74%).
DFinancial underpinning or stimulation
of new lending by banks to small
businesses (mentioned by 71%).
There were, however, some country variations.
The French, Spanish and US respondents
were far keener to see lower direct taxation
of business. In France and Spain, relaxation
of the employment laws came a clear
second to lower tax in the wish list.
Time spent on red tape
France
Spain
Germany
Netherlands
All
US
UK
Two hours 55 minutes
Five hours fve minutes
Four hours 23 minutes
Four hours 10 minutes
Four hours 15 minutes
Three hours 46 minutes
Three hours 10 minutes
Two hours 49 minutes
Two hours 33 minutes
Three hours 13 minutes
Two hours 26 minutes
Two hours eight minutes
Two hours 24 minutes
Two hours 13 minutes
2015
2014
16 17 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
What’s holding small businesses back? What’s holding small businesses back?
More than half of frms plan to
launch new products or services
One of the more dramatic fndings of the survey is
the jump in the number of frms engaged in launching
a new product or service. Expanding the business
through innovation is seen as the way ahead for an
increasing number of small frms. A year ago, just 36%
of respondents had introduced a new product in the
previous 12 months, yet this year the equivalent fgure
is 41%. Now more than half (51%) plan to introduce
a new product or service in the year ahead. At a time
when funding remains scarce, and so many frms lack
confdence in their own government to support the small
business sector, this testifes to a determination to take
matters into their own hands and innovate to grow.
Bigger frms invest
in export markets
One-in-fve frms surveyed is now exporting
to other countries. UK frms are the most
likely to be exporting (25%), followed by their
French and Spanish counterparts at 23%
each. US frms are bottom of the list with
only one-in-eight (13%) saying they export.
Dutch frms are also less likely to export with
only 15% saying they export currently.
Only 16% of the smallest
frms export.
As with innovation, the propensity to export
rises with the size of frm in the survey.
Only 16% of the smallest frms (those with
a turnover of up to £100,000) export. By
contrast, half of those with sales of between
£5m and £10m say they export. This may
be a refection of the additional costs and
infrastructure required to penetrate overseas
markets. Manufacturers (46%) and retail/
distribution frms (36%) lead the way.
Among those that export, the highest
proportion of export sales is found
among French (34%), UK (32%)
and Spanish (32%) frms.
Go-getters combine
innovation and exports
There appears to be a direct link between
innovation and exports, reinforcing the
view that these are both indicators of more
aggressive, growth-oriented management.
Two-thirds (65%) of frms that export have
developed a new product or service in the past
year, and 72% plan to do so in the coming year.
Firms turn to self-help through
innovation and exports
51%
36%
41%
All
33%
35%
48%
Germany
29%
31%
44%
France
35%
40%
49%
UK
42%
38%
50%
Spain
33%
39%
50%
Netherlands
50%
61%
64%
US
Launching new products and services Year ahead
Past 12 months
Previous year
Expanding the business through
innovation is seen as the way ahead
for an increasing number of small frms.
Spanish frms are
the most innovative
Spanish respondents were by far the most
actively engaged in developing new products
or services in the past 12 months – with 61%
reporting the introduction of a new product
or service. In sectoral terms, retail/distribution
and manufacturing were the most innovative
globally – with 55% of the frms in these two
sectors innovating. The bigger companies in
our survey were typically the most active at
developing new products – 57% of those with
a turnover over £5m say they have innovated in
the past 12 months, compared with just 37%
of frms with a turnover of £100,000 or less.
Technology no threat to jobs – yet
Despite fears to the contrary, only 9% of frms say new
technology will allow them to cut staff numbers in the
near future and half of respondents say new technology
will not affect them. The proportion rises among the
bigger frms surveyed (those with between 20 and 50
employees). More than a ffth of these frms (21%) do
see technology as a path to headcount reductions.
Surprisingly, the sectors where new technology
appears the biggest threat to staffng levels are
marketing/communications (14% of respondents
here say technology will allow them to cut staff in the
near future), manufacturing (13%), leisure/catering
(12%), IT/media and fnancial services (11% each).
Most exporters are innovators too
72%
New products
planned for the
coming year
65%
New products
launched in
past year
14%
Marketing and
communications
13%
Manufacturing/
engineering
12%
Leisure/catering
11%
IT/media
11%
Financial services
Small businesses that export
15%
Netherlands
25%
UK
13%
US
21%
Germany
23%
France
23%
Spain
20%
All
18 19 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Firms turn to self-help through innovation and exports Firms turn to self-help through innovation and exports
Self-belief
More than half (57%) of respondents consider
themselves ‘an entrepreneur’ and nearly
half (48%) say they always thought they
would start their own business one day. Men
are signifcantly more likely to agree with
both statements than women. The Dutch,
Germans and French are keenest to label
themselves entrepreneurs (76%, 71% and
65% respectively), while the British are typically
shy and retiring with just over a third (35%)
wanting to assume the label of entrepreneur.
What makes an entrepreneur?
Nothing better came my way
More than one-in four-respondents (26%) say they started their
business ‘because I couldn’t fnd a suitable job’. The fgure is as
high as 37% in France and 31% in Spain. The proportion is also
somewhat higher among women (28% compared to 25% of men).
I started my business as I couldn’t fnd a job
21%
Netherlands 23%
UK
23%
US
26%
Germany
37%
France
31%
Spain
26%
All
I consider myself an entrepreneur
76%
Netherlands
35%
UK
56%
US
71%
Germany
65%
France
59%
Spain
57%
All
Key attributes
of an entrepreneur
Respondents were invited to pick out what
they considered to be the top fve attributes
of an entrepreneur. The ability to work hard
came well ahead of other strengths, with
determination ranked second and creative
thinking in third place. Interestingly, the ability
to delegate came bottom of the list – with just
one-in-fve (21%) respondents selecting it.
There were some interesting differences in
outlook between the different nationalities.
DThe French and the Spanish both
put ‘independence’ top of the list
(followed by the ability to work hard).
DThe Dutch also put ‘independence’
top with ‘creative thinking’ second.
DUS and German respondents were
both more likely to cite ‘ability to work
hard’ followed by ‘independence’
and then ‘determination.’
Perceived entrepreneurial spirit
Ranking by French,
UK and US respondents
Ranking by
German respondents
Ranking by
Dutch respondents
Ranking by
Spanish respondents
1. US 1. US 1. Netherlands 1. US
2. UK 2. Germany 2. US 2. Germany
3. Germany 3. Netherlands 3. Germany 3. UK
4. Netherlands 4. UK 4. UK 4. Netherlands
5. France 5. France 5. France 5. France
6. Spain 6. Spain 6. Spain 6. Spain
Perceived attributes of an entrepreneur
Determination
Creative thinking
Independence
Ability to make relationships
Intelligence
Experience
Patience
Courage
Ability to promote your business
Ability to manage others
Ability to work hard
Ability to delegate
63%
49%
43%
41%
39%
39%
39%
38%
36%
27%
66%
21%
Self-made, not inherited
Only one-in-fve (21%) say they were inspired by a parent who ran a business
– although the proportion is slightly higher among women (23%). US
respondents stand out with 41% of them saying they have been inspired by a
role model to start a business (compared with 31% across the six countries).
Once again, three-out-of-fve of respondents (59%) say that a university
education can be an advantage to someone running a business.
Spanish, US and German respondents were especially pro-university
education as the foundation from which to run a small business
(77%, 70% and 68% respectively). Again, the US respondents stand
out for having attended some form of formal business education
too – 46% of US respondents compared to 35% globally.
20 21 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
What makes an entrepreneur? What makes an entrepreneur?
Hard work, long hours…
Small business owners and managers are
a hard-working lot. Respondents said they
put in on average just over 42 hours a week
and nearly one-in-fve (18%) works more
than 60 hours a week. Extraordinarily, 1%
of respondents say they top the 90-hour
mark! Whether it is the result of improved
trading or increased challenges, respondents
say they are putting in an extra 19 minutes
a week on average than a year ago.
Men work an average of 44 hours a week,
while women reported an average of 39
hours. The difference may be explained by a
greater proportion of women working part-
time, though among one-person frms, many
may be keen to work longer hours. A labour
force survey in April this year by Eurostat
found that nearly ten million people in Europe
were ‘underemployed’. This means those
workers that are highly skilled but are not
being utilised to their full potential – either
because they are working in low paying jobs,
low skill jobs or part-time. More than two-
thirds of the ‘underemployed’ were women.
Weekly working hours
41
Netherlands
38
UK
39
US
45
Germany
47
France
47
Spain
42
All
Average number of days holiday a year
26
Netherlands
23
UK
10
US
22
Germany
24
France
20
Spain
20
All
…and it still beats working
for a multinational
Respondents were asked to rank fve benefts
of running or working in a small- or medium-
sized business compared with being employed
by a large company or multinational. Two-thirds
cited ‘more fexibility over working hours’, in line
with previous reports. This year it was followed
by ‘greater feeling of being in control of their
life’ (58%) and ‘ability to work from home/other
locations’ (57%).
The results are broadly similar across countries,
except that:
DAmericans put ‘opportunity to make
more money’ in the number three spot
Dthe French cite ‘less stress’ more
often than any other beneft
DGermans put the ‘satisfaction of
feeling I am able to infuence the
direction of the business’ second
Dthe Spanish cite ‘fexibility over working
hours’ more than any other nation.
…but longer holidays this year
Reversing previous trends, respondents say they have taken
nearly half a day more holiday in the past year than the year
before (just under 20 days compared with 19-and-a-half the
previous year). However, this is largely down to Dutch respondents
saying they have taken two additional days off in the past year.
Once again, the US take the shortest holidays – with an average
of ten days off. One-in-fve US owners and managers takes
no holiday! A further 13% take only one to four days off.
Spare a thought for le patron and el padrón
The typical French and Spanish small business owner or manager
is putting in far longer hours each week than most of his or her
counterparts in the four other countries surveyed at 47 hours
compared with the 42 hour average. So much for France’s
35 hour week. More French and Spanish respondents also
say they have missed one or more important social occasions
in the past year because of work commitments. In contrast,
the British put in 38 hours a week and the Americans, 39.
Sole traders and owners of the smallest businesses (those
with a turnover of up to £100,000) put in fewer hours than
their counterparts running bigger small businesses at just 38
hours. They were also signifcantly less likely to have missed an
important social occasion – suggesting that working for yourself
provides far greater fexibility. Some 11% of sole traders said
they worked fewer than 20 hours and a further 16% said they
worked less than 29 hours. In contrast, those running £1m-plus
turnover businesses put in an average of 47 hours or more.
22 23 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
What makes an entrepreneur? What makes an entrepreneur?
Smallest companies have the greatest exposure
By and large, levels of cover for
these fve key risks increase by
size of company. Only 26% of frms
with a turnover under £100,000
said they are covered for breach
of duty of care. In contrast, at
the £5m to £10m turnover mark,
more than half (53%) of frms are
covered. A similar disparity is
evident in all the other key claims
areas. However, levels of cover
among the very biggest cohort in
our survey – frms with a turnover of
£10m-plus – tend to fall away again.
Age also has a bearing on levels of
cover in four of the fve key claims
categories, with older respondents
signifcantly more likely to have taken
out cover. The one exception is
infringement of intellectual property
rights where younger respondents
(those aged up to 30 years old)
appear to have far more awareness
of the risks. Nearly one-in-three
(32%) has cover in this area while for
those aged 60-plus the comparable
fgure is less than one-in-six (15%).
Only 26% of frms with a turnover under £100,000
said they are covered for breach of duty of care.
Managing risks
Unnecessary exposure
As part of the report, we highlighted the fve most common
insurance claims made by Hiscox’ small business customers
(negligence, breach of duty of care, infringement of intellectual
property rights, theft and accidental damage/accidental loss)
and asked respondents if they were insured against them.
Worryingly, around a ffth of respondents say they do not know
whether they are covered for the frst three categories.
