Being a business owner in the UK is in the bucket list of many young professionals who are even living far off the UK at present. One of the primary reasons behind this is the perceived highgrowth potential in the UK due to its favorable demographics and consumer spending habits. As much as starting and running a business in the UK is lucrative, there are many challenges an entrepreneur needs to familiarize himself with. Failure to tackle these important challenges will prove to be adverse in the long-term. Between 2007 – 2016, over 39,000 businesses in the UK failed in their very first year of operations. In this guide, we will introduce 5 key challenges to overcome when running a business in the UK.
The UK is generally a very stable region from a political perspective, but in today’s world, an investor should never take that for granted and believe a political turmoil might never hit the UK. Just like the Brexit, there could be several such developments in the future as well. As a prudent entrepreneur, one needs to plan ahead for these types of developments and the instability associated with such events. It is common for developed countries to run into problems, but successful entrepreneurs always have a plan ‘B’ and are prepared to adapt to different political environments successfully to ensure the long-term sustainability of the business. As such, it’s important for entrepreneurs to assess the impact of such a situation on their businesses and be ready with alternative plans. It would be near impossible in today’s world to find a country without the risk of temporary instability, so it’s important to embrace such developments as normal events and move forward.
Lack of market research
Often, entrepreneurs who are planning on doing business in the UK are quick to jump into conclusions and miss the fine print, so as to say when starting a business in the UK. This is one of the many mistakes committed by such aspiring individuals that very often leads to failure in their business ventures. Conducting thorough research is very important to build a successful business in the UK. Thorough market research will help identify the consumer trends in the UK and as importantly, this will further help the entrepreneur understand the target market better. Failure to conduct thorough market research prior to launching a business in the UK will certainly keep the founders in the dark, whereas a thorough understanding about the target market and the industry will help founders come up with innovative ideas and products to keep the business alive even under tough conditions.
Lack of expertise in financial management
In the UK and anywhere else in the world, entrepreneurs are individuals with innovative ideas and a dream to bring such ideas into reality. However, most of the time, these entrepreneurs are not experts in managing finances. Even though a business model could be very attractive from the outset, a lack of financial management skills could soon wipe the business out of existence, which occurs time and time again in the UK. To avoid this, entrepreneurs who run businesses in the UK should either develop such cash management skills or hire highly qualified accountants and finance professionals. Credit & Business Finance Ltd (UK) has identified poor management of cash flow as a leading reason for businesses in the UK to fail unnecessarily.
Lack of an exit strategy
While some businesses are built to last, others are not. Regardless of whether a business is built to last or not, every entrepreneur might face a situation where he or she has to sell the business to realize a cash return. It could be to meet urgent cash requirements for an emergency or to leave the UK and move to another country. Even though an entrepreneur might not realize this at the initial stages of forming a business in the UK, it’s important to have an exit strategy to ensure the business will never be sold for pennies at any point in time. Popular exit strategies are IPOs, spin-offs, management buyouts, and mergers. These strategies need to be carefully understood and a viable exit strategy should be formulated, which is an integral part of the success of many businesses.
Over the last couple of decades, technology has changed many industries and business sectors in the UK. Rapid changes and developments of new technologies could soon wipe out many businesses in the UK. To avoid this, entrepreneurs, investors, and managers of businesses in the UK should pay clear attention to the ongoing developments and identify disruptive technological developments as early as possible to benefit from such developments and stay on top of the game. Failure to do so could create openings for new market entrants to come and compete with them, which would eventually lead to a loss of market share.
Running a business in the UK comes with many benefits, both financially and non-financially. However, to run a successful business in the UK, an entrepreneur needs to get many things right. More importantly, one needs to understand and embrace the challenges of running a business successfully in the UK. In this guide, we discussed some of the most common challenges faced by entrepreneurs in the UK and successfully addressing these challenges should form the backdrop for any entrepreneur to run a business successfully in the UK.