nation of entrepreneurs...marketing tools. by working with uk small businesses to deliver e ective...

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A Nation of EntrepreneursA report compiled by Groupon in association with Climb Online - October 2015

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A Nationof EntrepreneursContentsIntroduction from Mark Wright 3

About Groupon Works and Climb Online 4

Executive summary 4

The landscape of the Nation of Entrepreneurs 6

What keeps entrepreneurs up at night? 8

The desire for independence 10

The rise of the hobby job 12

The importance of making it personal 14

Advice from Mark Wright 16

Advice from Lord Sugar 18

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Introduction from Mark WrightDirector at Climb Online & Winner of The Apprentice 2014

At a time when British university fees are the highest in Europe1 and with new reports2 showing that 58.8 per cent of graduates are in jobs deemed to be non-graduate roles, many young people are starting to consider alternatives to higher education. Despite unemployment declining in the wake of the financial crisis, ONS data shows 1.85 million people are still unemployed in the March-to-May period this year, up 15,000 from the previous quarter. Since the financial crisis began, the government has introduced schemes3 to help ambitious individuals start their own business by offering training, advice and financial support. As a result, we’re noticing a surge of younger people in particular wanting to explore their entrepreneurial side, and become their own boss. This begs the question: are today’s youth beginning to turn their backs on traditional employment in favour of starting their own businesses?

As a supporter of independent businesses, we commissioned this research to find out what inspires and encourages start-ups to not only set up a business, but to grow and succeed. We also wanted to identify if this is a trend most common amongst the youth.

Research firm, Duedil and small business network Enterprise Nation4 showed record numbers of under 35s starting their own businesses. According to the study, in 2006 there were 145,104 companies founded by young people, and by 2013 it had jumped to 247,049. This growth amongst younger people is also reflected in our own findings. Nearly half (42 per cent) 16-24 year olds currently own, or plan to set up their own business, compared to 37 per cent nationally.

A desire for independence was found to drive this. Over half of people set up their own business to be their own boss (53 per cent), have more flexible working hours (40 per cent) and have greater control of how the business is run (26 per cent). For the younger generations (16-24 year olds), avoiding costly university tuition fees is a big reason for going it alone. Over one in ten (12 per cent) say setting up a business is a good alternative to further education, while 16 per cent say they’d rather just get on the career ladder and start earning, as university is too expensive.

This report looks at the current state of the nation’s start-up scene, what makes a good entrepreneur, the rise of ‘hobby jobs’ and how to achieve success.

1 BBC News: ‘How Germany abolished tuition fees’, September 2015: http://www.bbc.co.uk/news/education-34132664

2 CIPD: ‘New CIPD report on UK’s graduate over-qualification problem a wake-up call for employers, government and for young people’, August 2015: https://www.cipd.co.uk/pres-soffice/press-releases/overqualification-190815.aspx

3 Startuploans.co.uk: government support and schemes to help new start ups

4 Daily Telegraph: More young entrepreneurs launch start-ups in wake of recession, Oct 2014

About Groupon Works and Climb OnlineGroupon Works5 is a merchant-focused website that provides small business owners with the best possible advice and marketing tools. By working with UK small businesses to deliver effective online advertising solutions, Groupon is helping to redefine how merchants attract, retain and interact with customers.

Climb Online is a digital marketing company founded by Mark Wright, the winner of last year’s The Apprentice. Since launching the business last year, Climb Online has had huge success in helping increase the visibility of the Groupon Works website and attracting small businesses to the platform.

5 https://www.grouponworks.co.uk/solutions/6 Daily Telegraph: Female ‘homepreneurs’ drive growth in kitchen table firms: http://www.telegraph.co.uk/finance/businessclub/11181071/Female-homepreneurs-drive-growth-in-kitchen-table-firms.html 7 ONS: Record proportion of people in employment are homeworkers, June 2014: http://www.ons.gov.uk/ons/rel/lmac/characteristics-of-home-workers/2014/sty-home-workers.html

A combination of technological advancements, better access to funding for start-ups and cultural developments (including a rise in tuition fees) has spurred the growth of Britain’s young entrepreneurs. With the Digital Age booming, it has become much easier for people to create their own websites and start successful e-commerce companies, for example. Just in the last few years we’ve seen a raft of highly successful digital companies disrupt the marketplace with mobile at their heart with the likes of Uber and Airbnb making their mark. And, there has also been a resurgence in all things local. Whether it’s selling artisan produce at farmers’ markets, opening pop-up stores on the high street or pubs brewing craft beers on-site, the numbers of independent businesses have soared.