A ffth of respondents don’t know
whether they have insurance cover for the
areas where claims are most common:
negligence, breach of duty of care and
infringement of intellectual property rights.
In general, less than half of respondents say they have taken
out relevant cover – the exceptions being for accidental
damage (53% of all respondents) and theft (51%).
Big country-by-
country differences
Awareness of these fve key risks appears
to vary signifcantly by country.
DAccidental damage – with the exception
of the Netherlands (where only 45%
of respondents say they are covered),
half or more of all respondents say they
have accidental damage insurance.
DTheft – nearly two-thirds of French
frms (65%) say they are covered.
Spanish (63%) and UK (51%)
frms also rank highly here.
DNegligence – nearly half (47%) of UK
and German small businesses are
covered, but only 29% of Dutch ones.
DBreach of duty of care – again, UK
and German small business owners
and managers score highly (45% and
42% respectively), but more than half
of French (66%) and Dutch (57%)
respondents say they are not covered.
DInfringement of IP – this is an area of
very low take-up. Only around one-in-
fve UK, German, Spanish and US frms
say they are covered. More than 60% of
German, French and Dutch frms say they
are not covered. Nearly a quarter (23%)
of respondents said they do not know
whether they are covered here or not.
Common claims – are you covered?
53%
Accidental damage/loss
51%
Theft
39%
Negligence 32%
Breach of
duty of care
18%
Infringement
of intellectual
property rights
32%
Up to 30 60 and over
19%
50-59
46%
30-39
20%
42%
40-49
IP and theft coverage by age Infringement of intellectual property rights (IP)
Theft
54%
53%
15%
54%
17%
24 25 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Managing risks Managing risks
High levels of exposure to risk…
We also listed 11 common types of insurance and asked
respondents to select which types they currently have. The
results suggest small businesses are running unnecessary risks.
Buildings and/or contents cover is the most common form of
insurance cover, but even here fewer than half of respondents
(47%) are covered. Slightly fewer have public liability and
professional indemnity cover (44% and 43% respectively).
There is then a sharp fall in the numbers with cover for
personal accident (38%) and employers’ liability (29%).
Most worryingly, one-in-fve owners and managers
(19%) say they do not have any insurance at all.
One-in-fve owners/managers (19%) say
they do not have any insurance at all.
Unexpectedly, 29% of US frms are in this category. The
most complacent industries are IT/media and marketing/
communications, with 29% and 27% respectively saying
they are without any insurance. Predictably enough it is
the smallest frms that tend to be uninsured (28%), and a
third of one-person frms have no cover of any kind.
Non-payment by clients
tops list of uninsured risks
As in previous years, we listed a dozen key
risks and asked respondents which they saw
as major risks to their business that they don’t
insure against. The one most widely cited
was the risk of not being paid by customers.
This was mentioned by 43% of respondents
globally and by 46% of one-person frms.
Reputational damage and the threat of being
sued by a client/customer came next, cited by
22% and 21% of respondents respectively.
Growing awareness
of cyber crime
Hacking or cyber crime is mentioned by around
one-in-fve (19%) respondents and ranks as
the fourth most widely cited uninsured risk.
This confrms a trend in recent years which
has seen the number concerned with the
threat of cyber crime steadily rising. Despite
that trend, only one-in-12 respondents (8%)
said they have any form of e-risks cover
– though this fgure is signifcantly higher
in Spain, where 16% of respondents have
e-risks cover, and among fnancial services
frms generally, 15% of whom are covered.
Only one-in-12 respondents
said they have any form
of e-risks cover.
The World Economic Forum’s Global Risk
Report for 2015 ranked cyber crime alongside
geopolitics, climate change and economic
turbulence as one of the top business risks.
While levels of awareness are clearly rising,
they remain low among the very smallest
of companies. Although one-in-fve frms
with a turnover of between £5m and £10m
has cyber cover, that drops to just 10% in
frms with a turnover of up to £100,000.
…as confusion reigns
Recent years have seen a downward trend
in the number of small business owners and
managers saying they fully understand what
insurance is available and what risks they can
mitigate. That trend is maintained: barely a
quarter (26%) of respondents this year say
they understand what risks they can cover,
though the fgure is higher in the UK (31%),
Germany (31%) and Spain (29%). One-in-12
respondents (8%) said they agree with the
statement ‘I do not understand what insurance
is available to me and what risks I can cover’,
and 5% say they don’t understand their policy.
Only 14% buy essential cover for their property
and transport, or what is required by law.
‘I do not understand what
insurance is available to me
and what risks I can cover.’
A surprisingly small number receive risk
management guidance from an insurer, broker
or other source – just 14% overall. This fgure
is signifcantly higher in Spain at 27%.
Top fve uninsured risks
21%
Being sued by
a client/customer
19%
Hacking/
cyber crime
43%
Not being paid by
clients or customers
22%
Reputational
damage
18%
Data loss/loss
of intellectual
capital
E-risks insurance by country
10%
Netherlands
7%
UK
7%
US
8%
Germany
4%
France
16%
Spain
8%
All
Types of insurance cover
Public liability
Professional liability/indemnity
Personal accident insurance
Employers’ liability
Product liability
Management liability
Business interruption
Equipment breakdown
Stock cover
E-risks
Building and/or contents
My business is not insured
44%
43%
38%
29%
14%
14%
12%
11%
9%
8%
47%
19%
26 27 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Managing risks Managing risks
A snapshot of each of the six
countries participating in the survey.
Country profles
Country profle: UK
More than one-in-ten (11%)
has turned to crowd-sourcing
and peer-to-peer lending.
Funding is still an issue.
One-in-six respondents (13%) says bank funding has
become more diffcult to access in the past year. That
is more than twice the number (6%) who say it has
become easier. Younger entrepreneurs (those aged
up to 30 years old) have responded by turning to
alternative sources of credit, with 24% borrowing from
family and friends and 22% borrowing on their credit
card. More than one-in-ten (11%) has turned to crowd-
sourcing and peer-to-peer lending. That compares
with just 2% of respondents across all age groups.
Government policies seen as supportive
UK respondents stand out as far more content with
their government’s policies than other nationalities.
Some 45% of respondents generally see government
as supportive of entrepreneurs, compared to
30% on average across all six countries.
Social media paradox
As a whole, British respondents are the least likely to
be using social media in their business. Some 46% say
their business does not engage with any social media
activity. However, younger entrepreneurs are among
the most avid users, with seven-out-of-ten (69%) using
Twitter and four-out-of-fve (80%) using Facebook.
Looking for an exit
Of all UK respondents, 40% want to quit in the
next fve years. Nearly half of those (49%) say
they will retire and the business will close.
Shy of being labelled
British small business owners and managers
are less likely to call themselves entrepreneurs
than their peers in the fve other countries.
Hiring intentions for the year ahead by region
High
Low
Medium
Confdence returns
The pick-up in activity reported here a year
ago has accelerated in the past year and
confdence levels have risen sharply. More than
60% of respondents have experienced revenue
and proft growth (64% and 62% respectively)
and 22% are planning to take on new staff.
Two-out-of-fve say they
personally feel better off
than a year ago.
British small business owners and managers
have become steadily more upbeat over the
past two years, with nearly two-thirds (64%)
saying they now feel optimistic about the year
ahead. Two-out-of-fve say they personally feel
better off than a year ago. Only in the US is the
feel-good factor more apparent than in Britain.
The fndings chime with recent surveys
conducted by the Federation of Small
Businesses and the Enterprise Research
Centre in Birmingham. The latter found
that the rate of growth among UK smaller
companies was back to pre-recession levels.
Biggest fear for the year ahead, by company turnover
‘I won't be able to attract new customers’
29%
22%
15%
20%
14%
13%
£500k–
£1m
£10m+ < £100K £5m–
£10m
£100K–
£500K
£1m–
£5m
A quarter of frms export
UK smaller businesses
are more likely to be
exporters, with one-in-four
(25%) exporting compared
with 20% globally.
Shorter hours
British entrepreneurs
work the shortest
hours – 38 hours a week.
But the smallest businesses still feel fragile
One-in-four respondents (25%) said diffculty in
attracting new customers was their biggest fear
for the year ahead and the proportion is markedly
higher (29%) among frms with a turnover of
£100,000 or less. Similarly, optimism levels tend to
be at their lowest among the smallest companies.
30 31 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: UK Country profle: UK
Country profle: USA
Hiring intentions for the year ahead by region
High
Low
Medium
Riding the wave
Small frms across America are now
participating fully in an economic recovery that
is six years old. US respondents top the survey
for growth in revenue, profts and customers
in the past year, with a stand-out 72% having
lifted their sales in that period. More than a
quarter (26%) have increased staffng levels.
Some 45% of respondents say they are feeling
better off than a year ago, compared to an
average of 36% across all six countries.
Leading the growth league
While there are question-marks over the pace
of growth after Department of Commerce
fgures showed second-quarter GDP growth
coming in below estimates at 2.3% annualised,
three-out-of-fve frms (60%) say their order
book is continuing to grow and 69% are
optimistic about the year ahead. Nearly a
quarter of frms (23%) say they are likely to
increase investment in the business in the
coming 12 months. Only Spanish frms
match them on their investment intentions.
Dependent on the domestic market
US small businesses are much less likely
to export. Only one-in-eight (13%) sells
abroad compared with 20% globally.
Percentage of US businesses that have
experienced growth in the past year
72% 71%
74%
61%
68%
65%
USA
Global average
Revenue Customer numbers Proft
But debt costs are an issue
Not surprisingly perhaps with the US Federal
Reserve poised to lift interest rates, there is
more concern about a rise in the cost of
debt; 7% of US respondents cite this as
a fear for the year ahead, compared to 5%
of respondents globally.
Gender gap, but not as we know it
Women outnumber men in our US cohort
at 53% to 47%. This is in sharp contrast
to the picture globally where women make
up just 38% of respondents.
Distinct attitude to business
US entrepreneurs are more likely to have
been infuenced to start their business by
a role model – 41% compared to 31%
globally. They are more likely to believe that
a university education is useful for running a
business (70% compared to 59% globally)
and nearly half (46%) have attended a
formal business course, compared to 35%
globally. American small business owners
and managers are also more likely to cite ‘the
opportunity to make money’ as the number
one beneft of setting up their own business.
Credit card funding
One-in-fve US respondents (21%) has sought
to borrow on their credit card to fund the
business in the past year. That compares with
an average of 15% globally. In addition, 11%
are thinking of doing so in the coming year.
Hard work
US respondents are more likely to cite hard
work as one of the key attributes of managing
a small business and they appear to put that
belief into practice. They take barely half the
average number of days’ holiday each year –
just over ten compared with 20 globally –
and one-in-fve takes no holiday at all.
However, that is balanced by an average
working week three hours shorter than the
global average (39 hours compared with 42).
US respondents are no more likely to say
they missed an important social occasion
in the past year than other groups.
US respondents
are more likely
to cite hard work
as one of the
key attributes
of managing a
small business
and they appear
to put that belief
into practice.
US respondents top the survey
for growth in revenue, profts
and customers in the past year.
32 33 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: USA Country profle: USA
Country profle: France
Percentage of French business owners who feel
better or worse off than a year ago, by sector
29%
Financial
services
43%
Building/
construction
51%
Retail/distribution
47%
Manufacturing/
engineering
24%
Professional
services
27%
Business
services
Feel better off – top three sectors
Feel worse off – top three sectors
Hostile environment
An unfavourable tax system, excessive
government bureaucracy and infexible labour
laws are cited as problems by 86% of French
respondents. More than three-quarters agree
that ‘culturally we are not inclined to take
risks’ (76%) and that the education system
‘does not encourage individual ideas and
dreams’ (77%). Lower direct taxation comes
top of the French wish list (most especially in
the fnancial services sector), followed by a
relaxation of employment laws. Two-thirds of
respondents (67%) believe their government
is not supportive of entrepreneurs.
The education system
‘does not encourage
individual ideas and dreams’.
Long hours
French business owners and managers work
the longest hours (47 hours a week) along
with Spain, but more than fve hours of that
is spent dealing with government red tape.
