Millennials lead the way as small businesses ride the upswing

12th September 2017

Study of 4,000 small businesses in the UK, Europe and the US shows strong growth across the board – with younger entrepreneurs outperforming the rest

London, UK (12 September 2017) - An international study by specialist global insurer Hiscox reveals a confident tone among small businesses, with two-thirds (67%) reporting revenue growth and more than seven out of ten (71%) expanding their customer base in the past year. US and Spanish firms top the revenue growth tables. By contrast, in the UK there is a modest decline in the numbers reporting revenue growth.

Economic recovery is finally being translated into solid jobs growth in the small business sector. One in six firms (16%) has added staff and more than a quarter (27%) plan to hire in the year ahead.

Millennials (those in their 20s and 30s) are leading the upswing. They are significantly more likely to be optimistic about the year ahead and to report an improvement in their personal finances.

The ninth annual Hiscox DNA of an Entrepreneur Report is based on responses from 4,000 small business owners and senior managers in six countries - 1,000 each from the UK and US and 500 each from France, Germany, the Netherlands and Spain. It provides a unique window into the world of the entrepreneur – and serves as a barometer for the financial health of the small business sector.

Bronek Masojada, CEO at Hiscox, commented: “The report demonstrates that small businesses are now getting their share of growth in all the countries covered. It shows too there is a new generation of risk-takers coming through who are clearly prospering. And it reveals for the first time there is a dynamic core of entrepreneurs, engaged in more than one business, who are likely to be leading the way with exports and innovation. These are the wealth generators on whom our future growth depends, and policy-makers should take note.”

Highlights from this year’s report include:

Millennials are prospering: Half of under-30s (50%) and 46% of those aged 30 to 39 say they are better off than a year ago. That contrasts with a third or less of older respondents. There is a similar generation gap when it comes to optimism for the year ahead.

Livewire core of serial entrepreneurs: Over a quarter (26%) of respondents currently operate more than one business. They are a dynamic bunch, making up more than a third (35%) of those planning to introduce a new product and nearly half (48%) of exporters. They are mainly to be found among the under-40s and those running the larger companies in the study.

Business concentration a concern: One in six small firms (16%) is dependent on one customer for half or more of its revenue. The average respondent relies on its biggest customer for over a quarter (26%) of its revenues, but the figure is higher among sole traders (29%). The problem is most acute in the transport and business services sectors.

Mounting cost of cyber attack: One in eight firms (13%) has suffered a cyber attack, up from 11% a year ago. Nearly half of those firms (48%) say it resulted in a serious loss, up from 26% in 2016.

Growth across the board: Two-thirds (67%) of firms report increased revenue. The figures are highest in the US (72%), where both investment spending and export activity have surged, and Spain (71%). More Dutch and French firms (67% and 62% respectively) also report sales growth, underlining the recovery in the eurozone. While the numbers are down marginally in the UK (from 64% to 61%) the proportion reporting profit growth is marginally higher (62% vs 61% a year ago).

Political instability an issue: The number of UK and US firms saying political instability is having an impact on their business has jumped sharply – from 22% to 31% in the UK and from 31% to 36% in the US. The numbers are significantly higher in France and Spain (43% and 57% respectively) but have fallen in the past year.

Signs of easier credit but alternative funding on the rise: While the number of firms who say bank funding has become more difficult still outnumber those that say it has become easier, the gap has narrowed significantly. A year ago, a net 15% of respondents said bank funding had become more difficult (22% found it more difficult and 7% found it easier); now that figure has shrunk to just 8%. And in the US, the numbers saying credit has got easier now outweigh those that say it has got more difficult (14% versus 13%).

However, more small business owners are by-passing the banks. There has been a sharp rise in the numbers turning to crowd-sourcing (6% raised money through this route in the past year), venture capital (6%), re-mortgaging their house (6%) or raising money from family and friends (12%). One in ten (10%) US firms now raises money from non-bank lenders such as debt funds.

Divide over Brexit: The research shows that 16% of small business owners see Brexit as a negative for their business but 14% see it as a positive. Overall, this represents a drop in the number that view Brexit as a negative - a year ago, a net balance of firms in all six countries saw Brexit as a negative (20% vs 9% who saw it as a positive). In the UK a net 5% of small firms still see Brexit as a negative, but in the US a net 7% now believe it will be good for their business. Concern over Brexit is still a big issue in Spain: 21% of Spanish respondents see Brexit as a negative compared with 9% who see it as a positive.

Widespread use of mentors: Nearly a third (31%) of small business owners and managers have had a personal mentor. The practice appears most widespread in the US and Spain, where 45% and 35% of respondents say they have been mentored, and among the under-30s (55% vs 24% of over-60s). Nearly all those who have used mentors (94%) say the experience was either ‘very useful’ or ‘quite useful’.

For further information please contact:

Hiscox Ltd    
Abi Clark +44 (0) 20 7448 6470 [email protected]
Caroline Cecil +44 (0) 20 7610 4110 [email protected]

Notes to editors

A full copy of the report can be found here.

The Hiscox DNA of an Entrepreneur Report examines the attitudes and behaviours of small business owners annually. Conducted for Hiscox by Research Now, the findings are based on responses from more than 4,000 owners, founders or senior executives in businesses with up to 50 employees (1,000+ respondents each from the UK and the US and 500+ each from France, Germany, the Netherlands and Spain).

The sample was drawn from online panels contacted between 10th May and 6th June 2017. Statistical accuracy: +/- 1% to +/- 2% for the whole sample and, for the country samples, +/- 1% to +/- 3% for the UK and US and +/- 2% to +/- 4% for the other country samples. Some figures may not add up due to rounding.

About The Hiscox Group

Hiscox is a global specialist insurer, headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). Our ambition is to be a respected specialist insurer with a diverse portfolio by product and geography. We believe that building balance between catastrophe-exposed business and less volatile local specialty business gives us opportunities for profitable growth throughout the insurance cycle. It’s a long-standing strategy which in 2016 helped generate gross premiums written of £2,402.6 million and a record profit before tax of £354.5 million.

The Hiscox Group employs over 2,300 people in 13 countries, and has customers worldwide. Through the retail businesses in the UK, Europe and the US, we offer a range of specialist insurance for professionals and business customers as well as homeowners. Internationally traded, bigger ticket business and reinsurance is underwritten through Hiscox London Market and Hiscox Re and ILS.

Our values define our business, with a focus on people, quality, courage and excellence in execution.  We pride ourselves on being true to our word and our award-winning claims service is testament to that. For more information, visit www.hiscoxgroup.com


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