SMEs in business paralysis as fear stops decision making
SMEs are caught in 'business paralysis' as over half reveal they have delayed making important business decisions in the last year for fear of making the wrong choice.
Questioning over 1,000 senior SME decision makers, YouGov research found the current economic environment had affected their approach to making business decisions, with 57 per cent admitting they had delayed decisions by a day or more during the last 12 months.
It seems the UK's slow return to economic growth is impacting SMEs, with one in five (18 per cent) saying they would now choose to play it safe and focus on the day-to-day running of the business, while over a quarter (27 per cent) say that economic uncertainty had made them more hesitant to make long term decisions.
Barclays Banking, who commissioned the survey, said businesses that are overcome by a fear of failure (BoFF) were not only hampering their own success but stalling the UK's return to economic stability. Those questioned believed this fear could affect business growth, innovative marketing and the long term direction of the business.
Commenting on the findings, psychological entrepreneur Jon Cousins said: "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."
According to the research, younger entrepreneurs are more willing to make risky business decisions, with over three quarters saying they often push themselves out of their comfort zone. This compares to just over half of entrepreneurs aged 55 and over.
SMEs may take a small respite in the fact that while three quarters of decision makers admitted to making a decision that did not go as expected, 45 per cent said there were no serious repercussions while 12 per cent said the result had worked better for the business in the long run.
Sue Hayes, managing director of Barclays business banking, said businesses are right to feel like they are taking 'big risks' with decisions, but added:
"Despite the tough external environment, there are many opportunities to be seized upon and the ability to make important decisions is vital to the growth of all businesses and the overall UK economy."
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