A new study of 1,000 businesses owners shows that fear of failure is holding back many small businesses. The major findings of the research conducted for Barclays include;
- 57% of those questioned confirm they have delayed making key businesses decisions for fear of taking the wrong decision
- 18% admit that the current economic climate means they are not taking risks; concentrating on the day to day, rather than on the long term
- 48% agree their fear of failure could mean they are missing out on growth opportunities
- The main causes of fear of failure are; economic uncertainty (58%), cash flow and late payment worries (32%), more competition (28%) and legislation and regulation (27%).
Uncertainty is making small business owners hesitant
Barclays claims the impact of BoFFs (Businesses overcome by Fear of Failure) might not only be holding back individual businesses but could also be preventing the much-needed economic recovery.
With half of the BoFFs questioned, confirming their fear of failure means they are missing growth opportunities, and a quarter of respondents delaying decisions on the longer-term direction of the business, this could well be the case.
Younger business owners less affected
The results also show that that younger business owners are less likely to be gripped by fear when making business decisions. 78% claim to push themselves out of their comfort zone, compared to just 58% of those aged 55 and over.
Younger decision-makers also seem to have different fear-factors. They are not as concerned about the current economic environment as their older counterparts, but are more concerned about the future of the Eurozone.
Appetite for risk mirrored in business and personal lives
Other interesting results thrown up by the research include:
- Business managers’ levels of risk appear to be mirrored in both their business and personal lives, as 51% of business owners take as many risks in their business life as they do in their personal life
- 25% of respondents admit to inventing reasons not to do a task in work, with 21% saying the reason for this was because they were afraid it would go wrong
- 71% of business owners have made decisions that have frightened them
- The most feared decision was turning down a customer or client (24%), followed by decisions regarding employees such as making redundancies (17%) and taking on external finance in order to grow (17%).
Business psychologist Jon Cousins, gives some extra insight into the psychology that may shape business owners’ thinking, “While risk aversion is a totally normal human response, the BoFF phenomenon is out of character when compared to the traditional risk-seeking behaviour we might expect of entrepreneurs. In the face of adversity, a fear of failure can cause a freeze reaction amongst businesses, where it can often wrongly seem safest to do nothing at all.”
On the differences between younger and older business owners, Cousins confirms that, on the whole, younger entrepreneurs are willing to take more and larger risks as, “it’s natural for the young to believe they are invincible.”
Top Tips on how to tackle the fear of failure
To help small businesses to recognise and deal with the fear of failure, he provides some useful tips;
1. Accept that fear of failure is a totally normal and rational emotion – but make sure it is in proportion.
2. Learn from your own past experiences – sometimes things work, sometimes they don’t but make sure you learn from it.
3. Does the risk have to be all or nothing? Can you mitigate the danger by setting less extreme goals and aiming a little lower.
4. Risk-taking is a game of chance so try to put numbers to the probability of success. While it’s always good to listen to your gut, try and make a logical decision rather than a purely emotional one.
5. Seek advice and expertise to help you make the right call.
6. Be honest: what’s the worst that could happen?
7. Remember that risk-taking is part of what makes you an entrepreneur.
More help on growing a business
These other ByteStart guides will give you more help and advice on growing your business;
- The 3 issues you’ll need to overcome if you want your start-up to reach £1m turnover
- Barriers to growth – how to identify them and how to overcome them
- How finding a great mentor could help you to grow, and your business to flourish
- How you can build your business in 90 minutes a day
- Increasing your personal efficiency – how to get more done in less time
- The start-up survival guide – 6 practical tips to help you get through the early years
- What are business angels and how can they help grow your business?