Small businesses suffer from potentially fatal complacency after their first full year of trading, according to Business Link in London.

According to the DTI's small business survey 2007, 91% of start-ups make it to their first birthday but only 67% are still trading by the time they are three years old.

Business Link in London believes this should serve as a wake-up call to businesses that have finished their first year's trading to recognise and tackle the challenges that face them over the next two years.

The organisation's own awareness survey found that the key areas where growing businesses needed help and advice were finance, cashflow, staff issues and raising business level through marketing. It also found that the rate of churn for businesses in London was higher than it was for the rest of the UK.

Business owners can't just put their head in the sand when it comes to growing pains. They have to overcome them and the best way to do that is with external advice and support

"We found that recruitment, marketing and finance were the key problem areas for developing small business," said Andy Berrow, senior business advisor at Business Link.

"We want to make sure that out of the rising number of businesses starting up in London each year as many as possible make it to their sixth birthday. In reality only 20% will make it this far.

"Business owners can't just put their head in the sand when it comes to growing pains. They have to overcome them and the best way to do that is with external advice and support."

The poll also revealed a reluctance among entrepreneurs to seek advice, with only 44% of companies with fewer than 49 staff going out of their way to get information on how to run their business. Asian and black businesses are even less likely to do this, just 29% and 27% respectively.

Business Link in London suggests five top tips for businesses to think about when it comes to going forward:

  • Assess current performance: where is your business now?
  • Set a vision for growth: where do you want to be?
  • Plan to grow: work out how to increase marketshare, develop new products and take advantage of commercial opportunities
  • Lead staff through the growth: motivate current staff and take on new ones to fuel growth
  • Manage the risks: look at the risk in each of the areas of your business and how to limit it