New year, new business?

One in five Brits intends to set up their own business in the next five years, with 23% considering themselves as entrepreneurial. Is 2020 the year you become a small business owner? Dave Howell reports.

Over 200,000 new businesses were started in 2019 according to government figures – an increase overall of 69% since 2000. It seems the appetite to start a new business shows little sign of slowing.

If you have a burning ambition to start your own business, 2020 could be the year to make this a reality. Over the past decade, the essential services all new companies need have matured. Today, setting up a new enterprise is easier than it has ever been. The key is having confidence in your idea and carefully planning how your new company will operate.

“Last year 96% of all businesses in the UK were classed as micro-businesses, employing up to nine people, many of which are start-ups,”

Jonathan Lamb, Chief Executive, The Entrepreneurs’ Forum told Small Business Essentials. “There remains a healthy number of natural entrepreneurs with the inspiration, courage and determination to launch their own businesses. Whatever their motivation, the desire to establish your own business remains unabated.”

Of course, for many aspiring entrepreneurs, Brexit is a huge fly in the ointment. However, the uncertainty that the UK's exit from the EU brings should not dampen your enthusiasm. Making plans for your new business now will give you a great foundation to build upon. Many of the most successful small businesses were started in recessions. Brexit is no different. If you believe in your business idea, now is the time to put that belief into action.

Says FSB (Federation of Small Businesses) External Affairs and Advocacy Director Craig Beaumont: “The UK remains a great place to start an enterprise, rising to 8th place in the World Bank’s Ease of Doing Business rankings this year. However, we now need to make it the best place in the world to launch a firm. Doing so means tackling costs and unleashing opportunity.

Beaumont continued: “The fundamentals of starting a new, successful business don’t change with time: research and establish your customers, develop a great offering that betters the competition, write a brilliant business plan and ensure you have your numbers, cashflow and inventory under control.”

Taking the risk

Having a great business idea is one aspect of running your own business. Believing in your idea and your abilities to create a profitable business, go hand-in-hand. According to WebsiteToolTester, 41% of those surveyed saying that they lacked the confidence to start their own business. 

Also, common barriers that may prevent people from setting up a business include age and gender, with 28% of people saying they would set up their own business if they were younger, and 15% if they were older. When asking specific age groups, 57% of the older generation (45 years+) said they would start their own business if they were younger, and an incredible 77% of the younger generation (16-44 years) said they would start their own business if they were older.

Robert Brandl, CEO of WebsiteToolTester comments: "It's great to see that so many people are keen to nurture their inner entrepreneur, with plans to set up their own business in the next five years. While funding and connections help when setting up a new business, a great idea and enthusiasm need to come first!”

Speaking to Small Business Essentials, Steve Dougan, Head of Enterprise at Teesside University said: “Financing remains the key challenge, and for my graduate and student founders it is compounded by a lack of personal capital. Other challenges include a lack of social or network capital, the people with influence and access that can make a huge impact by making the right introductions. I think the last, and perhaps most impactful, is a lack of investment in personal development, learning how to be confident and how to communicate with passion and energy and that it’s OK to want to succeed and win. This is a huge challenge that needs to be addressed in primary and secondary education.”

A clear trend over the last three years is to start a new business part-time or as a 'side hustle' while maintaining a full-time job. "From our experience with our clients and website visitors that many new businesses are set up by people who do so alongside being employed,” says Darren Fell, CEO, Crunch. “They may be freelancing on the side or, doing the 5-9 as well as their 9-5! We also see lots of new businesses, such as IT contractors or people moving from employed roles to self-employed consulting roles, for example, do not have significant overheads when starting up their businesses.”

Also, the tools that are now available to new business owners continue to expand, says Chris Evans, UK Country Manager and VP, QuickBooks: “The future of UK entrepreneurship is bright thanks to those business owners embracing digital with unabated optimism. A new financial system powered by Open Banking will cater to the unique needs of small business enterprise to optimise results and free up time towards the most important parts of running a business. We envisage a future where entrepreneurs feel secure in the knowledge that they have a digital, personal finance advisor in their pockets, managing their finances and keeping a watchful eye over cash flow and business decisions.”

Small is beautiful

For many, starting their small business will mean remaining small. Indeed, according to research from Nesta, the majority (95%) of all small business would be characterised as micro-enterprises employing between 0-9 people. These businesses account for 54% of SME employment and just under 40% of turnover. Medium businesses represent less than 1% of the SME population, but account for nearly a quarter of SME employment and 30% of turnover.”

Enthusiasm is needed to set-up a business. However, this must be tempered with knowledge and skills. Linda Davies Carr (aka The Master Fixer) explains: “I find that often a business owner will have a great idea, maybe they are an expert in their field and talented at what they do. However, they have no idea how to run a business and are foolishly determined to carry on regardless.

“Their expectations are often unrealistic, and they do not value their own development as an asset and a business-critical activity. They fail to work on their mindset and resilience and work unsustainable hours without creating boundaries and daily success rituals. They do little workaround asking for the right remuneration for their service or product as they often ignore the value of their time - or those things which are not physical yet are critical for business success.”

Does the UK still have an environment where business can flourish? The answer is a resounding, yes! The levels of support, the masses of information available and a continuing sense of crafting your own future, ensures entrepreneurship is alive and well. The definition of what an entrepreneur is has evolved. Today, you may call yourself a freelancer, side hustler or portfolio worker.

Starting a small business in 2020 can be done on your terms, and with as much risk as you are comfortable with. Gone are the days where large quantities of time and money had to be risked in a make or break a business venture. A microenterprise is a clear path for many, who can test their business idea for a low cost. The only question to ask yourself is, what are you waiting for?