The last two years have created an unpredictable employment landscape in the UK – from mass furloughs during COVID, to The Great Resignation and now, the Cost of Living crisis continuing the trend. To gain control over their job security, we saw many UK workers make the transition to being their own boss, capitalising on a trend that had been growing since the dot com boom.
We recently conducted research into entrepreneurs both new and established, especially those who run their businesses as individuals without employees: sole traders. It found that sole traders alone contributed £112 billion to the UK economy last year, more than twice that produced by all the people in Manchester.
New trends are emerging among the sole trader community – and nowhere more impressively than in younger generations. 1 in 5 of Gen-Z sole traders said their small business is their first job, having never entered the “traditional” labour market and instead set up on their own right out of education. What’s more, nearly a quarter of Millennial & Gen-Z sole traders are either currently running or want to run multiple businesses, establishing an innovative new trend: ‘the multi-hustle’.
Passion and drive
Both corporations and individuals have been forced to reassess their work/life balance since the pandemic hit, and are now dealing with the consequences. Many individuals simply won’t accept jobs with inflexible hours or locations, so businesses are faced with increasing pressure to retain talent – and this has led to an increase in budding entrepreneurs going solo.
Where most entrepreneurs are making these decisions based on work/life balance or ‘being their own boss’, among younger sole traders – especially Gen Z – there is another driver: pursuing a passion. More and more small businesses are sprouting from a desire to do what you love, with a quarter of sole traders having turned their side-hustle into their full-time business.
Some are going one step further, and establishing themselves as ‘multi-hustlers’. Millennial multi-hustler Isobel Perl, founder of natural skincare brand PERL Cosmetics and online community and coaching service Girls in Business, is one such example.
“By owning multiple small businesses, I feel that I’m able to have a larger impact on my communities, and I never get bored as there is such a variety of work to do! I have created my own diverse client portfolio working in two separate industries with different offerings,” she said.
Digitally-led youth raking in revenues
Young people faced a catastrophic job market collapse in 2020 – yet now, they’re disrupting traditional career paths and having the confidence to go it alone. Even more impressive? They’re seeing enormous success.
Younger and more digitally-savvy business owners are financially outperforming their counterparts, according to our research, and as such are leading the UK’s post-pandemic economic recovery. Gen Z sole traders, for example, are the only generation experiencing an annual increase in revenues, while millennials were just as likely to have experienced an increase as a decrease. Gen X and Baby Boomers, meanwhile, experienced a notable decrease – and as the ages get higher, the revenues decrease.
As more and more businesses and consumers operate online only, revenue increases are unsurprisingly led by digital proficiency and technology. We found that Gen Z sole traders are particularly likely to use digital technology to monitor their business cash flow and overall financial performance. While digital technology is likely to boost success in all areas of business, Gen Zs are seeing the most benefit from financial software such as digital payments, invoices and accounts, which help them dedicate more time to creativity and less to admin.
Sole traders are a strong force for sustainable business in the UK
Sustainability is fast becoming one of the most important pillars of successful business operations – and the pressure to take action is now shifting from large corporations to the very smallest, such as sole traders. Over the past year, we have seen more and more businesses pledge for carbon neutrality and biodegradable packaging, especially around the watershed moment of COP26.
Understanding the huge contribution sole traders make to the economy reveals the importance of their climate impact, especially as 71% of sole traders in the UK have taken action to make their business more environmentally sustainable in the past year. Again, we found that sustainability commitment is strongest amongst the youngest generations, with the vast majority of Gen Z and Millennials having taken some action. That said, around 7 in 10 Gen X and Baby Boomers were still making sustainable choices for their business, not far behind their younger counterparts.
There are simple steps sole traders can take to improve their sustainability, such as recycling more, going paperless, moving meetings online or reducing the amount of everyday waste generated by the business. While these actions are small, the proven benefits of increasing sustainability credentials are huge – from gaining customers and reducing operational costs to boosting business efficiency. Even more critical is the role sustainable business will play in our economic recovery – the two go hand in hand, and taking more climate-friendly actions will certainly boost a business’ bottom line.
What’s clear to see is that entrepreneurialism is thriving in the UK – despite the trials and tribulations of the last two years. It shows no signs of slowing down, which is crucial for our economic recovery and for continuing the long legacy of British business success. What’s impressive is that the youngest generations are really leading the way – and it seems we can expect this to continue in the years to come, as more and more businesses with sustainability and strong growth at their heart continue to be born.