History would hardly tell you that recessions are ripe for the creation of new businesses. Yet new research suggests that in 2023, despite the uncertain economic environment in the UK and around much of the world, entrepreneurship is set to boom.
One in three British adults – as many as 17.9 million – say they plan to start a new business in 2023, according to recent research from Intuit QuickBooks. This comes despite widespread fears that the recession will dampen new business growth, and shows a shift towards entrepreneurialism in order to weather the economic storm – rather than in spite of it. By contrast, back in early 2022 just one in ten said they planned to kickstart a new business.
Weathering the storm
This huge projected growth in business ownership in the UK is not as unlikely as it may seem. Of the millions of new business owners laying out their plans, 84% say their small business will be a ‘side hustle’ alongside their existing full or part-time job with another employer.
This is because many of these budding entrepreneurs are kick starting their businesses to combat the rising cost of living, by creating a more lucrative income stream. More than half said rising inflation has necessitated a boost in their household income – and for many, the thrill of owning a business and trying something new is too good to pass up.
That said, these new entrepreneurs aren’t blind to the difficulties they will face. The most widely anticipated challenge is making a steady income, closely followed by attracting customers, dealing with the rising costs of energy and materials, and staying on top of finances.
Interestingly, a third said that staying motivated would be a major challenge – so figuring out who or what to rely on when the going gets tough will be key. When starting out, the vast majority of new business owners are excited about connecting with customers, delivering great products or innovative services, and on growing their bottom line – not on filing tax returns and keeping on top of expenses.
This is where a helping hand will come in, be it a reliable third-party, such as an accountant or financial advisor, or the help of financial management software to ease the burden of financial admin. In fact, more than a third said they believed technology has made it easier to start a business – which is no surprise.
The entrepreneur’s outlook
Looking at these statistics, the pessimistic among us might ask: is there not too much risk in starting a business during a recession? This sentiment is not shared among the UK’s future business leaders – more than two-thirds are confident their business will succeed.
Already, they believe their business has strong customer demand, regardless of the economic outlook, and many have invested time and effort into nailing their pricing to make it competitive. Meanwhile, three in ten new entrepreneurs say they believe they have found a genuine gap in the market – enough to guarantee strong success in their new venture.
This confidence is reflected in so many new business owners’ willingness to fund their businesses out of their own pockets. The vast majority plan to use their own money, with just a quarter saying they’ll use a loan from family and friends, and even fewer relying on government funding.
The light at the end of the tunnel
Seeing such a strong desire to kickstart a new wave of businesses is the light at the end of the tunnel that many of us needed. We may even see the UK come out of this recession even stronger, given the importance of the SMB sector to our overall economic outlook. Any slowdown in our small businesses impacts the wider economy enormously, so avoiding this will be crucial.
With such a wide-ranging set of business types projected to take 2023 by storm – from e-commerce businesses making revenue from online sales, to creator or influencer businesses making their income from social media – we are likely to see even more success.
Despite everything being thrown at budding entrepreneurs around the UK, it’s clear that they have the drive and determination to make a success of their ventures, whether that’s a side hustle or going all-in on their business idea.
What’s important for new business owners to remember is that they don’t have to do it all – relying on the skills, tools, and technologies available to them will take pressure off, and keep their passion alive.