Long holidays
French respondents take an average
of 24 days’ holiday a year. Only
the Dutch take more time off.
Late payments
French small business owners are
more likely than any other nationality
to say they are suffering from late
payments – and also to admit they are
paying their own customers later.
Stress test
‘Less stress’ is seen as the number one
beneft of running a small business, followed
closely by more fexibility over working hours.
Yet independence and the ability to work
hard are viewed as the two most important
attributes of a successful entrepreneur.
Accidental entrepreneurs
A remarkable 37% of French small
business owners say they started their
own business because they ‘couldn’t fnd
a suitable job’. They are least likely to have
attended a formal business course at just
25%, compared to an average of 35%.
Accidental entrepreneurs
‘I started my business as I couldn’t fnd a suitable job’
37% France
26% All
21% Netherlands
Stuck in a groove
There are tentative signs of a pick-up
in France’s small business sector but
confdence remains low. Perhaps the most
telling statistic is that optimism levels have
now remained unchanged for three years.
Just 43% of French respondents say
they are optimistic about their prospects,
well below the average of 62% across
all six countries. The one encouraging
sign is that the number saying they are
defnitely not optimistic has fallen sharply.
There has been a small increase in the
proportion of French respondents reporting
increased revenue and proft (now 54% and
51% respectively) and a bigger increase in
the numbers reporting customer growth
(68%, up from 55% the previous year).
Order books have increased at 56% of
frms surveyed. This may be taken as
an indication of better things to come,
which is the message of recent surveys
from Insée, the National Institute of
Statistics and Economic Studies, and
forecasts from the likes of OECD.
However, 17% of French respondents say
they fear not having the fnancial resources
to keep going and more than a quarter
(26%) say bank fnance has become
more diffcult to access in the past year.
Feeling the pinch
French small business owners are feeling the effects of stagnation
in their own pockets. Nearly two-out-of-fve (39%) say they feel
personally worse off than a year ago. That is double the number
saying they feel better off (19%). Only in France does such a
feel-bad factor prevail. There is a real divide between those in the
service industries and those in manufacturing or construction.
Just 43% of French respondents say they
are optimistic about their prospects.
34 35 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: France Country profle: France
Country profle: Germany
Hiring intentions for the year ahead by region
High
Low
Medium
Moving up a gear
Germany’s small business sector is
experiencing accelerating growth. The
proportion of respondents reporting revenue
and proft growth is 7% and 4% higher
respectively than a year earlier – when German
growth was already outstripping most of the
rest of Europe. Only the numbers from the
US (and from Spain in the area of customer
growth) compete with those from Germany.
German growth is already
outstripping most of the
rest of Europe.
Manufacturers most bullish
The building and construction industry tops
the list of sectors for revenue, proft and order
book growth (with around nine-out-of-ten frms
reporting growth in all three areas). Financial
services and professional services are close
behind. Manufacturers and engineers are the
most bullish about their prospects, with 82%
saying they are optimistic for the year ahead.
Proportion reporting growth
71%
63%
74%
61%
65% 64%
Last 12 months
Previous 12 months
Revenue Customer numbers Proft
Spending and staffng restrained
While German small business owners are least likely to be
worried about having the resources to keep going, they
are keeping a rein on investment spending and staffng.
One-in-fve respondents reduced spending last year, the
highest proportion in any of the six countries, and one-
in-eight (13%) plan to cut spending in the year ahead.
One-in-fve respondents reduced
spending last year, the highest
proportion in any of the six countries.
Fewer than one-in-four frms plan to hire in the
year ahead, with all but a small number of the
jobs available going to juniors, apprentices and
interns. The three biggest areas of jobs growth
are set to be leisure and catering, building and
construction, and manufacturing and engineering.
Bank fnance still tight
German respondents who say bank fnance has
become more diffcult to access outnumber those
who say it has become easier by more than four-to-
one (21% to 5%). Nearly one-in-ten (9%) is thinking
of remortgaging their house to raise fnance – the
highest proportion in any of the six countries.
Exporting widely
While the proportion of frms that export is in line with
the average at 21%, German small businesses export
more widely, reaching an average of 9.5 countries.
Long hours
German small business owners and managers
view the ability to work hard as the key attribute of
an entrepreneur (followed by independence and
determination). Respondents worked an average of 45.5
hours a week in the past year compared to a global
average of 42 hours. Nearly half (47%) worked more than
50 hours. They do, however, take slightly longer holidays
– 21.6 days compared to a global average of 20.
Flexibility, autonomy
Asked what they see as the key benefts of working
in a small business compared to a multinational,
German respondents cite the fexibility to be able to
work from home and the satisfaction of being able to
infuence the direction of the business above all else.
Ich bin ein Unternehmer
More than any other nationality in our survey, German
respondents are keen to assume the entrepreneur
tag. Some 71% say they consider themselves to
be an entrepreneur, compared with 57% globally.
Paradoxically, only 42% say they always thought
they would start their own business one day. This
is the lowest proportion among all six countries.
German small businesses export more
widely, reaching an average of 9.5 countries.
Irritation with Brussels
Germans, together with the French, stand out
among their European peers for their concern
over EU regulations. More than two-in-fve
respondents (43%) say rules coming out of
Brussels are impacting on their business.
Many planning retirement
A third (33%) of German small business owners
and managers are planning an exit within fve
years. Of those looking to quit, nearly half (49%)
will retire and allow their business to close.
Wary of social media
While large numbers of German small business
owners and managers use eBay and Amazon, they
are slow to adopt most social media. A third of
respondents (32%) rely on talking to people on the
phone or in person and 18% say they are afraid of
not being able to control social media (this compares
with 12% of respondents across the six countries).
36 37 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: Germany Country profle: Germany
Country profle: Spain
Cash concerns remain
Despite the improvement in business conditions,
18% of Spanish respondents say they fear not
having the resources to keep going in the year ahead.
This compares with 11% globally. Late payment
by customers remains an issue for nearly half of
respondents (47%). A quarter (25%) have sought
fnance from a bank in the past year (compared with
16% of global respondents), more than a ffth (21%)
have borrowed on their credit card, and 14% have
sought fnance from family or friends.
Longest hours
Spain’s small business owners put in an extra hour-and-
a-half each week last year. Together with the French,
they now work the longest hours – 47 compared to an
average of 42 across all six countries. However, they
are also the most likely to cite fexibility over working
hours as a key beneft of running a small business.
But still a decent lunch-break
More than half of Spanish respondents (52%) say
they take a proper lunch-break, of over 30 minutes.
Switched on to social media
Spanish small business owners and managers are
much more likely to be using social media than their
peers elsewhere (73% compared to an average of
61%) although nearly a quarter (24%) say they worry
about using it from a business point of view.
Chief bugbears
They are most likely to complain about their tax system
and government bureaucracy. Two-out-of-fve (41%) say
their government’s policies fail to support entrepreneurs.
Reduced direct taxation is number one
on the wish list.
Entrepreneurial disconnect
Spanish small business owners and managers were
by far the most active innovators last year (61%
compared to 41% globally) but consider themselves
the least entrepreneurial nation (something which
other countries agree with). Paradoxically, Spanish
respondents are the most likely to say they always
thought they would start their own business one
day (57% compared to an average of 48%).
The comeback kid
The remarkable recovery in the Spanish
economy this year, with frst-half growth at
the highest rate for more than eight years,
is refected in the buoyancy of the replies
from our Spanish respondents. The numbers
reporting growth in revenue and proft are ten
percentage points higher than a year ago,
at 62% and 58% respectively. Spanish small
businesses are more likely than their peers
elsewhere to have grown their order book in
the past year. Three-quarters (74%) report
growth in customer numbers, up from 57%
a year earlier.
The numbers reporting
growth in revenue and proft
are ten percentage points
higher than a year ago.
Spanish respondents are the most likely
to have hired staff in the past year and the
most likely to do so again in the coming
year. Together with US respondents, they
are the most likely to be investing more
in the coming year. Over two years, they
have gone from being less optimistic than
average, to more optimistic than average.
Optimism
Spain 65% All 62%
All 22%
Spain 27%
Hiring in the year ahead
Innovation with new products and services
Spain 61%
All 41%
Working longer hours
Spain All
47 hours 42 hours
All 16% Spain 25%
Managing to borrow from the bank
Rising optimism in Spain
Two years ago Now One year ago
40%
50%
60%
70%
80%
Spain
Average of other
six countries
Cyber insurance
The Spanish are more likely to have protection
16% 8% 4%
S
p
a
in
A
ll
F
ra
n
c
e
A dramatic turnaround
38 39 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: Spain Country profle: Spain
Funding diffcult
Dutch respondents are the most negative about the
availability of bank lending. There is a stark divide
between the 34% who say bank fnance has become
more diffcult and the 2% who say it has become easier.
Surprisingly, only 15% of
respondents say their company
is engaged in exporting.
Later payment
An above average 43% of Dutch frms say they are
suffering from later payment by customers. In the
building and construction industry the fgure rises
to a remarkable 71%.
Bottom of the export league
Surprisingly, only 15% of respondents say their company
is engaged in exporting. This is the lowest proportion
among the fve European countries in our survey.
No hiring spree
Dutch frms are the least likely to be hiring in the
year ahead, with just 15% planning to take on new
staff. Hiring intentions rise with the size of company
– two-thirds (67%) of those in the £5m to £10m
turnover bracket plan to take on new staff.
Entrepreneurial
Dutch business owners and managers are
the keenest to label themselves entrepreneurs.
Three-quarters (76%) happily assume the title.
They also consider themselves the most
entrepreneurial country in our survey, with a
less risk-averse culture than any of the other
European countries.
The Dutch don’t lunch
Some 40% of Dutch respondents take less than
half an hour off for lunch, 12% skip lunch entirely
and 23% say the lunch question is not appropriate
as their normal work hours exclude lunchtime.
But they do take time off
On average, Dutch small business owners took
nearly two extra days’ holiday last year, bringing
their average time off to 26 days – a full six days
more than the average for the six countries.
Flexibility
The prime attractions of running a smaller business
are the ability to work from home followed by less
bureaucracy and fexibility over working hours.
Not for sale
Dutch small business owners are the least likely
to be considering exiting their business in the next
fve years – just 15% say they plan to do so.
Country profle: Netherlands
Rising optimism in the Netherlands
Two years ago Now One year ago
40%
50%
60%
70%
80%
The Netherlands
Average of other
six countries
Planning to hire in the year ahead
The new jobs are concentrated in three main sectors
36%
Manufacturing/engineering
20%
IT/media/telecoms/printing
25%
Motor vehicles/garages
Optimism amongst
businesses in Spain
and the Netherlands is
second only to the US.
Recovery boosts small business
The recovery in the Dutch economy, which gathered
momentum over the course of 2014, has clearly
given the smaller business sector a much needed
boost. Over two years, optimism levels have
surged, with the building and construction industry
leading the way. Here the proportion of owners and
managers who say they are optimistic about the year
ahead has almost doubled over the period to 74%.
One-in-four respondents still
cites diffculty in attracting
new clients as a concern.
Revenue and proft growth among smaller companies
remains below par at 60% and 57% respectively
(compared to 65% and 61% on average across all six
countries) but both fgures are a full ten percentage
points higher than a year ago. Order books are
growing at the majority (57%) of companies
although one-in-four respondents still cites diffculty
in attracting new clients as a concern. Along with
US and Spanish frms, Dutch frms are the most
likely to have increased investment last year.
40 41 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: The Netherlands Country profle: The Netherlands
Age of respondents
Up to 30 60 and over 30 to 39 40 to 49 50 to 59
7%
22%
27%
24%
20%
Number of employees
One 20 to 50 One to four Five to nine Ten to 19
44%
9% 9%
12%
26%
Turnover
Figures have been converted into Pounds Sterling for reporting purposes
<£100k >£10m £100k-£500k £500k-£1m £1m-£5m £5m-£10m
59%
1% 1%
10%
8%
20%
Methodology and
profle of respondents
The sample for this study was
provided by Research Now using
their proprietary online panels. In total
4,140 business owners, founders or
senior executives within companies
with up to 50 employees were
contacted (1,000+ from both the
UK and the US and 500+ each from
France, Germany, the Netherlands
and Spain). Respondents completed
an online survey between 22nd
May and 15th June 2015.