Rise of the young entrepreneurs

Our study shows that younger generations are hungry to get in on the action. Over two fifths (42 per cent) of 16-24 year olds currently own, or plan to set up, compared to 37 per cent nationally. One in ten (11 per cent) say it is their ultimate career goal.

Do what you love, love what you do

What’s more, we’re seeing a growing trend in people ditching

their nine to five office jobs and instead turning their passions and interests into business ventures. Our research reveals that a fifth (20 per cent) of people in the UK are making money from their hobbies, particularly among the younger generation – almost a third (30 per cent) sit within the 16-24 age bracket. Key money-making hobbies are in the sports industry (e.g. coaching), selling products, crafts, art and design and sewing/knitting.

Rise of the homebrew business

Many of these people are running their business from the comfort of their own sofas. According to figures from the Department for Business, Innovation and Skills and analysed by Enterprise Nation and Direct Line for Business6, the UK’s home-based business owners contribute more than £300bn to the economy each year. Similarly the latest report on home workers by the Office for National Statistics (ONS)7 reveals there were 4.2million home workers between January – March 2014, the highest since records began. Almost a quarter of these home workers (24 per cent) were classed as working in skilled trades, seeing a re-emergence of the cottage industries of pre-industrial Britain.

Groupon commissioned Opinium to poll 2,121 UK adults aged 16+ including 264 self-employed people and business owners, between 1st – 8th September.

Executive Summary

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Chapter One:

The landscapeof the Nationof Entrepreneurs

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Significant investments in broadband services across the UK mean that it’s easier than ever for businesses to be set up from home, while online marketplaces such as Groupon, Etsy and eBay offer a direct route for independents to sell their goods and services to a mass market.

The wonder of web business

This sentiment is endorsed by our research, as respondents say the internet has made it easier than ever to set up a business. Almost a third of business owners (32 per cent) say it’s easier to start a business now, compared to when they started out. They suggest this is because of advances in technology, which means they don’t have to be office-based (67 per cent). In particular, social media makes it easier to connect with customers (54 per cent) and the rise of online shopping helps to attract more customers (54 per cent).

Finance still a hurdle

Despite technology making the set-up relatively easy, one of the main barriers to starting a business is access to funding. In response, government initiatives such as the Start-up Loan scheme have been introduced8. As part of the £82.5 million project, people aged between 18-24 with creative business ideas can receive expertise and support to help develop them into business plans and access training where required. And, if the business plan is approved, they can receive a loan of up to £2,500 to help them find their feet. The project has been extremely successful since its launch in 2012. In January this year, it hit another milestone as the

25,000th business loan was approved9, taking the total amount lent to new firms to nearly £130 million.

The rise of crowdfunding

In addition to government support, equity crowdfunding has grown rapidly since the financial crisis, as a way for small companies or start-ups to bypass banks and get the cash injection they need. According to a report from Cambridge Judge Business School10, the European crowdfunding market grew by 144 per cent in 2014, up from €1,211 million in 2013 to €2,975 million at the end of 2014. UK crowdfunding platforms, Seedrs and Crowdcube are the go-to choices for many entrepreneurs. However, some start-ups decide to launch their own crowd investment schemes raising investment from investors directly through their websites. Scottish craft brewery, BrewDog11 is one of the most successful businesses to do this to date.

The ‘uberisation of business’ effect

The advancements in mobile technology have changed the way that businesses operate. Many of the latest and most successful digital organisations like Uber have built their entire business models on mobile apps. In 2010, Uber turned the entire taxi industry on its head by creating a smartphone app, which allowed users to get quotes and book taxis in real time. It transformed the traditional taxi business into something completely new and innovative and is now valued at more than $50billion12.

