Survey: 90% of entrepreneurs are happier now they are business owners

A new nationwide survey from 1st Formations found that 90% of UK entrepreneurs are happier now that they are business owners.

This is based on 1,055 small and medium-sized enterprise (SME) owners’ responses to a survey from 1st Formations, the UK’s largest company formation agent. Respondents are from a wide range of industries, such as tech, e-commerce, finance, education, construction, hospitality, property, and retail.

So, despite the narratives around the stress, long hours, and bleak failure rates of starting a business, entrepreneurs feel better off being their own boss. This could explain why more people are setting up businesses in the UK than ever before. The latest figures show that 900,000 new companies launched last year, a new record high.

What motivates entrepreneurs to start their companies?

To better understand why SME owners feel happier now compared to when they were employees, 1st Formations asked: What were your motivations for starting your company?

1. Financial Freedom

The top response was ‘financial freedom’ (32%). This includes both the monetary rewards of owning a business and the sense of responsibility for the business’s financial success. Entrepreneurs pay themselves from their business’s profits and, therefore, determine their own worth based on their results, free from limitations of a contracted salary.

“It’s incredibly encouraging to see most small business owners report greater happiness after starting their own ventures”, says Graeme Donnelly, CEO and Founder of 1st Formations. “And it’s understandable why nearly a third were driven by the potential for financial freedom. Clearly, many have found the opportunity to directly influence their earnings to be a rewarding experience. I remember the feeling when I first started my business, and it’s great to be in the position now to help new entrepreneurs achieve just that.”

2. Passion

Nearly 1 in 5 (18%) UK entrepreneurs said their key motivation for starting their business was ‘passion’. These entrepreneurs may have found that their work feels more rewarding and meaningful overall. Running their business may feel less like a job and more like fulfilling their personal aspirations.

3. Flexibility

As many as 17% of survey respondents cited ‘flexibility’ as their motivation to start their business, as entrepreneurs can control their own time and more easily fit their work around their lives without any management to answer to.

4. Sense of accomplishment

A further 15% of respondents were motivated by a sense of accomplishment. For them, the appeal may have come from their desire to build something from the ground up. Creating a business can lead to a great sense of personal pride from seeing the tangible results of your own hard work.

5. Autonomy

Respondents also said autonomy (14%) influenced their decision to start a business, suggesting that entrepreneurs appreciate the greater sense of independence and control that comes from working for themselves rather than an employer.

These findings highlight that despite the challenges of running a business, entrepreneurship offers benefits beyond financial rewards alone, providing a more flexible, autonomous and mentally fulfilling life.

According to CIPD’s Good Work Index 2023, employees are becoming increasingly unenthusiastic at work.

This is evidence of the alarming growth of resenteeism in the UK, where people are professionally dissatisfied and unfulfilled yet stay in their job anyway. CIPD’s survey of over 5,139 UK workers shows that employees are now less likely to perceive their work as valuable and more likely to see it as transactional, i.e. purely for the paycheck, than in 2019.

Key reasons for this include pay not matching responsibilities, lack of autonomy, and lack of access to remote work—a quarter of workers said they found it difficult to meet commitments in their personal lives because of the time they spent at work.

The CIPD calls on employers to improve access to flexible working arrangements and financial well-being support to address this trend.

Until we see improvements, individuals can decide which path will bring them greater personal and financial fulfilment: working for an employer or for themselves.

Ready to become a happy business owner?

1st Formations is here to help. We are proud to support new entrepreneurs with a range of services to get them set up and succeeding. Check out our customer stories to see how new businesses can benefit.