Statistical accuracy: +/- 1% to
+/- 2% for the whole sample of
4,140 and +/- 2% to +/- 4% for
each country’s sample except
the UK and US – +/- 1% to
+/- 3%. Some fgures may not
add up due to rounding.
Sectors
Business services
Retail/distribution
IT/media/telecoms/printing
Building/construction
Leisure/catering
Financial services
Manufacturing/engineering
Marketing/communications
Motor vehicles/garage services
Other including:
healthcare, property,
arts, tourism, transport,
entertainment and sport
Professional services
15%
13%
8%
6%
6%
5%
4%
3%
1%
23%
17%
Age of business
Two years old
Three years old
Four years old
Five years old
Six to nine years old
Ten to 14 years old
15 to 19 years old
20 to 30 years old
30 years old or more
Up to one year old
7%
7%
5%
8%
17%
16%
10%
13%
10%
6%
62% male
38% female
42 43 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Methodology and profle of respondents Methodology and profle of respondents
Hiscox is an international specialist insurance and reinsurance
company with over 2,000 staff in 14 countries. With over 100
years of underwriting expertise, we work with businesses and
individuals worldwide to provide cover that is tailored to suit
often complex and unusual insurance needs. We currently work
with over 268,000 SMEs, professionals and consultants across
the UK, Europe and the US that together have a combined
turnover in excess of £42 billion. These include a wide range
of businesses, from tech start-ups and media agencies to
landscape gardeners and interior design consultants.
Published: September 2015
Hiscox Ltd
1 Great St Helen’s
London EC3A 6HX
T +44 (0)20 7448 6000
F +44 (0)20 7448 6900
E [email protected]
www.hiscoxgroup.com
14918 08/15
doc_178820749.pdf
An Optimistic Outlook The Hiscox DNA Of An Entrepreneur Report 2015
An optimistic outlook
The Hiscox DNA of an Entrepreneur Report 2015
A new air of confdence pervades our seventh annual DNA of an
Entrepreneur Report. Nearly two-thirds of the small businesses we
spoke to are optimistic about the year ahead – they are innovating,
expanding and exporting with real success. Where last year’s report
showed encouraging signs of recovery, this year’s shows a genuine
sense of buoyancy in many of the countries we surveyed.
We see this frst-hand from the 268,000 small businesses we insure
worldwide, who together have a turnover in excess of £42 billion.
Combined, our small business customers have increased turnover by
18% year-on-year through a combination of hard work and determination.
Innovation is a particularly prominent theme this year. The rate of new
products and services launched by small businesses has picked up
markedly in the past year – and is set for further acceleration in the
coming year. This is particularly heartening given that the part that small-
and medium-sized businesses have to play in global innovation is well
chronicled. They are a nursery for new ideas. With the freedom to pursue
innovations that might never be sanctioned in a bigger company, small
businesses consistently generate a disproportionately large number of the
new patents granted globally each year and as that continues so does the
chance that today’s micro-business becomes tomorrow’s top corporation.
Of course, not all in the garden is rosy. Many smaller companies
still feel swamped by government bureaucracy, crippled by high
taxation and constrained by infexible labour laws. Policymakers
should take heed. Small businesses are an important growth
engine and in the current economic climate must be encouraged
by what is possible rather than dissuaded by red tape.
Our fndings gauge the hopes and fears of the small business sector,
lay bare its biggest concerns and set out its agenda for supportive
change. From the small businesses we insure worldwide, we know that
the people we cover are as important as the businesses. Understanding
their challenges, opportunities, wants and needs helps us to provide the
products and services they need – both now and in the future. In the
same vein, our hope is this report is also valuable for others involved in
supporting, analysing or nurturing the vital small business community.
Bronek Masojada
Chief Executive Offcer, Hiscox
Foreword
Innovating for growth
Optimism levels reach three-year high.
As many as 62% of small business owners
and managers say they are positive about
the year ahead when it comes to their
business prospects. US respondents are the
most positive at 69%, while the Dutch and,
remarkably, the Spanish are not far behind,
at 65% each. Only in France are the optimists
in the minority at 43%, with no movement
in optimism levels in three years. The feel-
good factor of running your own business is
most keenly felt by UK and US respondents,
with 40% and 45% respectively saying
they feel better off than a year ago.
Innovation is the self-help solution. Small
businesses are increasingly viewing innovation
as the best form of self-help. The proportion
launching a new product or service has grown
from 36% to 41% in the past year and for the
year ahead, just over half (51%) say they are
planning to introduce a new product or service.
The urge to innovate is particularly strong
among frms that export, with two-thirds (65%)
having introduced a new product or service in
the past year and 72% planning to do so in the
year ahead. Innovation, expansion and exports
are enabling many to capture the upswing.
Revenue growth is accelerating… but proft
growth is patchy. Almost two-thirds (65%) of
frms have experienced sales growth in the past
year and a quarter (25%) report double-digit
sales growth. The proportion seeing double-
digit growth in their order book or workload
has also risen, from 15% to 24%. However, a
signifcant minority of small frms in Spain, the
Netherlands and particularly France continue to
see no growth in proft. The improvement in all
three economies is relatively recent and may be
taking time to flter down to smaller businesses.
No signs of a hiring spree yet. Nearly two-
thirds of frms (64%) report no increase in
employee numbers in the past year. Of the
six countries surveyed, small businesses
in Spain were more likely to have added to
staff numbers than any other nationality. For
the year ahead, almost two-thirds of frms
(64%) plan to stick with their existing staff
numbers and among the 22% that do plan to
hire, the majority have openings for juniors,
apprentices or interns – good news for school-
leavers and those entering the jobs market.
Government bureaucracy and direct taxation
remain key bugbears. Once again, these
two issues top the list of concerns in most
countries. The UK is an exception though,
with issues around the education system
coming frst. The top three demands from
small businesses overall are reduced direct
taxation, simpler and fewer accounting
rules, and stimulation of bank lending.
The US is seen as being the most
entrepreneurial country. For the frst time,
we asked each country which of the six
countries surveyed they thought was the most
entrepreneurial, and the results were almost
unanimous. Respondents in fve of the six
countries agreed it was the US. Spain came
bottom in all six countries… including Spain.
Executive summary
Pulses are beating faster
Optimism reaches three-year high
The tentative pick-up in sentiment in last year’s survey has fowered
into outright optimism in fve of the six countries surveyed.
Overall, optimism levels are at a three-year high,
with 62% of respondents saying they feel positive
about the year ahead for their business compared
with 57% a year ago and 52% two years ago. Only
in France are the optimists in the minority, with
no movement in optimism levels in three years.
The US looks to be the most buoyant, with 69%
of respondents saying they are optimistic – 7%
more than the global average. The Netherlands
and, remarkably, Spain are close behind at 65%
each. In both these economies the current reading
marks a dramatic turnaround from the picture
two years ago, and these fgures provide support
for the European Commission’s current forecast
of real GDP growth of 1.8% this year. This is
according to European Economic Forecasts,
published by DG ECFIN in spring 2015.
There is however a real distinction between
those businesses set up before and after the
2008 downturn, with post-recession businesses
thriving. Owners and managers of businesses set
up since the downturn in 2008 are signifcantly
more upbeat about their prospects than those in
charge of older businesses (70% for post-recession
businesses compared with 59% at older frms).
62%
52%
57%
All
59%
60%
61%
Germany
43% 43% 43%
France
51%
58%
64%
UK
60%
47%
65%
Spain
49%
52%
65%
Netherlands
57%
63%
69%
US
Optimism for the year ahead 2015
2014
2013
6 The Hiscox DNA of an Entrepreneur Report
Pulses are beating faster
Almost three-quarters of
frms (71%) report growth in
new customers in the past
year, compared with 59% a
year ago. US, German and
Spanish frms have been most
successful in gaining new
customers at 74% each.
Customer growth in the past year
67% Netherlands 68% UK 68% France 74% US
(71% All countries)
74% Spain 74% Germany
Revenue growth
is accelerating
Around two-thirds of frms (65%) have
experienced growth in the past year, and
a quarter (25%) report double-digit growth
in revenue (up from 16% a year ago).
Encouragingly, the number reporting growth
of 20% or more has doubled from 5% to 10%,
and the proportion seeing double-digit growth
in their order book or workload has risen from
15% to 24%.
Encouragingly, the number
reporting revenue growth
of 20% or more has doubled
from 5% to 10%.
Growth in proft is generally more muted.
One-in-three frms still report no growth
in proft, and in France this fgure rises to
43% of respondents. Across all six countries,
the numbers experiencing double-digit proft
growth have gone up in the past year from
15% to 22%.
Job opportunities for
apprentices and interns
The improved outlook has yet to translate into a hiring
spree at all levels. Nearly three-quarters of frms (73%)
report no increase in employee numbers in the past year,
similar to the previous year at 74%. Remarkably, a higher
proportion of Spanish frms have seen an increase in
employee numbers than any other nationality at 28%.
Spanish frms are also more likely to be hiring in the
year ahead, with 27% anticipating headcount growth.
A similar proportion of German, UK and US frms say
they are likely to hire new staff at 23%, 22% and 22%
respectively. In contrast, only 15% of Dutch frms plan
to add to employee numbers.
The best place to be an
apprentice or intern? Germany.
Among the 22% of small frms that do plan to hire in the
year ahead, 10% say they will be looking for junior people
and 9% say they will be taking on apprentices or interns
– good news for school-leavers and those entering the
jobs market. Only 6% are looking to fll senior positions.
More than half (55%) of frms who say they plan to take
on apprentices or interns will be paying them in full,
with a further 26% paying them their travel and other
expenses. Government schemes will ensure another
8% get payment or reimbursement of expenses. The
best place to be an apprentice or intern? Germany,
where 65% of frms will be paying them a full wage.
The UK is not far behind at 61%. In both cases, the
fgures are based on a small number of respondents.
23%
22%
All
19%
17%
Germany
15%
17%
France
22%
23%
UK
23%
24%
Spain
22%
26%
Netherlands
27%
28%
US
Hiring: past and planned Hired in past year
Hiring in year ahead
8 9 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Pulses are beating faster Pulses are beating faster
But do we feel any better off?
The uplift in optimism has yet to be accompanied by a general
feel-good factor among small business owners and managers.
On the plus side, the number who say they feel better off than
a year ago (36%) outweighs those who feel worse off (23%)
by a clear margin, but nearly two-in-fve respondents (38%)
say there has been no change in their fnancial situation.
Those who set up their business
since the 2008 crisis are more likely
to be feeling happier with life.
There are several indicators of increased wellbeing. For a
start, it helps if you are operating in the US or UK – economies
that have been in recovery mode for the longest time. Some
45% of US and 40% of British respondents say they are
personally better off than a year ago, while in contrast only
19% of French respondents say they are better off.
Bank funding getting more
diffcult on balance…
There is little evidence of easier access to
credit. Nearly a ffth of respondents (19%) think
that bank fnance has become more diffcult
to access in the past year. Just 7% say it has
become easier (rising to 11% in Spain) and
the remainder say it has stayed the same or
that it doesn’t affect their business (which is
the case for nearly half of the smallest frms
in our sample). Dutch and French frms are
the most negative on the availability of bank
fnance at 34% and 26% respectively.
Spanish, French and German
banks appear to be the most
supportive of small businesses.
Despite that, one-in-six respondents (16%)
say they have sought money from a bank
in the past year and a further 15% are
thinking of doing so in the year ahead.
Spanish, French and German banks appear
to be the most supportive; 25% of Spanish
respondents said they turned to their bank
in the past year, as have 22% of French
and 19% of German respondents.
