The contrasting fortunes of companies from the new and old economies

Share
Subscribe

I’ve just finished reading about the contrasting fortunes of companies from the New and Old economies.

From the “New”, eDreams (an online travel comparison website, formerly known as Opodo) had its shares suspended last week, having only floated on the stock market in April. Meanwhile, Tui Travel, a traditional package holiday provider from the “Old”, is now worth just over £4bn and is a constituent of the FTSE100.

We’ve been bombarded in recent times with stories of how online upstarts like Uber and AirBnB have revolutionised the tired traditional mini-cab and hotel industries respectively, and it seems like every walk of life has been disrupted by some new form of “collaborative consumption”, as it is euphemistically called. You can even rent your dog out online, for God’s sake!

So, it’s a bit of a timely reality check for new and budding entrepreneurs to witness Old economy stocks like Tui biting back to see off pretenders to their crowns like eDreams. Just because you think up the “next big thing” doesn’t necessarily mean you will pose any kind of long-term threat to the established players.

As Elizabeth Anderson’s fascinating article in The Daily Telegraph (Tuesday 21st October, Business Section, page B8) points out, in the UK, more than half of new businesses don’t survive beyond five years. She was referencing research from the commercial insurer, RSA, who pointed out that while the UK is a great place to start a business (with tax incentives like SEIS designed to mitigate the risks to investors), the survival rates are low.

A staggering 95.4% (4.67m) of all private sector companies are now what is referred to as “micro” SMEs (Small and Medium Enterprises), defined as having between nought and nine employees. It’s a chilling statistic to think that half of them statistically won’t be around in five years time.

Not that I wish to be a doom-monger, and dissuade any “want”repreneur from having a go, in fact Match Capital is itself a “micro”, so we too have the same 50/50 statistical chance of survival, but it’s worth being reminded occasionally that starting a new business is not a panacea for success.

It takes grit, determination, a never-say-die attitude, resilience, stubbornness and a healthy does of arrogance to survive, even when the odds are stacked against you. It’s these realities that are worth bearing in mind every single day, when you’re making the big decisions.

Good luck, and bon chance, we are 1000% with you every step of the way.

Match Capital is a platform algorithmically connecting entrepreneurs with relevant investors.

Back to top