Innovation Diary: British entrepreneurs aren’t lazy – but life could be getting easier for part-time small businesses
NEW RESEARCH from Hiscox, the insurer, has turned some heads. Its fifth annual study into the entrepreneurial DNA has found that UK small business owners work an average of only 37.6 hours a week – down from 38.5 in 2012. Based on a relatively small sample of 3,000 business owners across six countries, the UK finds itself at the bottom of the pile in Europe. Entrepreneurs from Germany say they work 43.7 hours per week, the Spanish work 43.6, and the French 42.1 hours. Not everyone is happy with these findings. One disgruntled founder put it pointedly over Twitter: “This is unbelievable.”
Most entrepreneurs have their anecdotes of long hours, and months living on nothing. The founders of Hello Fresh, the food delivery service, told Morning Wire last week that – in their early days – they would lug customer orders across London on the Tube. Dana Elemara, founder of argan oil startup Arganic, slogged it out in Hamleys over Christmas to raise capital. Another survey, released last month by call-handling firm Penelope, found that micro-business owners work 52 hours a week on average. And Deepak Soni, head of small business insurance at Hiscox, suspects that many owners answered the question “based on how they perceive others working – time in the office. They don’t class all the other hours they put into their business as working.”
Regardless, the lazy entrepreneur narrative – notably articulated by Saul Klein of venture capitalists Index Ventures last year (he said Europeans lack Silicon Valley’s work ethic) – doesn’t necessarily stack up. But it’s also worth unpicking the assumption that running a firm has to be a full-time job. Research by Herbalife – which, like cosmetics giant Avon, uses independent local distributors to sell its nutritional snacks and fitness products – found that British people are more likely to take on extra work to supplement their income than other Europeans. The phenomenon is predominantly female: according to its figures, 85 per cent more women than men work on side businesses.
Emma Jones, founder of Enterprise Nation and author of Working 5 to 9, a book about part-time entrepreneurship, estimated in 2009 that “at least 5m people work by day, are at university, or raising children, but are also growing a business at night and weekends.” She notes that it’s a useful way of starting a firm because “you keep the safety of the salary, and give yourself the time to build confidence and cashflow in the business”. Julie Deane, of the Cambridge Satchel Company, for instance, started that phenomenally successful company from her kitchen table – as a way of paying her daughter’s school fees.
It does, however, lend itself to business models that allow you to outsource certain tasks. Jones cites e-commerce: “There’s less of a need to meet clients. If you look at the mega trading platform Etsy.com, which enables 130,000 UK businesses to get to market, over 90 per cent of these will be 5 to 9ers.” They make a product, upload it, and sell it globally. “You can even outsource activities such as fulfilment, so you don’t even have to touch the product if you’re not making it,” she says.
And opportunities are expanding beyond the rather quaint items Etsy specialises in. Tictail is simplifying the process of setting up an e-shop. E-tailers create a virtual personalised store-front for free, with Tictail making money through optional add-ons. For those looking for non-retail sidelines, Freelancer.com is bringing crowdsourcing to skills, allowing companies to purchase services from sole traders who only want to take on a small project. Sooqini, which calls itself a task marketplace, announced this week that it had raised $500,000 (£319,000). It lets users buy or sell a range of services – accounting, translation, cleaning, gardening, or just general errands – effectively allowing people to monetise their spare time.
This could reflect another of Hiscox’s findings. Its report suggests that barriers to entry for small-scale entrepreneurship may be falling. The UK was the only country with owners displaying a more positive view of the state than in 2011. British critics of bureaucracy fell by four percentage points, and of labour laws by nine percentage points. Hiscox’s Soni suggests that entrepreneurs now enjoy a “stability factor.” Reassurance about a business startup environment may be contributing to smaller firms being more interested in launching new products this year, and less likely to let go of staff.
Tom Welsh is business features editor at Morning Wire @TWWelsh