Did you know that 99 per cent of commercial organisations in the UK are small and medium-sized businesses? All across the the country, hard-working people go about their business running companies, delivering products and services to their customers, creating jobs for local people and providing the bedrock for their community. Many of these enterprises are recent startups – new businesses dreamt up by ambitious entrepreneurs who are eager to create a new life for themselves in self-employment.
Over the last five years, there has been a surge of startup activity in the UK. Many thousands of people have been encouraged to act on their ideas and set up their own company, whether a hi-tech startup at London’s Silicon Roundabout or a small-scale enterprise run from a PC in their bedroom. There is a world of opportunity for people with the creativity, drive and energy to be their own boss, and the UK is a great place to become an entrepreneur.
Here are eight reasons why Britain is a great place to start a business in 2015:
1. It’s cheaper to start a business
Once upon a time, starting up a business was a complicated and costly process. To have a viable business, you needed physical premises to operate from – and naturally this would involve overheads such as rent and utilities. Knowing that your business may struggle to turn over a profit in the first year, you’d require a significant chunk of cash to invest in your company from the outset.
But these days, with the advent of the internet, it’s possible to start a business in distinct stages. Rather than opening a shop on your first day, you can begin by trading online, using your home computer. If there is sufficient interest in the products and services you are offering, and your business is capable of turning over a profit, then you can think about taking out a lease on a shop, factory or warehouse, or perhaps building your own. This mitigates many of the financial risks when starting a business, particularly if you opt to carry on with your job during the early stages of your startup.
It doesn’t cost much to register a new business with Companies House – only £15 if you apply online, or £40 via post. Should you need to register a business on the same day, this costs £100. It’s not an earth-shattering amount of money, even for a startup with limited financial resources.
2. The government is pro-business
With a Conservative government in place in the UK, the focus is on building up the private sector and encouraging businesses to drive the economy. Since the general election in 2015 – and during the Con-Lib coalition’s five years in office – ministers have been eager to support entrepreneurs and encourage more people to set up their own companies. One way they have done so is by slashing the rate of corporation tax, to add incentives to businesses registered and operating in the UK. In 2015, small businesses pay a rate of 20 per cent corporation tax, but this is to fall to 18 per cent by 2020.
The government has also introduced a number of schemes geared at fostering business growth, including Start-Up Loans, the Enterprise Finance Guarantee Scheme, the UK Innovation Investment Fund and the Aspire Fund. Advice and support is available for entrepreneurs through schemes such as Growth Accelerator and Mentorsme, helping to give confidence to those who are considering working for themselves.
3. Inflation and interest rates are low
Since March 2009, the Bank of England has held its base rate – from which interest rates are derived – at the historic low of 0.5 per cent. This policy, alongside quantitative easing, which has seen additional finance ‘injected’ into the economy, has helped keep business costs low and encouraged investment. With inflation also remaining relatively low, new businesses can get ‘bang for their buck’. Startups with limited resources will find their money stretching a little further, giving more companies the opportunity to establish themselves and put down solid foundations.
4. Investment is available
Slowly but surely, the banks are starting to lend again to UK small businesses. During the recession and ensuing economic downturn, credit was difficult to come by from traditional lenders, but as the economy has recovered, the banks have started to regain the confidence to lend to small businesses.
But in 2015, startups have a range of options for finance. The UK has a growing alternative finance sector, where private investors provide growth credit for ambitious young companies through a range of models and platforms. Many startups are now turning to crowdfunding, angel investment and other ways of raising capital, rather than asking their bank manager for a loan.
The UK still has a very active venture capital community, and there are always wealthy individuals looking to provide support for the next Google or Microsoft. There is plenty of money available in the startup ecosystem for entrepreneurs who can prove they have a great idea and the ability to bring it to fruition.
5. Seed Enterprise Investment Scheme (SEIS)
The Seed Enterprise Investment Scheme (SEIS) was established by the coalition government in 2012 in order to encourage taxpayers to buy shares in new startup companies registered in the UK. SEIS investor can invest up to £100,000 in a single tax year in startup businesses, and in return, they pick up 50 per cent tax relief. This provides a major incentive for high net worth individuals to identify up and coming new businesses and lend them the money they need to achieve their potential. If you are an entrepreneur with a great idea, it is definitely worth looking for private investment as there is mutual benefit in such arrangements.
6. The technology is in place
Many of the new startups being established in the UK are technology-based, or at least rely on technology to some extent. Thousands of new online businesses have been set up over the last few years as eCommerce has become a multi-billion pound industry. All you need to start trading online is a computer, internet connection and website – along with something to sell to your customers. Using the internet, it’s possible to reach out to consumers in every corner of the globe.
There has been huge investment in the UK’s connectivity over the past few years. Companies such as BT and Virgin Media have spent billions bringing superfast broadband to the major towns and cities, and government funding is helping these next-generation networks to extend into the countryside. Increasingly, homeowners and potential entrepreneurs can access rapid download speeds and take advantage of a full range of online services. Regardless of your location, it is possible to get online and start doing business deals with people around the world.
7. Customers are returning to small businesses
Startups may not be able to compete with large, multinational businesses in terms of price and product range, but they can differentiate themselves on quality and customer service. Many people are sick and tired of going into the supermarket for the same sterile retail experience, standardised across the country. Rebelling against the rampage of big business, they are returning to small enterprises, looking for something more bespoke and personalised. Startups that can offer something genuinely different, and have the ability to market themselves effectively, can still do very well in today’s market.
8. It’s cool to be an entrepreneur
TV shows such as ‘The Apprentice’ and ‘Dragon’s Den’ have brought entrepreneurialism into the public eye and captured people’s imagination. It’s now seen as being cool to run your own business, to be a creative mind with a different approach to life – like the techies working out of artsy co-working spaces in Shoreditch and King’s Cross. There’s definitely something romantic about taking a chance in business, not knowing exactly how things will turn out. For people who find their job mundane, starting up a business offers an exciting alternative – one that could prove to be a real life-changer.