Decline in people wanting to start a business

A new survey shows a fall in the number of people wanting to start a business in 2021, with women more likely to be planning this than men.

Business Finance

 

The number of people planning to set up their own business has dropped significantly in the last year, due to Covid insecurity, with women more likely to be considering it than men, according to a new survey.

The research from FreeAgent, based on 2,000 employed people in the UK, shows that over half (51.2%) plan to start their own business or become freelance in the future with 1 in 10 (11.5%) aiming to do this in 2021. The 11.5% figures compares to 21.6% who said the same at the start of 2020.

For the first time the annual survey has found more women than men plan to be their own boss in 2021. This is also true for the long term, with more women saying that they want to start their own business at some point – 52.1.% as opposed to 50.2% of men. Last year, the difference between the number of men and women who wanted to start their own business was 11%, with women being less keen.

FreeAgent’s 2019 research revealed that 25.7% of men and 17.3% of women were planning to start a business within the year 2020, compared to 11.4% of men and 11.6% of women planning to start a business within the year 2021.

The research found that the top reasons for Brits wanting to start a business were:

  • The ability to choose what work they do (41.7%)

  • Earn more as their own boss (36.3%)

  • Have a better work/life balance (33.2%)

  • Follow their passion (24.6%)

Despite over 50% of those surveyed saying they still want to start a new business or go freelance in the future, this is a  12% decrease on the same time last year.

The top concerns around setting up a business were:

  • The financial burden of setting up a business (40.1%)

  • A lack of confidence (27.5%)

  • Economic uncertainty/instability arising from Covid-19 and/or Brexit (27.5%)

  • Dealing with tax, such as National Insurance, VAR and MTD (22.9%)

  • Managing business finances (18.4%)

  • Lack of government support for freelancers and small businesses (17.1%)

More than 1 in 3 people (39.9%) said Brexit had put them off wanting to start their own business. Those between the age of 40-45 were the most concerned with uncertainty arising from Covid and Brexit. A third (33.3%) said this was a main reason for not starting a business, while only around fifth (21.2%) between the age of 18-25 said it put them off.

Ed Molyneux, CEO and co-founder of FreeAgent, said: “A deeper look at people’s feelings towards starting a business raises concerns. After a year of many businesses falling short and feeling the negative impact of COVID-19, it was no surprise to see people were mostly concerned about the financial burden of starting a business. This and the high number of people with the lack of confidence to do so, calls for intervention on a higher level, the government must seriously consider the ways in which they can best encourage and support entrepreneurs to practically turn their vision into a reality. As a result, what appears to be a trying road ahead, can instead be a time for the birth of new, innovative ideas. Entrepreneurs with smart ideas have the potential to fuel the UK with exciting ways of thinking, which will in turn, see the economy reap the rewards.”

The survey came ahead of another by IPSE (the Association of Independent Professionals and the Self-Employed) which shows that over a third (37%) of freelancers are worried they will struggle to pay their tax bill because of the financial impact of the pandemic. IPSE has urged the government to look again at financial support for excluded groups of self-employed workers – particularly the newly self-employed. It says that, since most newly self-employed people will have filed their first full annual tax return by the time of the next grant, there is “no excuse” for government not to include them in the support. The Government had originally said this group could not be included because of the risk of fraud with people who had not filed a full annual tax return.

Meanwhile, a survey by Totaljobs of 5,000 workers found 89 per cent are thinking about changing jobs this year with more than three quarters actively searching and worries about job security being a leading cause.



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