By Daniel Hunter
A fear of failure is hitting British entrepreneurs, with almost three fifths (57%) admitting that they’ve put off making important businesses decisions for a day or more during the last twelve months in case they make the wrong call.
New Barclays research carried out amongst over 1,000 senior decision makers in small and medium businesses in Britain, reveals the tough economic climate is causing this business paralysis, as over half (51%) state the economic environment has affected their approach to making business decisions.
Almost one in five (18%) say they now play it safe and their focus is now purely on the day to day, whilst over a quarter (27%) admit that economic uncertainty has made them much more hesitant about longer term decisions.
This impact of BoFFs - Businesses overcome by Fear of Failure - could not only hamper individual business success, but could also collectively stall the UK's economic recovery. BoFFs admit their fear of failure has or could prevent their businesses from growing (48%), from taking an innovative approach to marketing (31%) and from making decisions about the longer-term direction of the business (28%).
“At the time of making important business decisions it’s only natural to be scared of getting it wrong," Sue Hayes, Managing Director of Barclays Business Banking, said.
"It can feel like you are taking a big risk — whether that is decisions about staff, products, finance or even your marketing strategy. Despite the tough external environment, there are many opportunities to be seized upon and the ability to make important decisions is vital to the growth of all businesses and the overall UK economy.”
The research reveals that younger entrepreneurs (aged 25-34) are more willing to push themselves when it comes to making business decisions. 78% claim to push themselves out of their comfort zone from time to time or more often, compared to just 58% of business decision makers aged 55 and over. Younger entrepreneurs also appear to have different fear-factors to those aged 55 or older. They are less worried about the current economic environment (44%) than older entrepreneurs (60%), but instead are more concerned about the Eurozone (16%) than their older counterparts (12%).
“While risk aversion is a totally normal human response, the BoFF phenomenon is out of character when compared to the traditional risk-seeking behaviour we might expect of entrepreneurs. In the face of adversity a fear of failure can cause a freeze reaction amongst businesses, where it can often wrongly seem safest to do nothing at all," Jon Cousins, Psychological Entrepreneur, said.
“In general, younger entrepreneurs are greater risk-takers when compared to their older counterparts, as it’s natural for the young to believe they are invincible. Older entrepreneurs have had greater life experiences, which prove to them that success is rarely guaranteed. Those who are just starting their entrepreneurial ventures feel sure that they will still be around when the economy recovers, whereas older business owners may wonder when — and if — it’s all going to change.”
It’s not just economic uncertainty which is making business decision makers fearful (58%), but concerns around cash flow and late payments (32%), increased competition (28%) and legislation and regulation (27%) are also amplifying these fears.
BoFFs may perhaps take comfort in the fact that, although things don’t always go to plan, often the consequences of their decisions aren’t as bad as they may fear. 75% of senior decision makers admitted to making a decision that didn’t go to plan, and 45% said they have made a decision that didn’t go to plan but there were no serious repercussions and 12% actually said the result was better for the business in the long run.
my-wardrobe.com, founded by Sarah Curran in 2006, has become the premier online retailer for ‘everyday luxury’ designer fashion. Sarah’s attitude towards fear is a human one:
“As an entrepreneur and a founder of a business, you have to push yourself out of your comfort zone and make tough decisions every day. Starting up my-wardrobe.com from scratch meant making many sacrifices both personally and financially, which certainly was enough motivation to drive myself forward every day. I’ve never let a sense of fear hold me or the business back. You learn from every decision you make, so I’d never say I’ve made one that I regretted.”
Other findings from the research include:
- Business managers’ levels of risk appear to be mirrored in both their business and personal lives, as the majority of business owners (51%) take as many risks in their business life as they do in their personal life. However, females (25%) are more likely to take risks in business than they are in their personal lives, compared to males (36%).
- A quarter of respondents (25%) admit to inventing reasons not to do a task in work, with females (28%) more likely to do this than males (24%). One fifth (21%) said the reason for this was because they were afraid it would go wrong.
- Three quarters (71%) of business have made decisions which have frightened them
- The top most frightening decision was turning down a customer or client (24%), followed by decisions relating to current employees such as making redundancies (17%) and taking on external finance in order to grow (17%)
- Business managers are most fearful of the following consequences when making important business decisions:
o 46%- damaging profits or making a loss
o 46%- losing customers or clients
o 37%- risk losing the success the business has already achieved