The financial hardship and job uncertainty experienced by many during the coronavirus pandemic has provided the final push for thousands of aspiring entrepreneurs to start their own business, according to new research.
Almost 60,000 (58,450) new businesses were created by Britons on furlough, while the number of registrations by those made redundant increased by a third (33%) from last year to create 133,600 new companies, signalling a wave of enforced entrepreneurs.
Fourteen percent of new business registrations – around 116,900 enterprises – were the result of a need for an extra source of income, according to research published in the Boom or Bust: Beginning a business in a pandemic report published by The Accountancy Partnership.
Whilst unemployment and money struggles played a significant part in this surge of business registrations, almost half (46%) of entrepreneurs who started businesses during Covid said they had always wanted to be self-employed or own a business.
Lee Murphy, managing director of The Accountancy Partnership, said: “Starting a business is notoriously difficult, even in normal times, so it was somewhat unexpected to see new businesses in their hundreds of thousands being set up last year.
“Our research shows that many lockdown entrepreneurs saw creating their own business as their only option after being made redundant or facing other financial troubles, but the statistic of those fulfilling longer-term dreams of owning a business is hugely encouraging.
“It means that even businesses launched out of necessity have people behind them with a genuine desire to be business owners. This enthusiasm will help fledgling businesses thrive despite the adverse circumstances of their inceptions.”
The research shows that an ever-growing interest in side-hustles has also contributed to the new business boom, with more than a fifth (21%) of pandemic-born businesses starting their life in this way. This 40% increase from 2019 is likely a result of people having more time on their hands due to lockdown restrictions, isolation and furlough, with enterprising Britons using their free time to monetise a skill or hobby.
Lee Murphy continued: “The notion of turning a hobby into a source of income has been on the rise for a few years, especially as more people become aware that the first £1,000 gross profit per year is tax-free. The pandemic has presented many people with the time and opportunity to turn a side hustle into their main source of income. Again, it is promising that there are people with a genuine passion for what they are doing behind these businesses and 13% of people who started a business from a side hustle last year want it to become their full-time job.
“The ‘lockdown-preneurs’ have some difficult waters ahead of them as we navigate the rest of the pandemic and the recovery period, but our research suggests that there are enthusiastic, passionate people behind a significant number of lockdown businesses and that is critical to success.”