Since then, there have been a flurry of other mobile-based start-ups emerging and wanting to replicate Uber’s success.

The Landscape of the Nation of Entrepreneurs

8 Government initiative: £80 million start-up loans for new businesses, May 2012: https://www.gov.uk/government/news/80-million-start-up-loans-for-new-businesses 9 Government initiative: 25,000 new businesses supported by Start Up Loans, January 2015: https://www.gov.uk/government/news/25000-new-businesses-supported-by-start-up-loans10 Cambridge Judge Business School, ‘Moving Mainstream’ report, February 2015: https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/publications/moving-mainstream/#.VgVii5fihB811 Start-ups: ‘BrewDog raises £3m using ‘Equity for Punks’ online share scheme’, July 2015: http://startups.co.uk/brewdog-raises-3m-using-equity-for-punks-online-share-scheme/12 WSJ: Uber valued at more than $50billion, July 2015: http://www.wsj.com/articles/uber-valued-at-more-than-50-billion-1438367457

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And, it has encouraged established companies such as British Gas13 and Barclays14 to embrace digital, often involving the development of an intuitive mobile app for products and services in order to compete.

The emergence of the sharing economy

As consumers lead increasingly busy lifestyles and want services to be as quick, easy and convenient as possible, one company has gone one step further to deliver. TaskRabbit, which launched in April last year, has taken advantage of the growing sharing economy trend, a model in which individuals can borrow or rent assets that belong to someone else. The app allows users to outsource chores and errands to approved ‘Taskers’ directly from their mobile device – anything from cleaning, to event help and DIY can be requested. Most recently some users were offering payment for Taskers to wait in line so they could be the first to own the latest iPhone!

Both Uber and TaskRabbit have taken fairly straightforward ideas and revolutionised them with mobile technology, with the simple aim of easing the lives of consumers to deliver what they want quickly, no matter where they are. Start-ups should consider that successful businesses are not always built on brand new ideas, but also by bettering existing ones with new technology.

The challenges to business success

Owning your own business certainly comes with its challenges, and there are some pretty sobering statistics out there. According to Bloomberg15 , eight out of 10 entrepreneurs who start businesses fail within the first 18 months. What’s more, research by British commercial insurer RSA16 reveals that more than half of new businesses don’t survive beyond five years, with the UK tax system, a lack of bank lending and the cost of running a business cited as the top reasons for failure.

Delving deeper into the issues, CB Insights17 found the number-one reason for business failure, as cited by 42 per cent of polled start-ups, is the lack of a market need for their product. Respondents also cited a lack of sufficient capital (29 per cent), the assembly of the wrong team for the project (23 per cent), and superior competition (19 per cent) as top reasons for failure.

Supporting these findings, our research reveals the biggest business challenges are finding customers (48 per cent), staying competitive (36 per cent) and managing finances (34 per cent). When it comes to being kept awake at night, almost a third of business owners across all age groups (29 per cent) worry about paying the bills, almost a fifth (19 per cent) worry how the business will grow and 14 per cent are concerned about keeping up with competitors.

13 http://www.britishgas.co.uk/youraccount/discover/app.html 14 https://itunes.apple.com/gb/app/barclays-mobile-banking/id536248734?mt=815 Forbes: Five Reasons 8 Out Of 10 Businesses Fail, September 2013: http://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-10-businesses-fail/16 Daily Telegraph: Half of start-ups fail within five years, October 2014: http://www.telegraph.co.uk/finance/businessclub/11174584/Half-of-UK-start-ups-fail-within-five-years.html 17 Fortune: ‘Why start-ups fail, according to their founders’, September 2014: http://fortune.com/2014/09/25/why-startups-fail-according-to-their-founders/

What Keeps Entrepreneurs Up At Night?

