Every year in the UK, there is usually a fair amount of enthusiasm among would-be entrepreneurs for starting their own business. Whether it’s the appealing prospect of becoming your own boss, the chance to follow your passion or simply the chance to build a better work-life balance, there are a lot of positives when it comes to considering going it alone as a career.
However, while running a small business is generally an attractive proposition for many working Brits, the reality in 2024 is that many people are being put off from doing so due to the current economic and political landscape.
Recent research we’ve conducted at FreeAgent found that just a fifth (20%) of people currently in UK employment said that they plan to start their own business within the next 6 months. However, in contrast, more than 60% said that while they are interested in starting a business at some point in the future, they either have no immediate plans to do so or don’t expect to be able to start one for ‘at least a few years’.
Factors like the ongoing cost-of-living crisis and the prospect of dealing with inflation and uncertain economic conditions have certainly had some influence on this reticence. But the biggest reason for people choosing to pause their plans to start a business is actually the forthcoming UK general election.
Over half of our survey respondents said their decision to start a business had been ‘significantly’ or ‘somewhat’ impacted by the general election taking place in 2024. Furthermore, 49% said they had been deterred from starting a business due to economic instability caused by uncertainty around the next election..
With potentially significant political and economic changes on the horizon – particularly if there is a change in government after the election – many prospective small business owners are simply not confident enough to take the plunge yet. We could potentially see a scenario where prospective small business owners spend the rest of this year putting off their plans.
My request to our political leaders, therefore, is this: I hope each political party will provide more information about their own policies and aspirations for the SME sector. That way, at least prospective small business owners will be able to see what commitments are being suggested for SMEs, and will have a little bit more confidence over when (or if) to start up a venture of their own.
Small businesses are the lifeblood of the UK economy and, historically, have been the type of enterprises that have led the UK out of recession due to their innovation and nimbleness. If we want to see the green shoots of recovery in our economy, we not only need to support the small businesses that are already operating, but also those that are about to be built.
By having clarity over issues such as small business taxes, late payment and access to support, would-be SMEs will be able to better plan for the future and have more confidence over taking their first steps into the small business sector.
