2.02 – So, Who Can Start a Business?
Small businesses defy easy definition. Typically, people think of small businesses as one-man bands such as shops, garages, and restaurants, while big businesses are giants like IBM, General Motors, Shell, and Microsoft. However, there are many businesses that fall between these extremes and can be considered big or small depending on the criteria used.
No single definition of a small firm exists due to the wide diversity of businesses. Organizations like HMRC, the UK Government, Department for Business Energy and Industrial Strategy (BEIS), and Companies House all define them differently. The term Small and Medium Sized Enterprise (SME) is often used to encompass these varying definitions. Some even say a business is small if it feels small, which holds a grain of truth.
The Importance of Business Size
The size, age, and sector of a business can impact the support and constraints it faces. For example, the government may offer grants, support, or impose regulations based on these factors. A business with an annual turnover of less than £15,000 can file simpler accounts than larger businesses.
Types Of People Who Start Business
Statistics on small firms are precise at one level, with government data tracking how many businesses start and close in each area and the type of activities they undertake. Beyond basic data, information often comes from informal studies by banks, academics, and other organizations with specific interests.
The Scale of Small Business in the UK
The UK has seen a significant increase in small business activity, with over 6 million people running their own businesses, up from less than 2 million three decades ago. These businesses employ over 16 million people and account for a £2.3 trillion turnover.
Certain factors such as geographic area and age group influence the number of start-ups. Let’s explore some of these factors.
Making Your Age An Asset
Research by the Global Entrepreneurship Monitor and the UK Office for National Statistics reveals interesting facts about the age of small business starters:
- Every age group from 18 to 64 is represented in the business starter population.
- Between 5 and 10 percent of each age group run their own businesses.
- The youngest age group (16-24), especially in Scotland and Wales, is now among the most likely to start a business, possibly due to high youth unemployment and fewer graduate opportunities.
- The older age group (55-64) is also seeing a surge in interest from people wanting to continue working after traditional retirement age.
Starting a business is possible at any age. The number of self-employed people aged 65 and over has more than doubled in the past five years.
Geographic Influence on Business Start-ups
More than three times as many people in London start businesses compared to the North East of England. Entrepreneurs in the North East, Wales, and Scotland may feel lonelier compared to those in London or the South East. The chances of business survival are highest in the South West, with 45.9 percent of new ventures still operating after five years. In London, only about 39.2 percent of businesses survive five years.
Success Stories
James Marshall, co-founder of technology company Pupil, dropped out of school at age 17 but successfully launched his business. Together with his partners, they introduced Spec in 2019, which uses software and machine learning to measure interior spaces for real estate. Despite COVID-19 constraints, Spec expanded to over 500 estate agency branches, securing €14.9 million in funding in June 2020.
Women in Business
The number of women running their own businesses in the UK has significantly increased, from 614,000 in 2013 to over 1.5 million in 2021. Organizations like the British Association of Women Entrepreneurs and Everywoman offer targeted support and advice for women entrepreneurs.
Self-employment is often a mid-life choice for women, many of whom have children at home and seek greater schedule flexibility. Women tend to start businesses in fields that reflect their previous occupations, such as public administration, education, health, distribution, hotels, and restaurants.
Education and Entrepreneurship
Contrary to the myth that under-educated self-made men dominate entrepreneurship, research shows that higher education levels correlate with higher entrepreneurship rates. Educated individuals are more likely to identify market gaps and understand new technologies. Successful entrepreneurs like Jeff Bezos (Amazon) and the founders of Google graduated from prestigious universities.
Conclusion
Anyone can start a business, regardless of age or background. The key is to leverage your unique strengths, stay informed about industry trends, and persist through challenges. Successful entrepreneurs come from all walks of life, proving that determination and adaptability are crucial for business success.
