By Marcus Leach
The British economy is getting a shot in the arm from the nation’s youngest businesses, according to the latest Henley Business School (HBS) small business research, which has been commissioned by T-Mobile.
This new breed of small British business, dubbed TOTs by the business school, could add £360 million to the UK economy and create over 70,000 new jobs over the next 12 months (2).
TOTs, an acronym coined for the T-Mobile 12 Study, describes firms that are Twelve months old; have an Optimistic outlook on business; and are Technologically-minded, using social networking sites and smartphones to boost their business from the outset.
The T-Mobile 12 Study was commissioned by the mobile communications company to investigate traits displayed by successful businesses that survive their first 12 months. The findings are being used by T-Mobile to help tailor its business offer to this specific sector.
The study found that mobile technology is at the heart of TOT firms. The vast majority of TOTs (98%) rely on smartphones for emails, organising their day and accessing business apps like Salesforce.com.
They also use social networking sites like Twitter, Facebook and LinkedIn to promote products, network with potential customers and get real-time feedback on products and services.
Benefits of this approach are underlined by Accenture which claims companies that invest early to harness the power of social media claim returns as high as 20 to 1, with greater gains predicted to be on the way.
This new breed of British business is growing quicker than the average start up according to the study. Over half (51%) predict they will increase revenues by 30% or more over the next 12 months. With TOTs generating between £100,000 and £250,000 revenue in their first year, this results in an extra £30,000 to £75,000 turnover per firm. Even if 10% of the firms started in 2011 became TOTs it would add a minimum of £360 million to the British economy.
TOTs are also creating jobs to service this growth in business. The study reveals the average TOT employs four permanent staff, with the majority (89%) planning to recruit at least two to three more over the next year. Again, if just 10% of new start ups become TOTs they could create around 40,000 to 70,000 new jobs over the next 12 months (3).
Given the economic backdrop in which these businesses were set up, the research reveals TOTs have focussed on improving cost performance, boosting export performance and being highly flexible as a business. Nine out of ten TOTs (91%) export goods and services to markets around the world - 49% trade with Western Europe and 44% with Eastern Europe. While in order to control costs and flex with volatile market conditions, two thirds (77%) said their firms do not want to commit to long-term contracts or leases.
"It’s clear that Britain is benefiting from these optimistic young firms that have embraced technology and are creating jobs," Martin Stiven, Vice President of Business for T-Mobile, said.
"We must do everything we can to help TOTs continue to be as successful as possible. That’s why we’ve designed a special mobile phone plan specifically for them, and small businesses alike. We know they value the flexibility of short contracts and the benefits that new technology can bring so we’ve launched the UK’s only 12 month business mobile phone plan which comes with a free smartphone.”
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