The UK's entrepreneurs are being held back by a lack of financing and the skills shortage.
Over two-fifths, 42 per cent, of start-up businesses surveyed by the Institute of Directors’ 99 network said they struggled to hire people with the right skills, and 39 per cent said they had difficulty accessing financing, which was preventing the growth of the company.
Access to skilled employees, and good digital infrastructure are the two most important things for a start-up the respondents agreed.
Jimmy McLoughlin, deputy head of policy at the IoD, said:
The start-up revolution has taken hold in Britain like nowhere else in Europe. “It is a worry, therefore, that so many start-ups struggle to hire skilled employees. The push to teach children digital skills is part of the long-term solution, but it is [also] crucial that Britain’s immigration system is open and easy to navigate.
Despite the government’s EIS scheme to encourage investors to fund start-ups, and the funding for lending scheme, access to finance is such a problem that 53 per cent said they had relied on money from family to get their business off the ground, and 45 per cent said they’d borrowed money from friends.
McLoughlin called for less regulation for the growing alternative finance sector, saying: “Innovations like crowdfunding and peer-to-peer lending are quickly becoming mainstream options. We should strip back the layers of complexity which currently stand in the way.”
Crowdfunding was used by 30 per cent of start-ups. Just over a third of respondents said government grants had been an important aid in starting up their business, 21 per cent said government start-up loans useful.
The survey by the IoD 99 network – a group of 650 entrepreneurs under the age of 35 – also revealed that 61 per cent of young entrepreneurs were in full-time work when they started their own business. Just over a fifth said they started a business to to create a positive social impact, which was the third most-popular reason to taking the plunge.