By Daniel Hunter
A new generation of young business owners are leading the way out of the downturn, according to the annual Simply Business Start-up Index, which reveals a 29 per cent rise in firms started by 18-25 year olds since the recession took hold in 2008.
Data from the UK’s largest business insurance provider, based on up to 750,000 individual quote requests annually, revealed that new businesses accounted for 38 per cent of all applications in 2012, representing a 3.4 per cent increase on the previous year. This compared to a decline of 8.7 per cent for all start-ups since 2008, making the big rise in younger entrepreneurs all the more significant.
As part of the annual report, Simply Business conducted a start-up capital poll on a cross-section of 500 customers, to review the current landscape of finance and lending. This revealed that the majority of businesses start on a shoestring, with 58 per cent raising less than £1,000 to get off the ground and 39 per cent managing on less than £500. Most start-ups are self-funded, relying on savings (84%) and/or family (12%), with just five per cent receiving bank funding to launch their enterprise.
“The start-up figures for 2012 are encouraging as they show that enterprise is not being unduly suppressed by ongoing negativity in the economy,” comments Jason Stockwood, Simply Business CEO.
“This has been among the most difficult periods ever faced for young people, with many traditional routes to employment now closed, so it is especially pleasing to see a new generation of entrepreneurs emerging and hopefully building the household names of the future.”
At the opposite end of the scale to those at the start of their career, the trend for retiree-age entrepreneurs continued in 2012 with a 7.2 per cent increase in applications from those over the age of 65 — the biggest annual rise of all age groups. Over 65s now account for more than four per cent of all new business owners, gaining ground on the most prolific start-up age of 35-44 year olds (30%).
Sentiment played a key part in the start-up landscape in 2012, with entertainment and arts businesses such as event organisers and children’s entertainers proving the biggest growing trades, with the number of new businesses in the sector increasing by 10.8 per cent. Elsewhere however, the struggles of the high street continued, with restaurants (-24%), shops (-18%) and pubs (-16%) recording the biggest declines overall, revealing the ongoing squeeze on consumers’ disposable income.
“The decline in retail trades is worrying as it suggests the government’s efforts to revive the high street are falling flat. This is clear evidence that a renewed focus is badly needed to help support local, independent businesses in particular," Jason Stockwood continued.
"On the flipside, the rise in entertainment focused firms shows the enterprising spirit of UK entrepreneurs as they look to meet demand for some light relief in difficult times, as well as riding the wave of major, feel-good events such as London 2012 and the Diamond Jubilee.
“Overall, the start-up demographics we have recorded in recent years shed a lot of light on the environment we now live in. The meaning of retirement has altered for many, as people look to carry on earning in order to boost potentially reduced income. However, positives have also sprung from this with many now viewing this period as a genuine opportunity to make business dreams a reality.”
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