…so more small business
owners get inventive when it
comes to accessing fnance
A clear indicator of the continuing squeeze
on lending to small frms is the fact that 15%
of small business owners and managers say
they have used their credit card to help fund
their business in the past year – and a further
8% are thinking of doing so. US and Spanish
respondents have been particularly keen to
borrow on their card, with 21% of respondents
in each country admitting to doing so.
US and Spanish respondents
have been particularly keen to
borrow on their credit card.
In addition, 10% have raised money from family
and friends (with a further 8% thinking of doing
so), 3% have turned to crowd-sourcing (with
9% more thinking of doing so) and 3% have
gone as far as remortgaging their house.
I am better off than last year
36%
Netherlands
33%
Germany
19%
France
40%
UK
45%
US
32%
Spain
In addition, it is clear that innovators who have launched
new products in the past year and fnd bank fnance
easier to access are more likely to say they feel better off.
Those who set up their business since the 2008 crisis
are also more likely to be feeling happier with life.
Owners and managers with the smallest businesses (those
with a turnover of up to £100,000) are having the toughest
time. Just over a third (34%) say they feel better off, but
almost a quarter (24%) say they are worse off. The sense
of prosperity generally rises with size of company.
Types of fnance sought in past year
5%
Government
(national or local)
and agencies
15%
Credit card
10%
Family and friends
16%
Bank
3%
Remortgaging
house
3%
Crowd
sourcing/peer-
to-peer lending
2%
EU
2%
Venture
capital
funds
10 11 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Pulses are beating faster Pulses are beating faster
Late payment cited as a big
problem across Europe
Late payment appears to be a particularly severe problem
in parts of Europe. In France and Spain nearly half of
respondents (47%) say their customers are paying later
than they were, and in the Netherlands and Germany the
comparable fgure is 43%. More than a quarter (27%) of UK
frms said late payment is a problem, despite repeated efforts
by government to increase transparency on large companies’
payment practices and toughen existing codes of practice.
French and Spanish respondents are
most likely to report cash fow problems
as a result of late payments.
Interestingly, late payment is cited by fewer one-person
and really small frms (those with between one and four
employees) than by bigger ones. Those businesses
that export are also more likely to be suffering from late
payment by customers than non-exporting frms.
More than half (51%) of those frms suffering from later payments
say it is having a ‘signifcant impact’ on their cash fow. A
further third (33%) say it is impacting ‘occasionally’. By country,
French and Spanish respondents are most likely to report
cash fow problems as a result of late payments (68% and
62% respectively), and by sector it is people in manufacturing
and leisure/catering who appear to be the hardest hit.
However, small companies are no angels. For the frst time we
also asked companies whether they were paying their suppliers
later than they were a year ago. Some 15% of respondents
said ‘yes’, with the biggest offenders being French frms where
nearly a quarter (24%) confess to paying later. Considerable
numbers of Dutch, Spanish and German respondents (19%,
17% and 16% respectively) also said they were doing so.
So what’s keeping them
awake at night?
Asked to select their ‘biggest fear for the year
ahead’, nearly a quarter of respondents (23%)
say they are concerned they might not be
able to attract new clients (the fgure rises to
27% among the smallest frms in the sample).
However, these numbers are down on the
previous year in all six countries surveyed.
UK and Dutch frms are the most concerned
about the fow of new clients (25% in both
countries, but less than the 28% and 32%
respectively reported for the previous year).
The second most widely mentioned concern
is not being paid by clients (cited by 17%
of frms). The possibility of not having the
resources to keep the business going ranks
third, mentioned by 11% of respondents.
A different picture emerges from France, where
17% of frms say their biggest fear is that they
will not have the resources to keep going.
UK and Dutch frms are
the most concerned about
the fow of new clients.
Concern at having to pass on cost increases
to customers is cited by 9% of respondents,
up from 8% a year ago, suggesting that
the defationary era is slowly passing. This
concern is particularly acute among bigger
frms in the sample (17% of frms with a
turnover of between £1m and £5m and 14%
of those with a turnover of more than £10m).
20% 20%
All
18%
19%
Germany
16%
14%
France
18%
21%
UK
20%
22%
Spain
23%
22%
Netherlands
23%
22%
US
Investment: past and planned Increased investment in the past year
Planning to increase investment in the year ahead
Paying suppliers later than last year
17%
Spain
11%
UK
19%
Netherlands
24%
France
10%
US
16%
Germany
15%
All
Steady pick-up in investment
One-in-fve (20%) increased investment in their
business last year and the same proportion
plan to do so again in the coming year. The
proportion of frms expecting to cut investment
in the coming year is 11%, which compares
with 14% who say they cut spending last
year. Nearly half of frms (48%) expect to hold
investment levels steady in the year ahead.
Investment levels
generally rise in line with
the size of business.
Spanish, Dutch and US frms are most
likely to have increased investment in their
business last year, and Spanish and US frms
are most likely to do so again this year.
In contrast, 28% of French frms say they
have not invested in the past year or the
year before and around a third (32%) are not
planning to invest in the year ahead. This
is disappointing for the French economy.
A quarter of the smallest frms in our sample
(those with a turnover of up to £100,000)
have not invested in their business in
either of the past two years and are not
planning to invest in the year ahead. This
indicates that investment levels generally
rise in line with the size of business.
12 13 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Pulses are beating faster Pulses are beating faster
What’s holding small
businesses back?
67%
Government bureaucracy is
a major barrier to setting up
a small business
28%
My country's recent/
upcoming elections will
result in more favourable
policies for entrepreneurs
53%
There are infexible labour
laws in my country
47%
Culturally, we're not inclined
to take risks in my country
64%
Our education system doesn't
encourage individual ideas and dreams
64%
Our taxation system does not
favour someone wanting to
set up their own business
How small businesses view their own country
Rules, regulations and tax
The message is clear; governments are
doing too little to help. Asked to agree
or disagree with a series of statements
about their own country, a substantial
majority of all respondents (67%) agreed
that ‘government bureaucracy is a major
barrier to setting up your own business’.
Complaints that ‘our taxation system does
not favour someone wanting to set up
their own business’ and ‘our education
system doesn’t encourage individual ideas
and dreams’ also ranked highly, being
cited by 64% of respondents each.
Nine-out-of-ten Spanish
respondents criticised their
government’s bureaucracy
and tax system.
There were, however, differing perceptions in
each country. Nearly nine-out-of-ten Spanish
respondents criticised their government’s
bureaucracy and tax system (89% and 88%
respectively). In France, similar proportions
cited the same two issues – but alongside
‘the infexibility’ of their labour laws (86% in
respect of each issue). Around three-quarters
of French respondents also cited an ‘education
system that fails to encourage individual
ideas and dreams’ and agreed that ‘culturally,
we’re not inclined to take risks in my country’
(cited by 77% and 76% respectively).
Concerns relating to the education
system were also mentioned by 73%
of German respondents and ranked
as the number one concern in the UK
(cited by 57% of respondents).
14 15 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
What’s holding small businesses back? What’s holding small businesses back?
Red tape still too onerous
There is general consensus that government
regulation consumes a disproportionate
amount of the average small business person’s
week. The bad news from this year’s survey is
that the problem appears to have got worse,
not better. The average amount of time spent
dealing with red tape is now three hours 13
minutes per week – up from two hours 55
minutes a year ago. The average is boosted
this year by a small rise in the number of
people saying they spend more than fve
hours a week on government regulation.
Only in Spain do people report spending
less time on this than the previous year.
The average amount of
time spent dealing with red
tape is now three hours
13 minutes per week.
UK and US small business owners get off
relatively lightly – spending less than two-and-
a-half hours a week on red tape. In contrast,
French respondents say they spend more than
fve hours a week dealing with regulation – a
fgure that has risen by nearly three-quarters
of an hour compared with the previous year.
Governments must do more…
Asked whether they believed their government’s
policies were supportive of entrepreneurs, only 30%
of respondents said ‘yes’ or ‘in most cases yes’.
The British are the most content with 45% believing their
government’s policies support entrepreneurship.
Larger companies are generally more
likely to say things have improved.
In contrast, just over two-thirds of French (67%) and 70%
of Spanish respondents say their government’s policies are
not supportive. Globally, a quarter (25%) of small business
owners and managers say ‘more can be done’.
…but there are
encouraging signs
Will governments heed the message?
There are certainly some encouraging signs.
Among those who see their government
as generally supportive, optimists far
outweigh pessimists (46% versus 10%).
Among those who see their government’s
policies as generally unsupportive, there
is a rough balance between optimists and
pessimists in most countries. The one
big exception is Germany. Here, 41% of
respondents expect things to get worse,
with only 7% saying they will get better.
Overall, the Spanish, followed by the
British, are most convinced things will
get better (35% and 32% respectively).
My government’s policies support entrepreneurs
14%
Spain
45%
UK
22%
Netherlands
13%
France
37%
US
32%
Germany
30%
All
There is a big divide when asked whether conditions
have improved in the past fve years. Nearly half (45%)
of those who believe their government is supportive
of entrepreneurship believe the political approach has
improved in the past fve years. The biggest proportion
of them are in Spain, the UK and France. Larger
companies (those with 20 to 50 employees) are generally
more likely to say things have improved. However, the
same proportion (45%) of those who say government
is not supportive believe conditions have got worse.
55%
Relaxing the
employment laws
71%
Financial underpinning
or stimulation of new lending
by banks to small businesses
74%
Simpler and fewer
accounting rules
83%
Reduced direct
taxation of businesses
43%
Subsidising training
courses and professional
development
Entrepreneurs’ wishlist
So what should
governments do to help?
Respondents were asked to choose from
a menu of government policy options
and rank the fve they considered most
important in encouraging small business
growth. As in prior years, the wish list
is dominated by three key changes.
DReduced direct taxation of business
(mentioned by 83% of respondents).
DSimpler and fewer accounting
rules (mentioned by 74%).
DFinancial underpinning or stimulation
of new lending by banks to small
businesses (mentioned by 71%).
There were, however, some country variations.
The French, Spanish and US respondents
were far keener to see lower direct taxation
of business. In France and Spain, relaxation
of the employment laws came a clear
second to lower tax in the wish list.
Time spent on red tape
France
Spain
Germany
Netherlands
All
US
UK
Two hours 55 minutes
Five hours fve minutes
Four hours 23 minutes
Four hours 10 minutes
Four hours 15 minutes
Three hours 46 minutes
Three hours 10 minutes
Two hours 49 minutes
Two hours 33 minutes
Three hours 13 minutes
Two hours 26 minutes
Two hours eight minutes
Two hours 24 minutes
Two hours 13 minutes
2015
2014
16 17 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
What’s holding small businesses back? What’s holding small businesses back?
More than half of frms plan to
launch new products or services
One of the more dramatic fndings of the survey is
the jump in the number of frms engaged in launching
a new product or service. Expanding the business
through innovation is seen as the way ahead for an
increasing number of small frms. A year ago, just 36%
of respondents had introduced a new product in the
previous 12 months, yet this year the equivalent fgure
is 41%. Now more than half (51%) plan to introduce
a new product or service in the year ahead. At a time
when funding remains scarce, and so many frms lack
confdence in their own government to support the small
business sector, this testifes to a determination to take
matters into their own hands and innovate to grow.
Bigger frms invest
in export markets
One-in-fve frms surveyed is now exporting
to other countries. UK frms are the most
likely to be exporting (25%), followed by their
French and Spanish counterparts at 23%
each. US frms are bottom of the list with
only one-in-eight (13%) saying they export.
Dutch frms are also less likely to export with
only 15% saying they export currently.
Only 16% of the smallest
frms export.
As with innovation, the propensity to export
rises with the size of frm in the survey.
Only 16% of the smallest frms (those with
a turnover of up to £100,000) export. By
contrast, half of those with sales of between
£5m and £10m say they export. This may
be a refection of the additional costs and
infrastructure required to penetrate overseas
markets. Manufacturers (46%) and retail/
distribution frms (36%) lead the way.
