Graeme Sands, Head of Business Products and Lending at Virgin Money explains why tough times make resilient entrepreneurs and what you can do to get your business off the ground right now.
The pandemic has been tough on many businesses, but has also triggered a new wave of innovation and entrepreneurial spirit with 786,777 businesses created over the course of 2020, according to Companies House. That is 13% higher than the number of businesses created in 2019 (678,419) and, while of course some of this has unfortunately come from sudden unemployment, many good businesses have come from similar circumstances in the past.
Collectively, these businesses provided employment to over a million individuals, while generating turnover of more than £100 billion.
The start of 2021 has continued this trend and generated record levels of entrepreneurship.
Business creation data from Inter-Departmental Business Register and ONS reveals that, in the first quarter of 2021, almost 212,000 businesses have been incorporated across the UK. Understandably, some sectors have been better able to adapt to the opportunities presented by the pandemic than others – those which saw the greatest levels of entrepreneurship were business administration and support services (83,000), scientific and technical activities (67,000) and retail and professional (62,000).
Regionally, London has continued to dominate the UK’s start-up scene, with nearly 75,000 businesses incorporated from 1st January to 31st March 2021. This equates to around 1,073 businesses per 100,000 adults.
These figures are supported by the latest Virgin Money Business Pulse, a quarterly business tracker, which revealed a marked uptick in the annual rate of business creation indicator last year, from 3.5% in Q2 to 8.3% in Q4.
In fact, the fourth quarter figure represents the fastest rate of business creation since data collection for the Virgin Money Business Pulse began in 2014.
While the pandemic has led to a great deal of economic uncertainty, for some businesses, it has also provided an opportunity for agility and innovation.
One in six (17%) SMEs are planning to start operating in a new sector or activity as a result.
The numbers also speak volumes about how vital these companies are to the UK economy. Whether it’s the people they directly employ or the supply chain into which they inject money, the country needs SMEs to be operating at capacity in order to deliver economic growth.
Given the challenging environment SME business owners are facing, of course their undivided focus right now is going to be on either keeping their business afloat or hopefully responding to a sharp boom in demand.
However, the next year will see many changes to patterns of ‘normal working life’ as many companies adopt a hybrid working model and others switch to full-time home-based working. These changed patterns will offer threat to some but, as always, opportunity to others prepared to think differently about how they serve customers. Perhaps, if time allows and as life returns to something approaching normal, those thoughts should be captured in a new business plan, however informal.
To help any budding entrepreneurs take the first step, Virgin Money has some tips to encourage them and help others get on the road to making their big idea into a business.
Tips for aspiring entrepreneurs
It’s great if you’ve got all the answers yourself, but keep an open mind and take advantage of opportunities to learn every day.
Do work you care about
Running a business takes a lot of time. Make sure the work you do is something you truly believe in. You don’t necessarily need to have experience, just know what your strengths are and put them to good use.
Take the risk
You will never know if you can succeed until you actually try something. Believe you can be successful, and you’ll find ways through obstacles.
Find good people
No one succeeds in business alone. It can be tempting to want your hands on every aspect, but if you want to grow, you’re going to need a select few others to take the strain.
When spending money on your business, be careful to not spend too much on unnecessary things. Make sure every expenditure is necessary and can add value as you shape and grow your business.
The pandemic has taught us the importance of being responsive to changing customer needs, there’s no one-size-fits-all solution and incumbents don’t always have it right.
No matter how passionate you are about your business idea, you must remain objective about its viability. Get advice from an established entrepreneur or someone unconnected to your business.
Age is just a number
Don’t let your age stand in the way. Whether you’re younger or older or somewhere in between, don’t be afraid to develop your business idea if you truly believe in it.
Graeme Sands is the Head of Business Products and Lending at Virgin Money.