Business Challenges

Business Worries

Staying Competitive36Business Owners

0 100

36%

Managing Finances34Business Owners

0 100

34%

Finding Customers48Business Owners

0 100

48%

Paying The Bills

Keeping Up With Competitors

2914Business Owners

Business Owners

0

0

100

100

29%

14%

How The Business Will Grow19

Business Owners

0 100

19%

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Chapter Two:

The desirefor independence

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The Desire For IndependenceIn a recent study by O2

18, being your own boss was found to be a big driver for the rise of start-ups in the UK. Almost half (44 per cent) of women think that they could do a better job than their bosses and more than two thirds (67 per cent) feel that they are underappreciated at work. Flexible working is also a big draw with 82 per cent saying they would work from home or a local café compared to just over one in 10 (12 per cent) wanting to work from a conventional office space.

This is echoed in our research, which shows a strong desire for independence amongst entrepreneurs. Over half of people set up their own business to be their own boss (53 per cent), have more flexible working hours (40 per cent) and have greater control of how the business run (26 per cent). For the younger generations (16-24 year olds), avoiding university is

important as over one in ten (12 per cent) say setting up a business is a good alternative to further education, while 16 per cent say they’d rather just start earning, as university is too expensive.

Evidently entrepreneurs are willing to take risks but this is also becoming more prevalent in the younger generation (16-24 year olds) with more than half agreeing that without risks there are no rewards, and over a third stating they are always trying to think of new business ideas to make money.

When you’re young you have nothing to lose in setting up a business” 33+17+47+5333% Agree Overall

17% of 16-24 year olds agree

47% of business owners agree

53% of new business owners agree

“I don’t think further education is worth the investment” 16+13+39+5421% Agree Overall




“It’s easier than ever to set up a business”16+13+39+5416% Agree Overall




“I’m always trying to think up business ideas to make money” 25+34+48+6125% Agree Overall




“Without risks there are no rewards”41+56+51+8441% Agree Overall




“I don’t like working for other people”30+23+60+6530% Agree Overall




18 London Loves Business: Five reasons to start a business now, September 2015: http://www.londonlovesbusiness.com/business-news/business/5-reasons-to-start-a-business-now/11029.article

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Chapter Three:

The rise ofthe hobby job

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The Rise of The Hobby JobAccording to research from Visa19, one in ten UK adults now run microbusinesses based on their hobbies and interests. These “hobby entrepreneurs” are making an average of £1,815 extra each year from these ventures, generating an extra £8billion for the UK economy. Our research also found that as many as a fifth (20 per cent) of people have a hobby that makes them money, which is more prevalent in the younger generations – 30 per cent of 16-24 year olds are currently making money from their passions. And of those that aren’t yet making money, almost a quarter (23 per cent) intend to turn their hobbies into money-makers, again predominant in the younger generation (53 per cent). The most common money-making hobbies are in the sports industry (e.g. coaching), selling products, crafts, art and design and sewing/knitting.

Although the internet has allowed for a boom in new start-ups, the initial distribution routes appear to be face-to-face, where entrepreneurs sell direct to friends, family and acquaintances, with over a third (35 per cent) of business owners doing so. However, the internet is still key when it comes to wider distribution with almost one in three (29 per cent) using their own websites, and 28 per cent using auction sites. In addition to this, the younger generations (16-34) take advantage of social media (16 per cent) and third party websites such as Groupon and Etsy (19per cent) to sell their products.

Hobby Entrepreneurs

Lifestyle and beauty personality, Zoella, became a household name after turning a blog into a business. By simply recording her hobbies and creating short hair and make-up how-to videos, she grew a mass following of 9.1million. In the past year, she’s also released her first book, Girl Online, which was the fastest selling book from a debut author, and has revealed plans to release a follow up.

Similarly Dan Middleton spotted a gap in the market and begun creating videos about the popular Minecraft game, targeted at children between five and 10 years old. He hosted them on YouTube and shared them via his social channels, and now has over eight million followers. In July 2015 his Minecraft videos were watched more than 405million times in the month alone, making The Diamond Minecart the most popular YouTube channel, ahead of brands such as WWE and nursery rhymes collection Little Baby Bum20.

More recently, a grandmother, Carole Gregory21 has begun creating cakes inspired by Hollywood blockbusters. She turned her passion for movies and baking into a money-making business after realising her Predator cake creation was an online hit. The entrepreneur is now selling her creations to friends and family, using social media as a platform for wider marketing.