Among those that export, the highest
proportion of export sales is found
among French (34%), UK (32%)
and Spanish (32%) frms.
Go-getters combine
innovation and exports
There appears to be a direct link between
innovation and exports, reinforcing the
view that these are both indicators of more
aggressive, growth-oriented management.
Two-thirds (65%) of frms that export have
developed a new product or service in the past
year, and 72% plan to do so in the coming year.
Firms turn to self-help through
innovation and exports
51%
36%
41%
All
33%
35%
48%
Germany
29%
31%
44%
France
35%
40%
49%
UK
42%
38%
50%
Spain
33%
39%
50%
Netherlands
50%
61%
64%
US
Launching new products and services Year ahead
Past 12 months
Previous year
Expanding the business through
innovation is seen as the way ahead
for an increasing number of small frms.
Spanish frms are
the most innovative
Spanish respondents were by far the most
actively engaged in developing new products
or services in the past 12 months – with 61%
reporting the introduction of a new product
or service. In sectoral terms, retail/distribution
and manufacturing were the most innovative
globally – with 55% of the frms in these two
sectors innovating. The bigger companies in
our survey were typically the most active at
developing new products – 57% of those with
a turnover over £5m say they have innovated in
the past 12 months, compared with just 37%
of frms with a turnover of £100,000 or less.
Technology no threat to jobs – yet
Despite fears to the contrary, only 9% of frms say new
technology will allow them to cut staff numbers in the
near future and half of respondents say new technology
will not affect them. The proportion rises among the
bigger frms surveyed (those with between 20 and 50
employees). More than a ffth of these frms (21%) do
see technology as a path to headcount reductions.
Surprisingly, the sectors where new technology
appears the biggest threat to staffng levels are
marketing/communications (14% of respondents
here say technology will allow them to cut staff in the
near future), manufacturing (13%), leisure/catering
(12%), IT/media and fnancial services (11% each).
Most exporters are innovators too
72%
New products
planned for the
coming year
65%
New products
launched in
past year
14%
Marketing and
communications
13%
Manufacturing/
engineering
12%
Leisure/catering
11%
IT/media
11%
Financial services
Small businesses that export
15%
Netherlands
25%
UK
13%
US
21%
Germany
23%
France
23%
Spain
20%
All
18 19 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Firms turn to self-help through innovation and exports Firms turn to self-help through innovation and exports
Self-belief
More than half (57%) of respondents consider
themselves ‘an entrepreneur’ and nearly
half (48%) say they always thought they
would start their own business one day. Men
are signifcantly more likely to agree with
both statements than women. The Dutch,
Germans and French are keenest to label
themselves entrepreneurs (76%, 71% and
65% respectively), while the British are typically
shy and retiring with just over a third (35%)
wanting to assume the label of entrepreneur.
What makes an entrepreneur?
Nothing better came my way
More than one-in four-respondents (26%) say they started their
business ‘because I couldn’t fnd a suitable job’. The fgure is as
high as 37% in France and 31% in Spain. The proportion is also
somewhat higher among women (28% compared to 25% of men).
I started my business as I couldn’t fnd a job
21%
Netherlands 23%
UK
23%
US
26%
Germany
37%
France
31%
Spain
26%
All
I consider myself an entrepreneur
76%
Netherlands
35%
UK
56%
US
71%
Germany
65%
France
59%
Spain
57%
All
Key attributes
of an entrepreneur
Respondents were invited to pick out what
they considered to be the top fve attributes
of an entrepreneur. The ability to work hard
came well ahead of other strengths, with
determination ranked second and creative
thinking in third place. Interestingly, the ability
to delegate came bottom of the list – with just
one-in-fve (21%) respondents selecting it.
There were some interesting differences in
outlook between the different nationalities.
DThe French and the Spanish both
put ‘independence’ top of the list
(followed by the ability to work hard).
DThe Dutch also put ‘independence’
top with ‘creative thinking’ second.
DUS and German respondents were
both more likely to cite ‘ability to work
hard’ followed by ‘independence’
and then ‘determination.’
Perceived entrepreneurial spirit
Ranking by French,
UK and US respondents
Ranking by
German respondents
Ranking by
Dutch respondents
Ranking by
Spanish respondents
1. US 1. US 1. Netherlands 1. US
2. UK 2. Germany 2. US 2. Germany
3. Germany 3. Netherlands 3. Germany 3. UK
4. Netherlands 4. UK 4. UK 4. Netherlands
5. France 5. France 5. France 5. France
6. Spain 6. Spain 6. Spain 6. Spain
Perceived attributes of an entrepreneur
Determination
Creative thinking
Independence
Ability to make relationships
Intelligence
Experience
Patience
Courage
Ability to promote your business
Ability to manage others
Ability to work hard
Ability to delegate
63%
49%
43%
41%
39%
39%
39%
38%
36%
27%
66%
21%
Self-made, not inherited
Only one-in-fve (21%) say they were inspired by a parent who ran a business
– although the proportion is slightly higher among women (23%). US
respondents stand out with 41% of them saying they have been inspired by a
role model to start a business (compared with 31% across the six countries).
Once again, three-out-of-fve of respondents (59%) say that a university
education can be an advantage to someone running a business.
Spanish, US and German respondents were especially pro-university
education as the foundation from which to run a small business
(77%, 70% and 68% respectively). Again, the US respondents stand
out for having attended some form of formal business education
too – 46% of US respondents compared to 35% globally.
20 21 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
What makes an entrepreneur? What makes an entrepreneur?
Hard work, long hours…
Small business owners and managers are
a hard-working lot. Respondents said they
put in on average just over 42 hours a week
and nearly one-in-fve (18%) works more
than 60 hours a week. Extraordinarily, 1%
of respondents say they top the 90-hour
mark! Whether it is the result of improved
trading or increased challenges, respondents
say they are putting in an extra 19 minutes
a week on average than a year ago.
Men work an average of 44 hours a week,
while women reported an average of 39
hours. The difference may be explained by a
greater proportion of women working part-
time, though among one-person frms, many
may be keen to work longer hours. A labour
force survey in April this year by Eurostat
found that nearly ten million people in Europe
were ‘underemployed’. This means those
workers that are highly skilled but are not
being utilised to their full potential – either
because they are working in low paying jobs,
low skill jobs or part-time. More than two-
thirds of the ‘underemployed’ were women.
Weekly working hours
41
Netherlands
38
UK
39
US
45
Germany
47
France
47
Spain
42
All
Average number of days holiday a year
26
Netherlands
23
UK
10
US
22
Germany
24
France
20
Spain
20
All
…and it still beats working
for a multinational
Respondents were asked to rank fve benefts
of running or working in a small- or medium-
sized business compared with being employed
by a large company or multinational. Two-thirds
cited ‘more fexibility over working hours’, in line
with previous reports. This year it was followed
by ‘greater feeling of being in control of their
life’ (58%) and ‘ability to work from home/other
locations’ (57%).
The results are broadly similar across countries,
except that:
DAmericans put ‘opportunity to make
more money’ in the number three spot
Dthe French cite ‘less stress’ more
often than any other beneft
DGermans put the ‘satisfaction of
feeling I am able to infuence the
direction of the business’ second
Dthe Spanish cite ‘fexibility over working
hours’ more than any other nation.
…but longer holidays this year
Reversing previous trends, respondents say they have taken
nearly half a day more holiday in the past year than the year
before (just under 20 days compared with 19-and-a-half the
previous year). However, this is largely down to Dutch respondents
saying they have taken two additional days off in the past year.
Once again, the US take the shortest holidays – with an average
of ten days off. One-in-fve US owners and managers takes
no holiday! A further 13% take only one to four days off.
Spare a thought for le patron and el padrón
The typical French and Spanish small business owner or manager
is putting in far longer hours each week than most of his or her
counterparts in the four other countries surveyed at 47 hours
compared with the 42 hour average. So much for France’s
35 hour week. More French and Spanish respondents also
say they have missed one or more important social occasions
in the past year because of work commitments. In contrast,
the British put in 38 hours a week and the Americans, 39.
Sole traders and owners of the smallest businesses (those
with a turnover of up to £100,000) put in fewer hours than
their counterparts running bigger small businesses at just 38
hours. They were also signifcantly less likely to have missed an
important social occasion – suggesting that working for yourself
provides far greater fexibility. Some 11% of sole traders said
they worked fewer than 20 hours and a further 16% said they
worked less than 29 hours. In contrast, those running £1m-plus
turnover businesses put in an average of 47 hours or more.
22 23 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
What makes an entrepreneur? What makes an entrepreneur?
Smallest companies have the greatest exposure
By and large, levels of cover for
these fve key risks increase by
size of company. Only 26% of frms
with a turnover under £100,000
said they are covered for breach
of duty of care. In contrast, at
the £5m to £10m turnover mark,
more than half (53%) of frms are
covered. A similar disparity is
evident in all the other key claims
areas. However, levels of cover
among the very biggest cohort in
our survey – frms with a turnover of
£10m-plus – tend to fall away again.
Age also has a bearing on levels of
cover in four of the fve key claims
categories, with older respondents
signifcantly more likely to have taken
out cover. The one exception is
infringement of intellectual property
rights where younger respondents
(those aged up to 30 years old)
appear to have far more awareness
of the risks. Nearly one-in-three
(32%) has cover in this area while for
those aged 60-plus the comparable
fgure is less than one-in-six (15%).
Only 26% of frms with a turnover under £100,000
said they are covered for breach of duty of care.
Managing risks
Unnecessary exposure
As part of the report, we highlighted the fve most common
insurance claims made by Hiscox’ small business customers
(negligence, breach of duty of care, infringement of intellectual
property rights, theft and accidental damage/accidental loss)
and asked respondents if they were insured against them.
Worryingly, around a ffth of respondents say they do not know
whether they are covered for the frst three categories.
A ffth of respondents don’t know
whether they have insurance cover for the
areas where claims are most common:
negligence, breach of duty of care and
infringement of intellectual property rights.
In general, less than half of respondents say they have taken
out relevant cover – the exceptions being for accidental
damage (53% of all respondents) and theft (51%).
Big country-by-
country differences
Awareness of these fve key risks appears
to vary signifcantly by country.
DAccidental damage – with the exception
of the Netherlands (where only 45%
of respondents say they are covered),
half or more of all respondents say they
have accidental damage insurance.
DTheft – nearly two-thirds of French
frms (65%) say they are covered.
Spanish (63%) and UK (51%)
frms also rank highly here.
DNegligence – nearly half (47%) of UK
and German small businesses are
covered, but only 29% of Dutch ones.
DBreach of duty of care – again, UK
and German small business owners
and managers score highly (45% and
42% respectively), but more than half
of French (66%) and Dutch (57%)
respondents say they are not covered.
DInfringement of IP – this is an area of
very low take-up. Only around one-in-
fve UK, German, Spanish and US frms
say they are covered. More than 60% of
German, French and Dutch frms say they
are not covered. Nearly a quarter (23%)
of respondents said they do not know
whether they are covered here or not.
Common claims – are you covered?
53%
Accidental damage/loss
51%
Theft
39%
Negligence 32%
Breach of
duty of care
18%
Infringement
of intellectual
property rights
32%
Up to 30 60 and over
19%
50-59
46%
30-39
20%
42%
40-49
IP and theft coverage by age Infringement of intellectual property rights (IP)
Theft
54%
53%
15%
54%
17%
24 25 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Managing risks Managing risks
High levels of exposure to risk…
We also listed 11 common types of insurance and asked
respondents to select which types they currently have. The
results suggest small businesses are running unnecessary risks.
Buildings and/or contents cover is the most common form of
insurance cover, but even here fewer than half of respondents
(47%) are covered. Slightly fewer have public liability and
professional indemnity cover (44% and 43% respectively).
There is then a sharp fall in the numbers with cover for
personal accident (38%) and employers’ liability (29%).
Most worryingly, one-in-fve owners and managers
(19%) say they do not have any insurance at all.
One-in-fve owners/managers (19%) say
they do not have any insurance at all.
