Begbies Traynor Group's analysis of its latest quarterly Red Flag data, which monitors the financial health of UK companies, shows that the average age of a company director of a business suffering 'critical' distress is 49, 4 years younger than the average age of directors at healthy companies (53).
A similar trend can be seen in the length of service of Directors – healthy company directors have an average length of service of 10 years, compared to just 6 years for business which are suffering 'critical' distress.
Julie Palmer, Partner at Begbies Traynor, said:
"These figures demonstrate that there is a clear link between the age and length of service of company directors and the success of their businesses. They confirm our experience that older directors are better able to plan for and weather storms than younger directors who won't have steered their businesses through past economic cycles. Budding entrepreneurs should take heed as they will often need to learn from the experience of a failed business before they can go on to succeed."
The sectors with the youngest directors of companies in 'critical' distress are food & drug retailing and leisure & cultural activities, both with an average age of 43. These sectors also show the greatest difference in age between those directors in charge of failing and successful businesses, with a difference of 6 and 11 years respectively.
Julie Palmer continued:
"Retail and leisure remain attractive sectors for younger entrepreneurs but our figures show that many of these younger entrepreneurs are struggling to build successful companies in the face of more experienced competitors who are already running established businesses. It is clear that the government should give targeted support to younger entrepreneurs in these sectors to ensure that it encourages a flourishing entrepreneurial culture rather than allowing young entrepreneurs to be put off by the failure of others."