19 The Daily Telegraph: ‘One in 10 make an extra £2,000 a year from hobby businesses’: http://www.telegraph.co.uk/finance/businessclub/11170044/One-in-10-make-an-extra-2000-a-year-from-hobby-businesses.html20 The Guardian: The Diamond Minecart becomes most popular YouTube channel, August 2015: http://www.theguardian.com/technology/2015/aug/31/the-diamond-minecart-pewdiepie-youtube-minecraft21 Daily Mail: Moving loving granny bakes thousands of cakes inspired by Harry Potter, Star Wars, Despicable Me and Predator, September 2015: http://www.dailymail.co.uk/femail/food/article-3247508/Now-s-showstopper-Movie-loving-granny-bakes-thousands-cakes-inspired-Harry-Potter-Star-Wars-Despicable-Predator.html

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Chapter Four:

The importanceof making it personal

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WDF Research22 recently found that a having personalised service can contribute to a business’s success. Considering some of the most accomplished businesses in recent years who pride themselves on delivering excellent, personalised service (such as Cambridge Satchel Company, Lush and First Direct), it’s clear that this is critical to gain and retain customers. Whether the business owner has an interesting backstory or infectious personality, offers a personalised product or service tailored to each individual, or takes extra care in customer service, the end goal is to ensure they resonate with customers and make them feel valued each step of the way. This will boost customer satisfaction, encourage them to keep returning and may even increase the likelihood of them recommending the product or service to friends and family.

Personality behind the product

Levi Roots became an iconic business figure after demonstrating his passion for Caribbean food and lifestyle on the BBC’s Dragon’s Den. Levi had been selling his sauce locally for 15 years and he felt it was time it was taken to a wider market. It wasn’t long before Dragon Peter Jones bought into his story, warmed to his charming and humble personality and developed a taste for his delicious Reggae Reggae sauce. Soon after, Levi became a huge success and something of a celebrity. His Reggae Reggae sauce flew off the shelves and following restaurant openings, cookbooks and TV shows among other things, he’s now worth an estimated £30million.

Personalised product

Personalised gifting company, Oakdene Designs has had great success23 through selling via NotOnTheHighStreet.com as well as its own website. Founder Ben Grist started the business as a 22 year old student, selling his creations through the popular ecommerce site. The business grew so quickly he dropped out of university to progress the company and he now has 14 staff and has sold more than £1million worth of products.

A personalised service

Cosmetics brand Lush, is regularly praised for its excellent customer service, last year it won the Which? Best Customer Service award24 and most recently the company has topped the 100-strong list for best customer service in the KPMG Nunwood report25. The Which? Award feedback stated it was the only brand to receive a five star rating for having knowledgeable and helpful staff, and for making customers feel valued. As a result the brand is still noticing strong sales and earlier this year reported an eight per cent increase in sales and profits26, and while not the sole reason for its success, it is a contributing factor in ensuring their customers return.

The Importance of Making it Personal

22 WDG Research: SMEs and the importance of creating a positive customer experience, May 2015: http://wdgresearch.co.uk/2015/05/smes-and-the-importance-of-creating-positive-customer-experiences/ 23 The Guardian: Meet the small businesses making millions from online marketplaces, March 2015: http://www.theguardian.com/small-business-network/2015/mar/19/businesses-millions-online-marketplaces-amazon-ebay 24 Which?: Which? Awards 2014 winners revealed, June 2014: http://www.which.co.uk/news/2014/06/which-awards-2014-winners-revealed-371258/25 This Is Money: Revealed: the top 1000 companies for customer service, September 2015: http://www.thisismoney.co.uk/money/news/article-3235361/Consumer-favourite-Direct-loses-crown-Lush-battle-brands.html 26 Daily Telegraph: Lush defies currency turmoil to post sweet-smelling profits, February 2015: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11423309/Lush-defies-currency-turmoil-to-post-sweet-smelling-profits.html

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Chapter Five:

Advice fromMark Wright

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There has been great debate over what sets truly great business ideas apart from the mundane ones. According to our research, the top three qualities of the strongest business ideas are that they are original/unique (39 per cent), there is an existing demand for the product (14 per cent) and the hard work and determination put behind the business venture (8 per cent).

