18 September 2020
Despite the coronavirus lockdown, June 2020 was a record-breaking month for new business creation in the UK, with entrepreneurs forming a total of 77,574 new start-up companies (a year-on-year increase of 47%). We’ve also seen a spike in demand for office space from newly formed businesses.
Join us as we unpack some of the reasons behind the increased numbers of start-ups being formed across the UK. We’ll also share top tips on what it takes to become a successful start-up based on our chats with a career coach who launched his business during the lockdown and is helping others to do the same.
Since finding out about the rise in new businesses incorporating with Companies House, we’ve been eager to explore the reasons behind the trend and gain insight into the increased demand for offices that we’ve seen from start-up companies in recent months.
Prior to the lockdown, interest in the idea of starting a business had already been growing steadily. The total number of UK Google searches for ‘start a business’ understandably took a sharp dip at the beginning of lockdown, then bounced back to reach an all-time high on the 28th June 2020:
Coinciding roughly with the boost in search demand, we also had a high volume of enquiries about office space from newly formed companies across a wide range of sectors (the sections below explore some of the reasons why we think that this might be the case).
One simple explanation for the rise in start-ups relates to the emergence of the “COVID economy”: demand for medical supplies and coronavirus-related goods naturally grew during the pandemic, creating lots of opportunities for new companies to step in and take their share of a rapidly developing market.
According to Companies House data analysed by the Centre for Entrepreneurs, June 2020 saw a 400% month-on-month increase in the number of new start-ups offering ‘disinfecting services’. There were similar surges in business formation amongst medical goods manufacturers (+243%) and wholesale pharmaceutical start-ups (+196%).
The ability to work from home could also be a huge motivation for a lot of entrepreneurs who have launched start-up companies in recent months. Closely connected to the traditional incentive of becoming your own boss, the freedom to work remotely appeals to new business owners more than ever in the context of coronavirus.
A large number of the start-ups formed over the last few months have been online-only businesses created with a view to selling products through third-party channels like eBay. As digital-first companies like these begin to grow and expand their operations, we should see another rise in the number of lockdown start-ups looking for their first offices.
Unfortunately, a large proportion of entrepreneurs who launched a start-up during lockdown had to do so because of job losses or an extended period of furlough: a GoDaddy survey of 1,000 customers across the UK found that 15% of new business owners had created their company as a result of redundancies related to the pandemic.
Although many have been forced into starting new business ventures during the past few months, our experience of working with this recent wave of start-up customers has shown that forming a business in the current climate can ultimately turn out to be a great decision. The final section offers some top tips on how to succeed.
Launching a successful start-up is no mean feat. We spoke to a business founder who started his business during the lockdown which offers career coaching services to others who are planning to do the same. Below is some advice on launching your first business venture – from preparation and research through to articulating your value proposition.
As with most things in life, preparation and research are key when planning a start-up. Neil Ewington, the founder of lockdown start-up Career Coaching Consultancy, offers the following advice to start-ups at the beginning of their journey:
“First and foremost, create a business plan. A goal without a plan is just a wish. So make sure you understand your market inside out. There are some fantastic free business plan resources by a company called Hubspot. If you want to see if your idea is viable then that's a fantastic place to start. And remember, be honest with yourself about the business. A truly impactful business plan has no place for vanity metrics.”
Now more than ever, it’s important to have a strong value proposition that enables you to stand out in a crowded market. Whether you’re selling products, services or somewhere in between, scout out your closest competition and work out what it is that makes your offering that bit better.
Your point of difference could be an innovation or just a small new feature, provided target consumers get it and can get behind it. For this reason, it’s often best to keep it simple, making sure that the difference between you and your competitors is easy enough to recognise and understand.
Take a look at the largest equity fundraisings since lockdown began. Having raised £100m in funding despite launching during March 2020, Cazoo tops the list. Like the other businesses, Cazoo’s value proposition is easy to put into words: it’s a second-hand car site that “allows users to buy a vehicle and have it delivered to their door”.
Try writing down your value proposition. This small but potentially significant difference between you and the other firms should be the bedrock of your strategy as well as the main message behind your marketing communications, particularly during those early months when brand awareness is lacking.
Articulating your proposition will also help to cement its importance as a fundamental part of the business plan. The best time to think about differentiation is before you launch your start-up: pivoting at a later date is a tricky and expensive task that’s best avoided if possible.
Having your proposition set out should give you the self belief you need to get things off the ground, but it’s important to maintain this going forwards if you’re to succeed. As Neil suggests:
“Confidence is key. You can't start a business with a tonne of doubts – if you're in, you're in. The gap between knowing you have the requisite skills and experience and putting them into practice and backing yourself is larger than you think. So you will need to be confident in what you know and take a leap of faith.”
Networking and making connections are vital parts of launching a start-up. As well as getting your company’s name out there, you might find that there are unforeseen benefits to discussing your ideas with others in the industry. Neil suggests that doing so could be the foundation of your future success:
“Building a business is hard, but it's even harder alone. Find out who the best companies and individuals are in your chosen field. Speak to them, tell them your plans. There's no-one better in the world to tell you if you're on the right track then someone who's walked the same path before. And you never know, they could be your future business partner.”
This article has explored the rise in start-ups during the coronavirus lockdown, the possible reasons behind this trend, and advice for prospect new business owners.
At BizSpace, we offer a variety of flexible workspace solutions to support businesses of all sizes, from start-ups to international organisations – get in touch today to see how we can help.
Alternatively, check out the latest post in our New Face at BizSpace series to learn about Rainbow Hub, a recently formed not-for-profit organisation that’s made its home at BizSpace Swindon.