A quarter of new businesses launched because pandemic created ‘unique’ opportunity
- Retail (e-commerce) and construction most popular sectors to open new businesses in
- Three quarters of new businesses to be full-time occupations, not ‘side-hustles’
- 65% of owners confident pandemic businesses will turn a profit in next 12 months
London – Monday 26 July 2021 – Tide, the UK’s leading business financial platform, has revealed that the COVID-19 pandemic is the key reason for 26% of new businesses being opened in 2021, with the crisis providing ‘unique opportunities’ for entrepreneurs.* Confidence among new business owners is very high, with 65% saying they are confident their business will turn a profit in the next 12 months.
2020 and 2021 have seen a surge in the number of new businesses being formed. According to data from Companies House, there were 21.8% more businesses incorporated in the UK in the year to March 2021 compared to the previous year.
Tide surveyed members who registered a business in the first half of 2021 to understand the types of businesses being created, and why the pandemic saw such a surge in new businesses.
According to the survey, the pandemic provided a ‘unique opportunity’ for new companies, with over a quarter (26%) of people citing this as the main reason they started their business in the last six months. Equally, 14% said that the pandemic gave them the time they needed to start a business. Only 9% of businesses were opened due to the founder being made redundant, with 3% being created due to furlough.
Retail (e-commerce) was the most popular sector to start a business in, with 13% of new businesses opened in this sector. Construction was the second most popular sector (11%), with a fifth of respondents (19%) finding the pandemic created an opportunity in this market for their business.
Over two-thirds (66%) of new business owners are first-time entrepreneurs, with over half of businesses being full-time occupations rather than ‘side-hustles’, suggesting the surge in incorporations hasn’t been due to people looking for something to occupy them while on furlough. 55% of respondents said their business would be their full-time occupation, with a quarter (25%) aiming to start their business as an additional occupation and expected to evolve into a full-time endeavour. Only 17% are aiming for their businesses to be a long-term ‘side-hustle’.
Oliver Prill, Tide CEO said: “At Tide, we have witnessed the significant increase in new business formations over the course of the pandemic. However, up until now it has been unclear whether these are going to be businesses that are run full-time with long-term ambitions or if they were set up to support people who had been put on furlough or made redundant, with shorter term horizons.
“It’s hugely encouraging for the UK economy to see that the majority of these businesses will be their founders’ full-time occupations and that there is a lot of confidence that they will be financially viable. Setting up a new business is a real test of character, and the challenges posed by the pandemic will compound this, however, with the economy opening up again and lockdowns looking like a thing of the past, there is a real opportunity for this bumper generation of entrepreneurs to be at the forefront of businesses’ reemergence.”
While the pandemic was a key driver behind people starting a business in 2021, there are many other reasons for people to start up on their own. A desire for people to work for themselves remains the key reason for starting a business (45%), followed by it being a life-long ambition (32%) and a desire for a better work-life balance (29%).
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