Unexpectedly, 29% of US frms are in this category. The
most complacent industries are IT/media and marketing/
communications, with 29% and 27% respectively saying
they are without any insurance. Predictably enough it is
the smallest frms that tend to be uninsured (28%), and a
third of one-person frms have no cover of any kind.
Non-payment by clients
tops list of uninsured risks
As in previous years, we listed a dozen key
risks and asked respondents which they saw
as major risks to their business that they don’t
insure against. The one most widely cited
was the risk of not being paid by customers.
This was mentioned by 43% of respondents
globally and by 46% of one-person frms.
Reputational damage and the threat of being
sued by a client/customer came next, cited by
22% and 21% of respondents respectively.
Growing awareness
of cyber crime
Hacking or cyber crime is mentioned by around
one-in-fve (19%) respondents and ranks as
the fourth most widely cited uninsured risk.
This confrms a trend in recent years which
has seen the number concerned with the
threat of cyber crime steadily rising. Despite
that trend, only one-in-12 respondents (8%)
said they have any form of e-risks cover
– though this fgure is signifcantly higher
in Spain, where 16% of respondents have
e-risks cover, and among fnancial services
frms generally, 15% of whom are covered.
Only one-in-12 respondents
said they have any form
of e-risks cover.
The World Economic Forum’s Global Risk
Report for 2015 ranked cyber crime alongside
geopolitics, climate change and economic
turbulence as one of the top business risks.
While levels of awareness are clearly rising,
they remain low among the very smallest
of companies. Although one-in-fve frms
with a turnover of between £5m and £10m
has cyber cover, that drops to just 10% in
frms with a turnover of up to £100,000.
…as confusion reigns
Recent years have seen a downward trend
in the number of small business owners and
managers saying they fully understand what
insurance is available and what risks they can
mitigate. That trend is maintained: barely a
quarter (26%) of respondents this year say
they understand what risks they can cover,
though the fgure is higher in the UK (31%),
Germany (31%) and Spain (29%). One-in-12
respondents (8%) said they agree with the
statement ‘I do not understand what insurance
is available to me and what risks I can cover’,
and 5% say they don’t understand their policy.
Only 14% buy essential cover for their property
and transport, or what is required by law.
‘I do not understand what
insurance is available to me
and what risks I can cover.’
A surprisingly small number receive risk
management guidance from an insurer, broker
or other source – just 14% overall. This fgure
is signifcantly higher in Spain at 27%.
Top fve uninsured risks
21%
Being sued by
a client/customer
19%
Hacking/
cyber crime
43%
Not being paid by
clients or customers
22%
Reputational
damage
18%
Data loss/loss
of intellectual
capital
E-risks insurance by country
10%
Netherlands
7%
UK
7%
US
8%
Germany
4%
France
16%
Spain
8%
All
Types of insurance cover
Public liability
Professional liability/indemnity
Personal accident insurance
Employers’ liability
Product liability
Management liability
Business interruption
Equipment breakdown
Stock cover
E-risks
Building and/or contents
My business is not insured
44%
43%
38%
29%
14%
14%
12%
11%
9%
8%
47%
19%
26 27 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Managing risks Managing risks
A snapshot of each of the six
countries participating in the survey.
Country profles
Country profle: UK
More than one-in-ten (11%)
has turned to crowd-sourcing
and peer-to-peer lending.
Funding is still an issue.
One-in-six respondents (13%) says bank funding has
become more diffcult to access in the past year. That
is more than twice the number (6%) who say it has
become easier. Younger entrepreneurs (those aged
up to 30 years old) have responded by turning to
alternative sources of credit, with 24% borrowing from
family and friends and 22% borrowing on their credit
card. More than one-in-ten (11%) has turned to crowd-
sourcing and peer-to-peer lending. That compares
with just 2% of respondents across all age groups.
Government policies seen as supportive
UK respondents stand out as far more content with
their government’s policies than other nationalities.
Some 45% of respondents generally see government
as supportive of entrepreneurs, compared to
30% on average across all six countries.
Social media paradox
As a whole, British respondents are the least likely to
be using social media in their business. Some 46% say
their business does not engage with any social media
activity. However, younger entrepreneurs are among
the most avid users, with seven-out-of-ten (69%) using
Twitter and four-out-of-fve (80%) using Facebook.
Looking for an exit
Of all UK respondents, 40% want to quit in the
next fve years. Nearly half of those (49%) say
they will retire and the business will close.
Shy of being labelled
British small business owners and managers
are less likely to call themselves entrepreneurs
than their peers in the fve other countries.
Hiring intentions for the year ahead by region
High
Low
Medium
Confdence returns
The pick-up in activity reported here a year
ago has accelerated in the past year and
confdence levels have risen sharply. More than
60% of respondents have experienced revenue
and proft growth (64% and 62% respectively)
and 22% are planning to take on new staff.
Two-out-of-fve say they
personally feel better off
than a year ago.
British small business owners and managers
have become steadily more upbeat over the
past two years, with nearly two-thirds (64%)
saying they now feel optimistic about the year
ahead. Two-out-of-fve say they personally feel
better off than a year ago. Only in the US is the
feel-good factor more apparent than in Britain.
The fndings chime with recent surveys
conducted by the Federation of Small
Businesses and the Enterprise Research
Centre in Birmingham. The latter found
that the rate of growth among UK smaller
companies was back to pre-recession levels.
Biggest fear for the year ahead, by company turnover
‘I won't be able to attract new customers’
29%
22%
15%
20%
14%
13%
£500k–
£1m
£10m+ < £100K £5m–
£10m
£100K–
£500K
£1m–
£5m
A quarter of frms export
UK smaller businesses
are more likely to be
exporters, with one-in-four
(25%) exporting compared
with 20% globally.
Shorter hours
British entrepreneurs
work the shortest
hours – 38 hours a week.
But the smallest businesses still feel fragile
One-in-four respondents (25%) said diffculty in
attracting new customers was their biggest fear
for the year ahead and the proportion is markedly
higher (29%) among frms with a turnover of
£100,000 or less. Similarly, optimism levels tend to
be at their lowest among the smallest companies.
30 31 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: UK Country profle: UK
Country profle: USA
Hiring intentions for the year ahead by region
High
Low
Medium
Riding the wave
Small frms across America are now
participating fully in an economic recovery that
is six years old. US respondents top the survey
for growth in revenue, profts and customers
in the past year, with a stand-out 72% having
lifted their sales in that period. More than a
quarter (26%) have increased staffng levels.
Some 45% of respondents say they are feeling
better off than a year ago, compared to an
average of 36% across all six countries.
Leading the growth league
While there are question-marks over the pace
of growth after Department of Commerce
fgures showed second-quarter GDP growth
coming in below estimates at 2.3% annualised,
three-out-of-fve frms (60%) say their order
book is continuing to grow and 69% are
optimistic about the year ahead. Nearly a
quarter of frms (23%) say they are likely to
increase investment in the business in the
coming 12 months. Only Spanish frms
match them on their investment intentions.
Dependent on the domestic market
US small businesses are much less likely
to export. Only one-in-eight (13%) sells
abroad compared with 20% globally.
Percentage of US businesses that have
experienced growth in the past year
72% 71%
74%
61%
68%
65%
USA
Global average
Revenue Customer numbers Proft
But debt costs are an issue
Not surprisingly perhaps with the US Federal
Reserve poised to lift interest rates, there is
more concern about a rise in the cost of
debt; 7% of US respondents cite this as
a fear for the year ahead, compared to 5%
of respondents globally.
Gender gap, but not as we know it
Women outnumber men in our US cohort
at 53% to 47%. This is in sharp contrast
to the picture globally where women make
up just 38% of respondents.
Distinct attitude to business
US entrepreneurs are more likely to have
been infuenced to start their business by
a role model – 41% compared to 31%
globally. They are more likely to believe that
a university education is useful for running a
business (70% compared to 59% globally)
and nearly half (46%) have attended a
formal business course, compared to 35%
globally. American small business owners
and managers are also more likely to cite ‘the
opportunity to make money’ as the number
one beneft of setting up their own business.
Credit card funding
One-in-fve US respondents (21%) has sought
to borrow on their credit card to fund the
business in the past year. That compares with
an average of 15% globally. In addition, 11%
are thinking of doing so in the coming year.
Hard work
US respondents are more likely to cite hard
work as one of the key attributes of managing
a small business and they appear to put that
belief into practice. They take barely half the
average number of days’ holiday each year –
just over ten compared with 20 globally –
and one-in-fve takes no holiday at all.
However, that is balanced by an average
working week three hours shorter than the
global average (39 hours compared with 42).
US respondents are no more likely to say
they missed an important social occasion
in the past year than other groups.
US respondents
are more likely
to cite hard work
as one of the
key attributes
of managing a
small business
and they appear
to put that belief
into practice.
US respondents top the survey
for growth in revenue, profts
and customers in the past year.
32 33 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: USA Country profle: USA
Country profle: France
Percentage of French business owners who feel
better or worse off than a year ago, by sector
29%
Financial
services
43%
Building/
construction
51%
Retail/distribution
47%
Manufacturing/
engineering
24%
Professional
services
27%
Business
services
Feel better off – top three sectors
Feel worse off – top three sectors
Hostile environment
An unfavourable tax system, excessive
government bureaucracy and infexible labour
laws are cited as problems by 86% of French
respondents. More than three-quarters agree
that ‘culturally we are not inclined to take
risks’ (76%) and that the education system
‘does not encourage individual ideas and
dreams’ (77%). Lower direct taxation comes
top of the French wish list (most especially in
the fnancial services sector), followed by a
relaxation of employment laws. Two-thirds of
respondents (67%) believe their government
is not supportive of entrepreneurs.
The education system
‘does not encourage
individual ideas and dreams’.
Long hours
French business owners and managers work
the longest hours (47 hours a week) along
with Spain, but more than fve hours of that
is spent dealing with government red tape.
Long holidays
French respondents take an average
of 24 days’ holiday a year. Only
the Dutch take more time off.
Late payments
French small business owners are
more likely than any other nationality
to say they are suffering from late
payments – and also to admit they are
paying their own customers later.
Stress test
‘Less stress’ is seen as the number one
beneft of running a small business, followed
closely by more fexibility over working hours.
Yet independence and the ability to work
hard are viewed as the two most important
attributes of a successful entrepreneur.
Accidental entrepreneurs
A remarkable 37% of French small
business owners say they started their
own business because they ‘couldn’t fnd
a suitable job’. They are least likely to have
attended a formal business course at just
25%, compared to an average of 35%.
Accidental entrepreneurs
‘I started my business as I couldn’t fnd a suitable job’
37% France
26% All
21% Netherlands
Stuck in a groove
There are tentative signs of a pick-up
in France’s small business sector but
confdence remains low. Perhaps the most
telling statistic is that optimism levels have
now remained unchanged for three years.
Just 43% of French respondents say
they are optimistic about their prospects,
well below the average of 62% across
all six countries. The one encouraging
sign is that the number saying they are
defnitely not optimistic has fallen sharply.
There has been a small increase in the
proportion of French respondents reporting
increased revenue and proft (now 54% and
51% respectively) and a bigger increase in
the numbers reporting customer growth
(68%, up from 55% the previous year).
Order books have increased at 56% of
frms surveyed. This may be taken as
an indication of better things to come,
which is the message of recent surveys
from Insée, the National Institute of
Statistics and Economic Studies, and
forecasts from the likes of OECD.
However, 17% of French respondents say
they fear not having the fnancial resources
to keep going and more than a quarter
(26%) say bank fnance has become
more diffcult to access in the past year.
Feeling the pinch
French small business owners are feeling the effects of stagnation
in their own pockets. Nearly two-out-of-fve (39%) say they feel
personally worse off than a year ago. That is double the number
saying they feel better off (19%). Only in France does such a
feel-bad factor prevail. There is a real divide between those in the
service industries and those in manufacturing or construction.
Just 43% of French respondents say they
are optimistic about their prospects.
