Despite a constant onslaught of negative economic news, government austerity, job cuts and salary freezes, Britain’s entrepreneurial system appears to be resoundingly healthy. So far this year, more than half a million startup businesses have been created in the United Kingdom, up from 484,000 in the prior year and 441,000 in 2011, according to data from Startup Britain's Daily Tracker. It is projected that the year will finish out with more than 520,000 new companies in the U.K.
The Daily Telegraph reported that an astounding 95 percent of all British firms comprise micro-sized and small businesses, employing more than 7 million people. “We’ve been looking at these figures carefully for three years… and it’s clear the U.K.’s startup community is fit and healthy -- and shows no sign of abating,” said Emma Jones, the co-founder of Startup Britain. “It’s astonishing to think that in the last week alone 8,675 people decided to start up here in Britain. We’re seeing record numbers of people setting up a business.” Jones has estimated that if all small businesses in the U.K. were to grow by 10 percent, it would add £21 billion ($34 billion) to the British economy.
The Startup Tracker computes how many new business are established in Britain on a daily, monthly and yearly basis using data from Companies House (the British government’s registrar of companies) and interpreted by a company called Made Simple Group. The Telegraph also noted that the British government has tried to encourage small companies to get off the ground through its ”Small Business: GREAT Ambition” program, which, among other things, helps embryonic firms to use digital innovations and speeds up the bidding process with respect to public contracts.
However, the economic climate remains challenging in the United Kingdom and there is of course no guarantee that new business will survive. “It's great that we have pulled out of recession but we still have a long way to go,” said Duncan Cheatle, CEO of the Prelude Group, a firm that helps U.K. entrepreneurs. “It’s easy to spot what’s not working, but what’s much harder is to see what might be done to help drive growth.”
InsideStartups.com delineated the risks inherent in starting one’s own company, citing that while the U.K. is a “cheap place” to start up, one in three businesses fail within the first three years, and 20 percent of businesses fail within the first year. Obtaining funds for a startup is also difficult. Venture Capital (VC) cash is declining and the number of those that get it has always been small -- in the U.K. only 5 percent of investment goes into VC.
Startups.co.uk reported on the profile of new entrepreneurs in the United Kingdom:
*The majority of entrepreneurs are white males, in their 40s, living in the Southeast.
*The age profile: 35 to 44 years (25 percent), 45 to 54 years (31 percent) and 55 to 64 (26 percent). Only 9 percent are below the age of 35.
*They are likely to be college graduates and had previous work experience in the same sector as their new business.
*Only 14 percent of small and medium enterprises are led by a woman. But this figure has actually been rising, up from 12 percent in 2005.