Hiscox's DNA of an Entrepreneur Report Reveals Solid Growth for Small Businesses but Concerns around Political Instability and Government Support
American business owners report growth in revenue, but are feeling the effects of political uncertainty
- Political Instability and Government Support – 31% of entrepreneurs say political instability is negatively impacting their business. U.S. business owners’ top wish as it relates to support from the government is reduced taxation.
- Funding Challenges – Bank funding has become more difficult to obtain this year versus last year (17% vs. 13%), leaving entrepreneurs looking for alternative options.
- Hiring Intentions – Hiring is on the rebound with 23% of business owners looking to hire next year.
- Money isn’t Everything – Only 37% of business owners cite ‘opportunity to make more money’ as the top benefit of becoming an entrepreneur.
New York - 9/12-2016 - Hiscox, a leading specialty insurer providing insurance to more than 366,000 small business owners worldwide, announced today the findings of its eighth annual DNA of an Entrepreneur report. Hiscox surveyed over 1,000 small and medium-sized U.S. business owners about the financial pressures, stresses, opportunities and challenges currently faced by entrepreneurs. This year’s findings reveal that, while U.S. small business owners reported growth in revenue (70%), profit (68%) and new customers (73%), a surprising 31% believe political instability in America is having a negative impact on their business.
“We are encouraged to see U.S. small business owners taking courageous strides to expand their businesses,” said Ben Walter, CEO of Hiscox USA. “Because small businesses are such critical drivers of economic growth, it is important that all of us, including corporate and government leaders, take the time to understand the challenges these business owners are facing. We look forward to supporting our small business customers as they work to take on these challenges in the year ahead.”
- Bank funding has become more difficult for U.S. small business owners to obtain versus last year (17% vs. 13%).
- 44% of small businesses that were set up within the last four years say they are drawing on outside sources of income to help fund or develop their business. This is especially common amongst those over 40 years of age (54%).
Support from the Government
U.S. entrepreneurs expressed their outlook on how the government is supporting their businesses, with many noting a stagnant trend over the past year.
- 58% feel as though government support has stayed the same (vs. 48% in 2015);
- 29% feel like support from the government has improved (down from 34% in 2015); and
- 13% believe support has worsened (vs. 18% in 2015).
When it comes to the wish list of small business owners in all countries surveyed, including the U.S., in regards to government support, most desire reduced taxation. In terms of the U.S. “wish list” specifically, American small business owners are seeking:
- Simpler accounting rules;
- Stimulation of lending;
- Subsidized training and professional development courses; and
- Relaxation of employment laws.
Strong Hiring Intentions, but Lack of Succession Planning
This year’s findings reveal that the U.S. is one of the most active recruitment markets, with 23% of business owners looking to hire in the year ahead. For the first time, the report explored the topic of succession planning. Remarkably, 61% of U.S. small business owners do not have a succession plan in place. What’s more surprising is that 65% of those aged 50 and older are amongst those without a succession plan. This is largely due to the fact that business owners are retiring and plan to close their businesses or sell the businesses outright.
Cyber Hacks go Undetected
When surveying the cyber landscape, 10% of U.S. respondents reported suffering a cyber attack in the past year. Though what’s more alarming is that 8% of firms actually “don’t know” if they’ve fallen victim to a cyber hack.
Lifestyle vs. Growth for Entrepreneurs
In a potentially surprising turn, the study found that money is not a primary motivator for entrepreneurs, with only 37% citing it as a top benefit.
What do U.S. small business owners prioritize the most?
- More flexibility over working hours (68%);
- Being in greater control (61%); and
- Ability to work from home/remotely (57%).
Although flexibility and control are top motivators, entrepreneurs are also taking little to no vacation. In fact, more than one in five (22%) claim to have taken no holiday at all (vs. 20% in 2015).
Top 5 Major Uninsured Risks
Small businesses have a number of responsibilities to handle and concerns to think about on a daily basis. While a majority of business owners understand the risks they face, many are taking unnecessary risks by not insuring against events that could pose a real threat to their businesses.
The top five risks U.S. small business owners worry about, but don’t currently insure against include:
- Non-payment by customer (34%);
- Unforeseen events such as a pandemic or economic crisis (24%);
- Being sued by a customer (23%);
- Hacking/cyber crime (21%); and
- Reputational damage (17%).
While the report shows global shifts impacting small businesses, U.S. entrepreneurs have proven to be resilient and ready to tackle road blocks that stand in their way. Not only do U.S. small business owners have the courage to take on new hires, but many are finding alternative means of funding to grow their businesses and have strong convictions when it comes to making key business decisions. This type of entrepreneurial spirit will be a theme throughout the upcoming year.
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Sample and Methodology
The sample for this study was provided by Research Now using their proprietary online panels. In total, 4,062 business owners, founders or senior executives within companies with up to 50 employees were contacted (1,000+ from the UK and the US and 500+ each from France, Germany, the Netherlands and Spain). Respondents completed an online survey between May 9 and June 6, 2016.
About Hiscox Small Business Insurance
Hiscox, the international specialist insurer, is the first company in the U.S. to offer insurance for small businesses direct, online, and in real-time. We provide professional liability, general liability and business owner's insurance, underwritten by Chicago-based Hiscox Insurance Company Inc., which is rated 'A' (Excellent) by A.M. Best Company. Additional information can be found on the Why Choose Hiscox? page. Coverages are subject to underwriting and may not be available in all states. Hiscox Ltd is listed on the London Stock Exchange UK: HSX.
Hiscox also provides professional liability, property and specialty insurance to U.S. businesses through U.S.-based brokers. This communication does not constitute a solicitation of business by Hiscox's syndicates at Lloyd's, London.
Lou Casale, Hiscox USA
Lisa Capaccio, Prosek Partners
212.279.3115 ext. 116