By Steve Taggart
As we reported recently, micro businesses and entrepreneurship are getting some great press lately and the growth of small businesses is helping to drive economic recovery here in the UK.
But new research has shown that the so-called ‘startup revolution’ appears to be losing pace. The data, which was gathered by business service website Company Check, shows the growth in numbers of new businesses being incorporated each year to have slowed from 13.4% year-on-year between 2010-11 to 4.9% year-on-year between 2013-14.
This is not to say the total number of new businesses has declined; indeed, quite the opposite is true. However, the rate of this growth is slowing.
56,207 more businesses were incorporated in 2011 than 2010 but the uplift from 2014 to 2013 was 27,571 – less than half.
Alastair Campbell, founder of Company Check, said: “At first glance the story is a positive one; Britain gets back to work and does it for itself, setting up millions of new companies across hundreds of industries and specialities after a prolonged and painful recession.
“However, behind the clear good news a note of caution should be struck. The pace of growth in startups has slowed significantly – by more than two thirds from 2010 to 2014.
“The ‘glass half full’ view is that more startups are surviving and thriving than were previously, leaving less cause for new businesses to be setup in the first place. However with youth unemployment still stubbornly high, there remains a pool of talent out there capable of becoming their own bosses with the right support.
“The Government needs to renew its efforts now to ensure the country’s startup success doesn’t stumble.”
What does this mean for small businesses?
Small businesses play a hugely important part in the UK’s economic growth. According to data from the Federation of Small Businesses, small businesses contributed an estimated combined turnover of £1.6 million in 2014 – so the importance of small business is by no means reduced.
What is clear is the need to continue to provide the support to startups that helps them go from idea to reality. Entrepreneurship support programmes such as the Growth Vouchers scheme and local initiatives are incredibly valuable in this process.
Furthermore, it is the role of our education system to continue to instil and nurture the skills of business, through programmes such as Young Enterprise as well as lessons in school to provide an understanding of economy and basics of business.
The importance of location
Seven of the top 10 areas for startup growth between 2010-2014, measured by constituency boundaries, were in London, with the remainder in Glasgow, Edinburgh and Manchester, according to the data from Company Check.
The constituency with the largest single increase in incorporations over the same period was Dumfriesshire, Clydesdale and Tweeddale, which saw a 332% rise. Vauxhall in London and Bolsover in Derbyshire both also saw growth of more than 300% in four years.
London continues to play the leading role in business growth.
In the week when George Osborne’s Budget announcement to cut corporation tax to 18% was tempered by the introduction of a £9 national living wage by 2020, one of our key areas of focus should be on small business incorporations over the duration of this government.