Average NES entrepreneur invests £17,000 in business

A recent nationwide survey carried out by the Centre for Enterprise at MMU Business School shows that the majority of NES scholars have put significant financial investments into their businesses ranging widely from £200 to £255,000. These results are taken from the NES Follow Up Survey 2006, which evaluated the experiences of NES scholars and their businesses, following on from the Big NES Survey in 2004.

The NES Follow Up Survey 2006 looked at NES scholars and their businesses in the longer term, and was conducted through a postal and web survey in July and August last year. It included NES scholars who responded to the first survey and who had given consent to take part in further NES research, with 184 scholars involved.

The results show that the average NES entrepreneur invested £17,779 into their business, up from £11,834 when the survey was first conducted in 2004.

Although the average is distorted by a small number of businesses with exceptionally high investments (in one case, £255,000), over half those surveyed had made financial investments of £8000 or more, up from £5825 in 2004.

“By far the most common source of business investment was NES or other grant funding,” says Dr Dilani Jayawarna, NES Researcher in MMUBS’ Centre for
Enterprise, who carried out the survey.

“83.4% of the people surveyed reported using NES or grant funding. This shows the enormous importance of NES support funds and other available grants in helping new businesses off the ground and keeping them there.”

Personal savings were another key source of investment for three quarters of scholars, a 50% increase from the 2004 survey, when only just over half said they had made personal investments.

Credit card or overdraft investments were other popular sources, and were, in fact, the only external debt investment source to give an increased figure since the last survey.

On the other hand, investment from enterprise loans, bank loans, and loans from family/friends has decreased, suggesting respondents have paid off some of their debts, although a small number of scholars received a business investment from family or friends as a gift, rather than a loan.

One of the most interesting aspects of the survey was the response to financial ‘bootstrapping’ techniques. In other words, trying different ways of managing and saving money, such as the way goods and services are bought, managing customer payments, saving money on staff, raising finance and managing taxes.

The survey reveals that few scholars manage their resource needs using means other than external finance. For example, few scholars had leased rather than bought equipment, or shared space with other businesses, or co-ordinated purchases with other businesses, but those who had, had found them very useful.

“Looking at other ways of managing your finances can be vital to the success of a business,” says Dominic Martinez, NES Project Manager at MMUBS.

“Trying different things such as buying used rather than new equipment, buying in bulk, or even negotiating lower prices with suppliers: these are all ways to cut down on heavy expenditure and financial pressures.”

Dominic adds: “The survey shows that bootstrapping methods are not yet very popular, but those who have tried them found them financially beneficial, which I hope will encourage others.”

As far as raising finance, most scholars agreed they had enough money to start their business, but 65% said they didn’t have enough to run and maintain it, and indicated the need for additional investment.

“A large majority of the scholars questioned – over 90% - agreed that they understand the financial needs of their business,” explains Dilani.

“Two-thirds said that raising finance with banks and other sources was not a difficult task. So it is not a question that confidence, skills and competence are lacking, just that they do not always make enough contacts or devote enough time to seek funding opportunities.”


To take part in future surveys or find out more about the results from the NES Follow Up Survey 2006, contact Dr. Dilani Jayawarna at d.jayawarna@mmu.ac.uk

Download the full survey report at: www.business.mmu.ac.uk/centreforenterprise