I constantly get stopped by people in the street and on business trips who want to tell me about their new business idea. They say it is ‘the next big thing’, a ‘game changer’, or a ‘revolution’. But many of the ideas, I am afraid to say, are not what they think they are. From my experience, ideas can become far too complex too quickly. Hence, I feel that an idea needs to be based on a few simple principles.

Advice from Mark Wright

So what makes a good idea?

You only need to look at what the iPhone has done to our generation to be truly inspired to create a product that can revolutionise the globe. In your mind, you may envisage a new way of doing something, or a system or product that does not exist yet: that’s where all the great concepts have started in someone’s mind. However, the saying goes that the graveyard is filled with all the best inventions that have never happened: most are too scared of the risk of giving it a go. I say get over your fear! If you have an idea, then that is step 1: step 2 is bringing it to the world at all costs. Research your idea, talk to people in the same field or industry and raise funding to give it a go; you never know until you try! After all, if Google teaches you anything, it’s that small ideas can be big.

Something new

Something betterMany ideas or products we have today started as improvements or fixes for existing items. I remember hearing that when Henry Ford produced the Ford Model T, many thought it was unbelievable. Some even argued that cars would never be produced better than this. But just look at the cars we have today and how far they have come since then; we don’t have wooden wheels for instance! Think of things we already have and ask yourself: how could they be improved to make them a truly globally competitive and useful product?

Something cheaperPeople are always looking for value for money in this fast-paced new world. An idea that brings people a same or better service at a lower cost will almost always triumph. Amazon made this the foundation of their business model and look where they are today. That could be you – find some new way of manufacturing a product or service that brings it in at a cheaper price and you could be onto a winner!

Every person will come up with a few good ideas in their life, but only few act on them. In my life I have seen: the birth of the Internet, Facebook, Google, smartphones and so much more and yet I am only 26. Imagine all the truly great things to be created in the next 26 years. Will you be the one to create the next Uber or AirBnB? The one to revolutionise an industry? The one who’s name will be forever associated with creativity, entrepreneurship and innovation?

The key is giving it a go and not being afraid to fail. Just think: what if it works? Indeed, I remember reading a quote somewhere that said “20 years from now you will be more disappointed by the things that you didn’t do than by the ones you did do”. I don’t think you can say it better than that. After all, it is ideas that shape the course of history and it can be you who provides history’s great new direction.

Once you have your business idea ready to be made public, be sure to market it in the right way – you need to get your product or service seen by as many of your target audience as possible. If they don’t know about it, how can they buy it? When you’re starting out it’s understandable that you won’t have instant access to thousands of consumers, so use websites like Groupon to market your product or service to mass audience. Groupon has thousands of merchants already taking advantage of the online marketplace, which is helping them increase sales and longer term revenue. However you choose to get your product out there, don’t be one of the 48

percent worrying about attracting new customers.

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Advice fromLord Sugar

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Advice From Lord SugarUnderstand what or who inspires you

The desire to succeed needs to come from deep within - it’s not something you can fake. You need to know yourself and be aware of who your role models and mentors are.

Clarify your goal

Having a vision is about using your imagination , it is stretching your brain to think differently. It’s about training your brain to focus on where it is you want to go, what you want to achieve.

Continuing to learn is one of the most important keys to

succeeding in business

The business world is constantly changing, so make sure you are willing to learn new skills or you will get stuck in an outdated rut.

Stay focussed and avoid developing self-indulgent habits

during the working day.

A pattern of late starts, long lunches and late-night working all hand the advantage to your competitors.

Watch your attitude

Do you think you are owed something by your employer, by your family, by society? If so, think again. Get out there by creating your own opportunities if you want to succeed in your own right.

Don’t give up, no matter how hard you’ve been trying.

If you believe in something, it is worth continuing with it - not blindly and not without taking stock of your progress to date - but if you believe you have an original and marketable idea, keep going.

Don’t expect to be an overnight success.

You can strike lucky if you have the right product in the marketplace at the right time and at the right price, but true success takes years and a lot of trial and error.

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