One in two (54%) UK entrepreneurs see the current recession as an opportunity. Is it a good time to start a business?
Entrepreneurs and business owners have endured a tough ride recently. Record-high levels of inflation leading to increased business costs (due to higher interest rates and rising wage growth), coupled with consumers tightening the purse strings as they battle with the cost-of-living crisis.
All of this has created a challenging economic environment for UK businesses to grow and flourish to fulfil their full potential.
What are the prospects for starting a business in 2024?
While recent tough times have tested business owners’ mettle, it has also fostered innovation as they adapt and find new ways to grow in periods of change. The recent economic disruption, and a political change with a new Labour government focusing on long-term growth, present another opportunity for those who can move quickly. Our latest survey revealed 45% of business owners think that the change of UK Government is an opportunity for their business.
We believe entrepreneurs who can navigate these challenges and seize the opportunities presented are likely to drive the next wave of economic development in the UK.
And business owners and entrepreneurs tend to agree. Our recent report – Opportunities in Adversity – in partnership with Beauhurst, reveals encouraging trends for entrepreneurs in 2024. It found that 54% of UK entrepreneurs see the latest recession is an opportunity. And 51% think British entrepreneurship is about to boom. This rises to 57% of serial entrepreneurs – those who have started multiple businesses throughout their careers.
Founding a business in the face of adversity – what do entrepreneur stats tell us?
While the current recession stresses the obstacles facing lots of business owners, the history of entrepreneurship in the UK demonstrates that adversity often breeds opportunity.
The chart below compares how companies incorporated during a crisis have fared. This includes the Global Financial Crisis, the COVID-19 pandemic and the more recent cost-of-living crisis.
Source: Beauhurst and Charles Stanley, Opportunities in Adversity, report May 2024.
Interestingly, the COVID-19 pandemic saw more than double than number of companies incorporated when compared to the GFC. Further still, the more recent cost-of-living crisis has seen over two million companies enter the fray – more than the two other crises combined.
There are a number of factors that play into these statistics. The GFC was the most severe economic crisis since the Great Depression. Economies around the globe grinded to a halt, the housing market collapsed, and unemployment soared. All in all, making it more difficult for entrepreneurs to take advantage of any investment trends and opportunities due to the sheer size and scale of the disruption.
In comparison, the COVID-19 and the cost-of-living crises generated less economic damage thanks to government support in the form of business loans and furlough schemes. The pandemic was a big market disrupter almost overnight, creating opportunities to solve new problems and develop products to serve a post pandemic economy – for example, working from home. Individuals also had more time to focus on starting a business due to lockdown furloughs and some employers being completely closed.
Looking at the percentage of companies still active that were incorporated during the three crises, the most recent has the highest percentage of companies still active.
Source: Beauhurst and Charles Stanley, Opportunities in Adversity, report May 2024.
The high number of companies still active from this period is more a reflection of the limited time they have had to fail rather than an indication of their inherent quality.
One in two (51%) companies founded amid the COVID-19 pandemic are still active today. Nearly two in three (63%) companies created in this period specialise in providing application software or software as a service, highlighting how lots of entrepreneurs seized the opportunities presented by the pandemic and have gone on to achieve huge success. As of May 2024, companies founded during COVID-19 have an estimated total turnover of £440bn and an estimated 2.71 million employees.
Thriving amidst the mist of adversity
Case study example: Tandem
Tandem operates a digital challenger bank with a particular focus on green finance and promoting a more sustainable planet. Founded in Blackpool in 2014, Tandem introduced a disruptive financial service that leverages technology to help clients make greener financial decisions. The fintech was founded by serial entrepreneur and fintech specialist Ricky Knox to provide customers with easy access to tailored financial tools, mortgages, and savings accounts.
The global financial crisis highlighted the vulnerabilities of traditional banking and led to a decline in public confidence. This created market opportunities for fintech businesses such as Tandem, which emerged as alternative financial services. In contrast to traditional financial institutions, fintech services are more innovative and affordable —simplifying banking for the increasingly tech-savvy customer. The increased scrutiny of traditional banking, in conjunction with the rapid growth of technology, contributed to the popularity of challenger banks that offered innovative digital solutions to customers’ financial queries.
Since its inception, Tandem has expanded across the nation with offices in Cardiff, London, Durham, and Manchester. It now employs more than 500 people and has gained the interest of international and UK investors, raising an impressive £362m in equity investment to date.
Tandem’s strategic acquisitions—Oplo, Allium, Loop, and Harrods Bank—work with a shared vision—to help more people make greener decisions that would, help the planet and their financial health.
Oplo, acquired by Tandem in April 2022, emerged from the GFC. Founded by Alexander Mollart, who now leads Tandem as CEO, Oplo was established in 2009 with a clear mandate to offer more equitable financial services. It aimed to address the needs of UK customers affected by the economic fallout and overlooked by conventional high-street banks during the global crash. It has facilitated over £1.00b in responsible loans since its establishment.
How Charles Stanley can help you start a business in 2024
At Charles Stanley, we are committed to supporting entrepreneurs through the good times and bad. We offer a comprehensive suite of services designed to meet the needs of entrepreneurs at every stage of their journey. Our holistic approach ensures personalised financial planning and bespoke investment strategies tailored to long-term success and financial security.
Our goal is to empower entrepreneurs to succeed, which, in turn, fuels economic progress. Our 200-year history means we have had to deal with adversity, from economic disasters to wars, and all the while, we have continued to support business owners.
Looking ahead, AI, clean technology, and digital health are poised to drive the next of entrepreneurial growth and we remain dedicated to guiding our clients through these emerging opportunities.
Our latest report, in partnership with Beauhurst, Opportunities in Adversity – Tough Times Make Brilliant Businesses, explores how various periods of economic hardship have created opportunities for the UK’s entrepreneurial ecosystem. Where others see problems, entrepreneurs see opportunities, meeting new demands or adapting their business models to better suit evolving needs.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
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