Data has shown that 2020 should see a record number of companies created this year, with 84,758 more business setting up this year compared to 2019. This is just over 12% increase YoY, which is the highest percentage growth since 2011.
The reasoning behind this has been pondered, but most assumptions allude to Covid-19 redundancies triggering people to set up their own business. Furthering this view, Companies House have recorded over 59,000 new companies being created between June and August this year, when many were furloughed.
With millions of people furloughed from a lot of the year and a particularly difficult job market, it seems that many people created their own opportunities.
Although it is extremely positive to hear that many new businesses have been formed by tens of thousands of new entrepreneurs, we should be cautious about attributing this increase entirely to growth in entrepreneurship. The reality is that many new companies have been created by those who lost their jobs due to Covid-19, meaning a lot (nearly 80%) of the new, small businesses being discussed are sole traders offering limited chance of employment for others too.
There is also the added uncertainty about how many of the companies created are legitimate, given the widespread fraud that went up. Namely, by criminals targeting the Bounce Back Loan scheme, which offers limited companies up to £50,000 interest-free for one year.
Which Sectors Saw The Highest Growth In 2020?
The sectors that have been seeing the highest growth compared to 2019 included:
E-commerce, which went up 88%, with 12,490 new businesses registered
Clothing, which went up 55%
Retailers of medical goods, which went up 176%, which is not surprising.
Given the way that 2020 has gone, it is to be expected that industries such as these have thrived, and with the second national lockdown commencing, continual reporting on this type of data will be interesting to analyse.
Why Start A Business
There are a multitude of reasons to take a calculated risk and start a business, from how much profit you can make and the independence your own successful business can provide to the sheer satisfaction that comes with making a difference with your brand. If you have a passion and want that to be your career, with the right research, planning and resources starting a business may be one of best decisions you make.
For more reasons as to why entrepreneurship is worth considering, take a look at the entrepreneurship portion of our blog, that covers questions such as ‘can anyone start a business?’, ‘what experience do you need to run a business?’ and ‘how do you set up a business of the future?’.
Should I Start A Business?
Iain Wright, director of business and industrial strategy at the Institute of Chartered Accountants in England and Wales, told the Times: “Every downturn in economic history is accompanied by a rise of entrepreneurship.”
So, it may be worth looking at the end of this calendar year and the beginning of 2021 as the start of your new, innovative business.
This prospect may seem daunting and only you know whether starting a business is the right step for you. But one certainty throughout is the necessity of creating the right business plan for your business’ unique goals.
If you would like help with putting together your plan, get in touch today! Contact us online using the form on the right or call 01604 420 420.