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Secrets of successful small firms revealed

​Successful entrepreneurs are more likely to learn from past failures, invest in technology, value time with their families and build strong relationships with mentors according to new research.

A survey by Xero polled over 2,000 entrepreneurs in the UK and the US to discover what separates successful business owners from the rest.

Learning from failure is a key trait. Entrepreneurs who had experienced prior failure reported they were better at planning and financial management the next time around; and 71% described the closure of an earlier business as a positive thing.

The findings also show that the most successful business people are more likely to enlist the support of others including family, mentors and financial advisors. A third of successful entrepreneurs say they have turned to mentors, compared to just 14% of respondents who ran businesses that had to close.

The findings reveal that successful entrepreneurs work hard to achieve a healthy work-life balance. Nearly six in ten respondents (58%) cited spending time with family in the evenings as crucial to their effectiveness as a business owner.

Those that succeed also invest more in technology say the researchers. Nearly six in ten successful businesses (58%) use software to manage their finances compared with 14% of failures. In addition, 86% of successful small firms said they used technology to boost productivity.

Also this week, new research by the Association of Accounting Technicians (AAT) shows that one in three small and micro businesses have failed to grow in the past five years. The study found that 33% have failed to grow revenue, whilst 31% haven't seen an increase in profits since 2010.

According to the business owners polled, the key factors holding them back are the lack of capital, too much red tape and not enough support from banks.

However, over the next five years 76% of small firms expect to see an increase in revenue and 78% predict that their profits will rise.

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