34 35 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: France Country profle: France
Country profle: Germany
Hiring intentions for the year ahead by region
High
Low
Medium
Moving up a gear
Germany’s small business sector is
experiencing accelerating growth. The
proportion of respondents reporting revenue
and proft growth is 7% and 4% higher
respectively than a year earlier – when German
growth was already outstripping most of the
rest of Europe. Only the numbers from the
US (and from Spain in the area of customer
growth) compete with those from Germany.
German growth is already
outstripping most of the
rest of Europe.
Manufacturers most bullish
The building and construction industry tops
the list of sectors for revenue, proft and order
book growth (with around nine-out-of-ten frms
reporting growth in all three areas). Financial
services and professional services are close
behind. Manufacturers and engineers are the
most bullish about their prospects, with 82%
saying they are optimistic for the year ahead.
Proportion reporting growth
71%
63%
74%
61%
65% 64%
Last 12 months
Previous 12 months
Revenue Customer numbers Proft
Spending and staffng restrained
While German small business owners are least likely to be
worried about having the resources to keep going, they
are keeping a rein on investment spending and staffng.
One-in-fve respondents reduced spending last year, the
highest proportion in any of the six countries, and one-
in-eight (13%) plan to cut spending in the year ahead.
One-in-fve respondents reduced
spending last year, the highest
proportion in any of the six countries.
Fewer than one-in-four frms plan to hire in the
year ahead, with all but a small number of the
jobs available going to juniors, apprentices and
interns. The three biggest areas of jobs growth
are set to be leisure and catering, building and
construction, and manufacturing and engineering.
Bank fnance still tight
German respondents who say bank fnance has
become more diffcult to access outnumber those
who say it has become easier by more than four-to-
one (21% to 5%). Nearly one-in-ten (9%) is thinking
of remortgaging their house to raise fnance – the
highest proportion in any of the six countries.
Exporting widely
While the proportion of frms that export is in line with
the average at 21%, German small businesses export
more widely, reaching an average of 9.5 countries.
Long hours
German small business owners and managers
view the ability to work hard as the key attribute of
an entrepreneur (followed by independence and
determination). Respondents worked an average of 45.5
hours a week in the past year compared to a global
average of 42 hours. Nearly half (47%) worked more than
50 hours. They do, however, take slightly longer holidays
– 21.6 days compared to a global average of 20.
Flexibility, autonomy
Asked what they see as the key benefts of working
in a small business compared to a multinational,
German respondents cite the fexibility to be able to
work from home and the satisfaction of being able to
infuence the direction of the business above all else.
Ich bin ein Unternehmer
More than any other nationality in our survey, German
respondents are keen to assume the entrepreneur
tag. Some 71% say they consider themselves to
be an entrepreneur, compared with 57% globally.
Paradoxically, only 42% say they always thought
they would start their own business one day. This
is the lowest proportion among all six countries.
German small businesses export more
widely, reaching an average of 9.5 countries.
Irritation with Brussels
Germans, together with the French, stand out
among their European peers for their concern
over EU regulations. More than two-in-fve
respondents (43%) say rules coming out of
Brussels are impacting on their business.
Many planning retirement
A third (33%) of German small business owners
and managers are planning an exit within fve
years. Of those looking to quit, nearly half (49%)
will retire and allow their business to close.
Wary of social media
While large numbers of German small business
owners and managers use eBay and Amazon, they
are slow to adopt most social media. A third of
respondents (32%) rely on talking to people on the
phone or in person and 18% say they are afraid of
not being able to control social media (this compares
with 12% of respondents across the six countries).
36 37 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: Germany Country profle: Germany
Country profle: Spain
Cash concerns remain
Despite the improvement in business conditions,
18% of Spanish respondents say they fear not
having the resources to keep going in the year ahead.
This compares with 11% globally. Late payment
by customers remains an issue for nearly half of
respondents (47%). A quarter (25%) have sought
fnance from a bank in the past year (compared with
16% of global respondents), more than a ffth (21%)
have borrowed on their credit card, and 14% have
sought fnance from family or friends.
Longest hours
Spain’s small business owners put in an extra hour-and-
a-half each week last year. Together with the French,
they now work the longest hours – 47 compared to an
average of 42 across all six countries. However, they
are also the most likely to cite fexibility over working
hours as a key beneft of running a small business.
But still a decent lunch-break
More than half of Spanish respondents (52%) say
they take a proper lunch-break, of over 30 minutes.
Switched on to social media
Spanish small business owners and managers are
much more likely to be using social media than their
peers elsewhere (73% compared to an average of
61%) although nearly a quarter (24%) say they worry
about using it from a business point of view.
Chief bugbears
They are most likely to complain about their tax system
and government bureaucracy. Two-out-of-fve (41%) say
their government’s policies fail to support entrepreneurs.
Reduced direct taxation is number one
on the wish list.
Entrepreneurial disconnect
Spanish small business owners and managers were
by far the most active innovators last year (61%
compared to 41% globally) but consider themselves
the least entrepreneurial nation (something which
other countries agree with). Paradoxically, Spanish
respondents are the most likely to say they always
thought they would start their own business one
day (57% compared to an average of 48%).
The comeback kid
The remarkable recovery in the Spanish
economy this year, with frst-half growth at
the highest rate for more than eight years,
is refected in the buoyancy of the replies
from our Spanish respondents. The numbers
reporting growth in revenue and proft are ten
percentage points higher than a year ago,
at 62% and 58% respectively. Spanish small
businesses are more likely than their peers
elsewhere to have grown their order book in
the past year. Three-quarters (74%) report
growth in customer numbers, up from 57%
a year earlier.
The numbers reporting
growth in revenue and proft
are ten percentage points
higher than a year ago.
Spanish respondents are the most likely
to have hired staff in the past year and the
most likely to do so again in the coming
year. Together with US respondents, they
are the most likely to be investing more
in the coming year. Over two years, they
have gone from being less optimistic than
average, to more optimistic than average.
Optimism
Spain 65% All 62%
All 22%
Spain 27%
Hiring in the year ahead
Innovation with new products and services
Spain 61%
All 41%
Working longer hours
Spain All
47 hours 42 hours
All 16% Spain 25%
Managing to borrow from the bank
Rising optimism in Spain
Two years ago Now One year ago
40%
50%
60%
70%
80%
Spain
Average of other
six countries
Cyber insurance
The Spanish are more likely to have protection
16% 8% 4%
S
p
a
in
A
ll
F
ra
n
c
e
A dramatic turnaround
38 39 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: Spain Country profle: Spain
Funding diffcult
Dutch respondents are the most negative about the
availability of bank lending. There is a stark divide
between the 34% who say bank fnance has become
more diffcult and the 2% who say it has become easier.
Surprisingly, only 15% of
respondents say their company
is engaged in exporting.
Later payment
An above average 43% of Dutch frms say they are
suffering from later payment by customers. In the
building and construction industry the fgure rises
to a remarkable 71%.
Bottom of the export league
Surprisingly, only 15% of respondents say their company
is engaged in exporting. This is the lowest proportion
among the fve European countries in our survey.
No hiring spree
Dutch frms are the least likely to be hiring in the
year ahead, with just 15% planning to take on new
staff. Hiring intentions rise with the size of company
– two-thirds (67%) of those in the £5m to £10m
turnover bracket plan to take on new staff.
Entrepreneurial
Dutch business owners and managers are
the keenest to label themselves entrepreneurs.
Three-quarters (76%) happily assume the title.
They also consider themselves the most
entrepreneurial country in our survey, with a
less risk-averse culture than any of the other
European countries.
The Dutch don’t lunch
Some 40% of Dutch respondents take less than
half an hour off for lunch, 12% skip lunch entirely
and 23% say the lunch question is not appropriate
as their normal work hours exclude lunchtime.
But they do take time off
On average, Dutch small business owners took
nearly two extra days’ holiday last year, bringing
their average time off to 26 days – a full six days
more than the average for the six countries.
Flexibility
The prime attractions of running a smaller business
are the ability to work from home followed by less
bureaucracy and fexibility over working hours.
Not for sale
Dutch small business owners are the least likely
to be considering exiting their business in the next
fve years – just 15% say they plan to do so.
Country profle: Netherlands
Rising optimism in the Netherlands
Two years ago Now One year ago
40%
50%
60%
70%
80%
The Netherlands
Average of other
six countries
Planning to hire in the year ahead
The new jobs are concentrated in three main sectors
36%
Manufacturing/engineering
20%
IT/media/telecoms/printing
25%
Motor vehicles/garages
Optimism amongst
businesses in Spain
and the Netherlands is
second only to the US.
Recovery boosts small business
The recovery in the Dutch economy, which gathered
momentum over the course of 2014, has clearly
given the smaller business sector a much needed
boost. Over two years, optimism levels have
surged, with the building and construction industry
leading the way. Here the proportion of owners and
managers who say they are optimistic about the year
ahead has almost doubled over the period to 74%.
One-in-four respondents still
cites diffculty in attracting
new clients as a concern.
Revenue and proft growth among smaller companies
remains below par at 60% and 57% respectively
(compared to 65% and 61% on average across all six
countries) but both fgures are a full ten percentage
points higher than a year ago. Order books are
growing at the majority (57%) of companies
although one-in-four respondents still cites diffculty
in attracting new clients as a concern. Along with
US and Spanish frms, Dutch frms are the most
likely to have increased investment last year.
40 41 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Country profle: The Netherlands Country profle: The Netherlands
Age of respondents
Up to 30 60 and over 30 to 39 40 to 49 50 to 59
7%
22%
27%
24%
20%
Number of employees
One 20 to 50 One to four Five to nine Ten to 19
44%
9% 9%
12%
26%
Turnover
Figures have been converted into Pounds Sterling for reporting purposes
<£100k >£10m £100k-£500k £500k-£1m £1m-£5m £5m-£10m
59%
1% 1%
10%
8%
20%
Methodology and
profle of respondents
The sample for this study was
provided by Research Now using
their proprietary online panels. In total
4,140 business owners, founders or
senior executives within companies
with up to 50 employees were
contacted (1,000+ from both the
UK and the US and 500+ each from
France, Germany, the Netherlands
and Spain). Respondents completed
an online survey between 22nd
May and 15th June 2015.
Statistical accuracy: +/- 1% to
+/- 2% for the whole sample of
4,140 and +/- 2% to +/- 4% for
each country’s sample except
the UK and US – +/- 1% to
+/- 3%. Some fgures may not
add up due to rounding.
Sectors
Business services
Retail/distribution
IT/media/telecoms/printing
Building/construction
Leisure/catering
Financial services
Manufacturing/engineering
Marketing/communications
Motor vehicles/garage services
Other including:
healthcare, property,
arts, tourism, transport,
entertainment and sport
Professional services
15%
13%
8%
6%
6%
5%
4%
3%
1%
23%
17%
Age of business
Two years old
Three years old
Four years old
Five years old
Six to nine years old
Ten to 14 years old
15 to 19 years old
20 to 30 years old
30 years old or more
Up to one year old
7%
7%
5%
8%
17%
16%
10%
13%
10%
6%
62% male
38% female
42 43 The Hiscox DNA of an Entrepreneur Report The Hiscox DNA of an Entrepreneur Report
Methodology and profle of respondents Methodology and profle of respondents
Hiscox is an international specialist insurance and reinsurance
company with over 2,000 staff in 14 countries. With over 100
years of underwriting expertise, we work with businesses and
individuals worldwide to provide cover that is tailored to suit
often complex and unusual insurance needs. We currently work
with over 268,000 SMEs, professionals and consultants across
the UK, Europe and the US that together have a combined
turnover in excess of £42 billion. These include a wide range
of businesses, from tech start-ups and media agencies to
landscape gardeners and interior design consultants.
Published: September 2015
Hiscox Ltd
1 Great St Helen’s
London EC3A 6HX
T +44 (0)20 7448 6000
F +44 (0)20 7448 6900
E [email protected]
www.hiscoxgroup.com
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