Nearly a third of start-ups are fuelled by redundancy and unemployment
Many people dream of starting a business and working for themselves. A recent survey from the Start Up Loans Company revealed that more than 60% of British parents would like to quit their jobs and start their own business. Reasons cited included increased flexibility, the opportunity to be their own boss, the chance to make more money, to turn a hobby or passion into a living and to gain a sense of self-achievement.
These are all valid reasons for starting a business and are just a few of the benefits that setting up a successful business can bring. Around a third of all new businesses started in the UK over the past five years were started out of necessity however. According to new research published by AXA, 30% of new businesses were spurred by redundancy or long-term unemployment.
Disability, age and childcare issues were also becoming increasingly common reasons for people entering self-employment. Almost a fifth (17%) of new businesses were founded by parents seeking to find a way to deal with the rising costs of childcare.
Older people are also increasingly engaged in the start-up economy. So-called grey entrepreneurs, the generation aged between 55 and 65, are responsible for a quarter of all new businesses started in the UK over the past five years and a further 7% of businesses were started by people aged over the state pension age.
Despite the potential benefits, starting a new business is not without its risks. A record number of businesses were started last year but it’s also the case that more than half of new businesses fail to survive beyond five years, with many facing insolvency or simply being wound up.
A large number of respondents in the AXA survey felt that their life experience would have equipped them with the survival skills they needed to help make a success if a new business. Nearly one in ten had already been through a business failure while other life crises cited included accident or illness (17%), financial disaster (15%) and even heartbreak (11%).
By Phil Smith