Over half of UK startups fail within five years, according to new research by the commercial insurer, RSA.
The top reasons cited for failure were the UK tax system, a lack of bank lending and the increasing cost of running a business.
The construction sector had the lowest survival rate, with just 44% of new businesses still running after five years. This was mainly due to Government cuts, which hold off many projects.
David Swigciski, SME trading director at RSA, said:
“The UK is a great place to start a business, but survival rates are low. The recession has had an unsteadying effect on small and medium enterprises and we need to work hard to rebuild their confidence.”
Business owners said that one of the biggest challenges was maintaining long term growth. 61% of those surveyed said they doubted their ability to achieve three consecutive years of growth.
Other big concerns included the UK tax system, which 44% cited as their main concern. Behind this, 38% stated bank lending and 36% said bureaucracy was to blame.
This being said, the conditions for business survival appear to be improving, with the number of businesses surviving their first year increasing six percentage points since 2011.
Mr Swigciski continued:
“There appear to be glimmers of hope for businesses but, understandably, they are erring on the side of caution. In order for them to move forward and grow, they need targeted measures that address their needs at every stage of the business lifecycle – from start-up to growth and expansion.”
Image by Serena Epstein