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Layoffs and Innovation Drive Small Business Startups

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New research from small business insurer Hiscox finds that:
– 15% of startups launched as a result of layoffs and,
– 80% of new small businesses were created based on improvements to existing ideas

NEW YORK, June 21, 2011 /PRNewswire/ — With unemployment rates now at 9.1 percent in the U.S.(1), new research by specialist insurer Hiscox has found that 15 percent of small businesses were established following a layoff. It also found the majority of startups are not original ideas, but are based on new approaches to existing businesses.

Key findings included:

  • Being your own boss and living the dream: Half of small business owners cited either being their own boss or living their dream as the reason for taking the risk and starting their own business, with 29 percent wanting to be their own boss and 21 percent wanting to live their dream.
  • Not new, just better executed: Eighty percent of small business owners and operators surveyed said that their business idea was not new, but an improvement on existing offerings. Over half (51 percent) reported that offering a higher quality of service or product than their competition was their key differentiator – rather than lower prices. A further 20 percent differentiate themselves by investing time in meeting face-to-face with clients.  However, for startups there was a low investment in R&D (6 percent) and even less in marketing (3 percent).
  • Million dollar idea: Nearly a quarter (24 percent) believed they had a ‘million dollar’ idea when founding their business. After taking the leap, more than two-thirds (69 percent) now feel confident or very confident that their business is indeed the ‘million dollar’ idea.

“Whether it’s due to a layoff, or to pursue a life’s passion, entrepreneurs are starting businesses to take control of their own destiny. Also, they don’t need to invent the next new hot idea, but need to put in hard work and provide higher quality service than the competition to succeed,” said Kevin Kerridge, small business insurance expert from Hiscox. It is important that small business owners use proper planning to protect their million dollar idea and reduce their risks while they grow their businesses.

“Starting up can be scary, but if you work harder than the competition, understand your risks and keep believing in your idea, you can succeed.”

Designed specifically for the small business and home-office market, Hiscox small business professional liability insurance coverage (errors and omissions insurance) is customized for a range of knowledge-based professions including IT, management consulting, business consulting and marketing. Hiscox offers professional liability insurance quotes direct and online in real-time along with other liability insurance products such as general liability insurance.  Hiscox’s licensed insurance advisors are solely focused on helping small businesses with their insurance needs.

Hiscox profiles the life of startup entrepreneurs in the critically acclaimed Leap Year web series, running through August 8 on www.leapyear-hiscox.tv.  Hiscox’s online offering is backed by experienced, licensed advisors based at the Hiscox Small Business Insurance Customer Service Center in Virginia Beach, VA.

To learn more about Hiscox Small Business Insurance, visit http://www.hiscoxusa.com/small-business-insurance/ or speak with a Hiscox licensed advisor at (888) 202-3007 (Monday through Friday, 8:00 AM – 10:00 PM EDT). Hiscox is also now on Twitter, Facebook and LinkedIn.

Read more news from Hiscox Small Business Insurance.

 

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