Entrepreneurship slumps 10% in 2021 but Gen Z entrepreneurs lead the way
New research from FreeAgent, conducted on 2000 employed people in the UK, today reveals that over half of Brits (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.
Additionally, for the first time the research 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.
Overall, the number of people planning to strike out on their own in the New Year has dramatically decreased from last year’s research. 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. Overall UK Entrepreneurship slumped 10% in 2021 compared to 2020 (11.5% are aiming to go freelance or start their own business in 2021, compared to 21.6% of Brits that planned to strike out in 2020).
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 Brits (51.2%) saying they still want to start a new business or go Freelance in the future, this is a 12% decrease in the number of Brits that wanted to start a business when asked around 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 my business’ finances (18.4%)
- Lack of government support for freelancers and small businesses (17.1%)
Further insights into the effects of Brexit on those wanting to start their own business has also been revealed, with more than 1 in 3 people (39.9%) saying it has 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%) of Brits between the age of 18-25 said it put them off.
Scotland was home to the highest number of budding entrepreneurs as a result of Covid-19, with 1 in 10 people (10.2%) saying they hadn’t previously planned on starting a business, but the impact of Covid-19 has made them want to go freelance or start their own business. The Scots were followed by London who 7.8% said the same thing, as did 7.7% in York.
Ed Molyneux, CEO and co-founder of FreeAgent, said, “Despite a tumultuous year, the fact that half of Brits are intending to set up their own business in the future is inspiring. In the past, our research has always shown men are more keen to be their own boss, and this year, it is refreshing that women are just as positive, if not more, about going freelance or starting a business of their own.
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.