Monday 29th Oct 2018
A Nation of Startups: Why More Brits are Setting Up on Their Own
28 Feb 2018
Brexit concerns are weighing heavily on medium-sized and larger established businesses, as they prepare to juggle supply chains and more, but there doesn’t appear to be too much in the way of concern when it comes to startups. According to the Centre for Entrepreneurs think tank, 2016 saw record numbers of people deciding to go it alone and set up their very own businesses. Almost 700,000 of them in fact. This did drop a little to just shy of 600,000 in 2017, but there’s still undoubtedly a healthy market for startups in the country - especially when you consider that most of the ‘drop’ was in fact down to tax and business registration changes that artificially inflated previous figures. Let’s take a look at why this sustained startup optimism might be.
Business Trends for 2017-2018
It’s worth noting first of all that most businesses in the UK, even several years after their inception, employ fewer than 10 people. And an increasingly large number of businesses are sole proprietorships, which shows a general trend towards businesses fracturing somewhat as employees decide they can do their job on their own - or indeed they have a completely different idea and want to make a business of it. One of the more interesting considerations is that Britain has in recent years struggled to see small businesses grow into larger ones. This may be seen as a negative, but it could also, again, simply mean that we’re seeing more of a trend towards individuals wanting to become their own boss - without any particular desire to expand that into a large business.
In general, it does look as though a significant proportion of the increase in startups has come about because of government initiatives to get businesses going. In a recent Hitachi survey, it was revealed that around 90% of startups invest their own money into getting the business up and running, but naturally in many cases this won’t quite be enough. As a result, many individuals have been supported by government schemes such as StartUp Britain. Of course lots will also have been motivated to give it a go owing to the large number of alternative finance methods out there. From crowdfunding to invoice finance, there are a lot of options for all of the most common concerns, of which cash flow is one of the major ones (almost a quarter of SMEs Hitachi surveyed see it as their biggest challenge).
Recruitment Finance & Other Sectors
Recruitment (and similarly recruitment finance) is one of the big areas in which we’re seeing many of the established players shrink as individuals split off and attempt to make something for themselves. The industry has always been a flexible one, but it appears that the incredibly low overheads that can be afforded to such businesses these days by the internet and relevant apps, are having a big effect. Where once an aspiring recruitment consultant had to tie their name to a big brand to be successful, it’s now fairly inexpensive for them to create their own brand and leverage social media for success, with LinkedIn being a particularly effective tool. We’ve already mentioned invoice finance being a driver in helping the financial side of things, particularly when it comes to cash flow, but an added benefit of some products is that they take control of the collections aspect of things too. This means that smaller businesses and even individuals don’t have to do it themselves - they can concentrate on supplying the services or goods that allow invoices to be raised.
The transport and logistics sector is another one that is likely benefiting from the ease at which an individual can brand and market themselves in the modern age. One man couriers and logistics consultants can set themselves up without major difficulty, provided they have the expertise. There are economies of scale to be had with larger businesses, but there is very clearly a market for smaller players too. Again, concerns over cash flow can be alleviated with invoice finance products, which can take away some of the normal stresses of getting a startup running successfully.
It seems as though we’re going to see startups continue to boom in the UK, as products, services and even government support make it even easier for individuals to set up on their own. Brexit may be causing some uncertainty, but there’s still plenty of opportunity for startups to be manoeuvrable, take advantage of what’s available to help them, and make a success of their business.