Almost half of senior business people pinpoint poor management and lack of leadership skills for high business failure rate




Freshminds, an award-winning recruitment consultancy that provides UK and European businesses with senior and executive talent, has released the results of a new survey which reveal what people consider to be the biggest reasons why 54%[1] of start-ups in the UK eventually fail within three years.


The survey found that 47% of respondents believe the main reason for the high failure rate is ‘poor management and leadership’. This is followed by ‘insufficient funds or investment’ (35%), ‘lack of planning’ (24%), ‘inability of the business to differentiate itself from competitors’ (19%) and a ‘lack of innovation’ (19%).


James Callander, Managing Director at Freshminds, said: “There is no one reason behind business failure, it is a combination of different factors. Despite this, entrepreneurs remain confident they can defy the odds and still grow a business that is profitable.”


Indeed, recent figures show that 660,000[2] new businesses were established in 2016 – up from 608,000 in 2015, making the UK one of the fastest-growing locations for start-ups in the world second only to the US.


“The introduction of government-sponsored initiatives, the rise of the alternative finance market, and global economic growth continuing at its highest rate since 2011 have encouraged many would-be entrepreneurs to set up their own businesses,” said James Callander. “But as the results of our survey show, not everyone is cut out to be a business leader.


“We found that the ability to be an effective leader and manage people in the right way are the most critical factors that determine the success or failure of a business. We also find the best start-ups that we work with look to solve a genuine problem – and develop a product or service that solves that problem.


“Those start-ups that fail do so because the leadership team have failed to engage their teams, are often guilty of micromanaging employees, set unrealistic goals for the business, and demonstrate an over-enthusiasm. This more often than not leads to over-expansion which in turn results in poor execution of great ideas to the detriment of the business itself.”


He added that “the UK’s entrepreneurship culture should continue to be encouraged.” Entrepreneurs, he said, “play a critical role in creating new jobs and driving the economy forward.”
“However, the biggest investment new business owners must make - and the one that will deliver the greatest return – is the investment they make in themselves by learning and developing the leadership and management skills needed to run a successful business.


“It’s all very well having a great idea and the funds to bring your new product or service to market, but if you lack the ability to listen, learn and leverage your own skills and those of your teams, then the business will ultimately fail.”
“It is not exactly rocket science, but to start a business in a growing market and broader market where you can sell and a deliver a product or service profitably, will support your growth’.


Freshminds recruits high calibre management and strategy consultant talent for many of the world’s leading strategy consultancies, advisory and private equity business, and some of the biggest retail and technology companies, with a client portfolio that includes the likes of Amazon, Tesco and the Big Four consultancy firms.


For more information about Freshminds, please go to https://www.freshminds.co.uk/


[1] Source: Enterprise Research Centre, October 2017

[2] Source: Centre for Entrepreneurs, October 2017

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