Number of UK ‘Debut Directors’ hits all-time high

Increasing number of first-time directors entering market with less capital
One in 13 directors lives in social housing

Nottingham, UK, 5 December 2014 – The number of first-time business directors in the UK is at an all-time high, according to Experian data. Alongside a lower level of business experience, these ‘Debut Directors’ start-up with less investment than ever before and an increasing proportion come from backgrounds with lower than average levels of affluence.

More than half a million businesses were created in the UK last year (515,000 in 2013, up 8.9% from 473,000 in 2012), with the proportion of first-time directors rising by 12.6% (304,000 in 2013 compared to 270,000 in 2012). A Debut Director is an individual listed as a company director for the first time.

First-time directors in 2013 have less start-up capital and come from a lower affluence band when comparing these individuals’ incomes, property values and net worth to national averages.

Key indicators 2009 2012 2013
DDs as % of start up population* 52% (182,000 businesses) 57% (270,000 businesses) 59% (304,000 businesses)
% of start-up directors with less than £25k household income 24% 30% 33%
% of new start-up directors with below average levels of affluence* 4% 7% 10%
% of directors living in social housing* 3.7% 5.6% 7.7%
% of start-up directors with more than £1K capital* 4.2% 3.6% 3.1%

Based on figures from Experian*


Survival of the fittest

The positive story for UK start-ups and the UK economy doesn’t stop there, with business survival rates also on the up year-on-year, from 76 per cent in 2009, to 87 per cent in 2011. The survival rate measures businesses still trading two years after start-up, observing companies which have survived up to the end of 2013. Overall, those less affluent Debut Directors have a slightly lower chance of survival (84 per cent compared to 87 per cent survival rate in 2011), but a savvy approach to business and credit management can increase those chances significantly.

Max Firth, Managing Director for Experian Business Information Services, UK&I, said: “These figures suggest a shift in how we should view the average UK entrepreneur. It’s not all high-tech start-ups and Dragons’ Den-style big ideas. An increasing proportion of new business directors are making the most of the lower start-up entry levels; grabbing a mobile phone, a laptop and a flexible workplace, and creating their own jobs and their own opportunities.

“While this increasing population of Debut Directors should be celebrated, there’s much they can do to improve their chances of success. Some may still lack the experience, capital and contacts needed to survive those first few tricky years. So it’s crucial for young entrepreneurs to tap into business support networks for advice and they shouldn’t underestimate the value in partnering with a more experienced director if they can. Just as crucially, they need be aware of how others may see their business and the impact this could have on their access to essential services and potential funding opportunities.”

Advice for Debut Directors:

  • You don’t have to go it alone: It may be advisable to try to find a partnering director, especially if you are able to partner with someone who has previously experienced start-up success to act as a mentor. Experian analysis shows businesses started by two people or more have a greater chance of survival.
  • Know your sector: There are many successful firms even in vulnerable sectors, just as there are many companies in growing sectors that do not perform well. The key is to ensure you have a good understanding of the risks and challenges of the target sector.
  • Know your area: Make sure there is local demand for the service or product if targeting a specific region.
  • Investigate all available finance options: Don’t just rely on overdrafts, bank loans or personal sources of cash. Investigate alternative sources of finance, such as crowd funding, angel investments, business cash advances and government grants.
  • Get credit savvy from the start: Ensure your business is registered with a business directory and approach credit reference agencies proactively to make sure your credit line is in order before you start making purchases. This will help kick-start your credit history and put you in a better position to negotiate with initial suppliers (e.g. telephone, utilities, banking).
  • Check your suppliers and customers: It’s easy to get caught up in that first customer win and forget the due diligence. Be sure to check out the financial position of all your customers and suppliers, regardless of how big they are. Don’t wait until they become insolvent and you don’t get paid.
  • Don’t stop sharing business information: Regardless of the stage a business is at in its development, the more information there is in the public domain or that is provided to credit reference agencies, the better. Once you are on top of it, you will be able to spot any problems early on, as opposed to them taking you by surprise and scuppering critical business developments further down the line.

-ENDS-

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Contact:
Ade O’Connor
PR Manager
Credit Services
T: 44 (0) 115 992 2645 | M: 44 (0) 7583 085796
E: Ade.O’Connor@experian.com


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