Fear of failure hampering businesses from making important decisions
08 Nov 2012 01:02 GMT
The rise of the entrepreneurial BoFF – “Business overcome by Fear of Failure” – is holding back business success and stalling Britain's economic recovery.
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 researchcarried 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%).
Sue Hayes, Managing Director of Barclays Business Banking, said:
“At the time of making important business decisions it’s only natural to be scared of getting it wrong. 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%).
Jon Cousins, Psychological Entrepreneur, said:
“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.”
“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 fears2.
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%) 2
- Business managers are most fearful of the following consequences when making important business decisions2:
- 46%- damaging profits or making a loss
- 46%- losing customers or clients
- 37%- risk losing the success the business has already achieved
Barclays is providing local clinics and seminars on a wide range of topics to all small businesses, regardless of who they bank with, to help overcome the challenges they are currently facing and reach the next level.
For more information about Barclays Ignite Seminars or clinics in your area log onto www.barclays.co.uk/businesshub or call 0845 124 6502. Clinics and seminars are free of charge and available to all.
Case studies of small businesses, photography and interviews with Barclays spokespeople are available. Please contact press office on number above.
About the research
- All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1002 Senior decision makers from small and medium businesses (less than 250 employees). Fieldwork was undertaken between 12th-18th October 2012. The survey was carried out online.
- Respondents were asked to pick their top three
About Barclays Business banking:
Barclays Business banking has over 700,000 - customers that are a mixture of start ups, sole traders, partnerships and limited companies.
Barclays services to SMEs include:
- A choice of business accounts that they can tailor to their needs and the provision of up to two years free banking to start-ups, subject to remaining in credit.
- Day to day business banking support through an award winning team of Business Managers who are available over the telephone for everyday and urgent banking needs during the daytime, evenings and weekends.
- A support line that customers can use to talk directly to a Barclays lending specialist to discuss additional financing options.
- Free consultations for businesses with a local accountant, marketing expert and solicitor to advise on topics such as the best legal status, how to advertise or draft supply contracts.
- A free nationwide business seminar and workshop programme. This is designed to help business owners network and gain practical help on relevant challenges such as marketing, trading online or how to generate more business profits. Over 12,000 delegates have attended one of Barclays 800 business seminars this year.
- Business management software that helps business customers complete their account work quickly and efficiently; support their hiring efforts; help back up their business data securely; and avoid late payment and bad debts.
Barclays Ignite Seminars are on 20 and 22 November from 5pm - a unique mix of face-to-face and satellite link-up streamed live across 10 locations. Participants have the chance to question entrepreneurs from around the country and hear live from our keynote speaker, Adam Balon of Innocent Drink, as well as other locally based entrepreneurs.
Clinics are held across the UK and available to Barclays customers and non-customers alike. Clinic sizes are small, ensuring an interactive learning experience; topics include cashflow, marketing, trading internationally and lending.
Barclays is a major global financial services provider engaged in personal banking, credit cards, corporate and investment banking and wealth and investment management with an extensive international presence in Europe, the Americas, Africa and Asia.
With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 140,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.