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Brexit Encourages New Business

New research predicts that post-Brexit more people will be starting new businesses than ever before. Dave Howell reports Brexit Encourages New Business

The dire warning of an economic meltdown across the UK post-Brexit doesn’t seem to be dampening the entrepreneurial desire to start new businesses.

According to research from StartUp Britain, a national campaign designed to inspire enterprise in the UK, the prospects for new businesses even after the UK exits the EU are bright. Indeed, businesses seem to be flourishing, with four per cent fewer insolvencies reported in the first quarter of 2016.

Leading the way

A recent report by accountancy firm EY concluded that the UK was the best place within the G20 (an international forum for the governments and central bank governors from 20 major economies) to start a technology-based business.

Radhika Chadwick, a partner at EY, says: “It’s great to see the UK leading the way for supporting digital startups. Taking the hassle out of getting a business off the ground boosts the creation of innovative and dynamic businesses, which drive economic growth in the UK.”

According to Bjorn Conway, a senior partner at EY, with Brexit on the horizon, the UK government, more so than the other G20 countries, will be thinking about how the economy can be set up to succeed in the digital age.

He adds: “Supporting an entrepreneurial environment that encourages young people to establish, grow and scale their businesses will ensure the UK continues to be competitive on the world stage into the future.”

Many experts believe the ‘Brexit effect’ is leading to a renewed desire to start new businesses without the burden the EU poses on enterprises in the UK. The uncertainty is clearly a factor, but this is being viewed as an opportunity by many.

High street retail

New business start-ups in the tech sector with potential for significant growth may grab the headlines, but other sectors are also highlighting that new businesses are alive and well.

Bucking the trend, the high street retail sector is showing signs of a resurgence. In its report into Britain’s pop-up retail economy, the Centre for Economics and Business Research revealed that total turnover in the sector grew by 12.3 per cent compared with the previous 12 months, an increase supported by a rise in the number of people visiting their local high street and a jump of over £8 in visitors’ average annual spend to around £124.

There are approximately 10,500 pop-up shops in the UK employing around 26,200 people. A number of successful ventures have become established retailers. This growth has helped support the increasing number of small retail businesses seen in recent years, which have grown by 3.2 per cent between 2013 and 2014, reversing the slight decline seen since the beginning of the decade.

The Centre for Economics and Business Research believes that with the continued proliferation of pop-up venues through platforms such as Appear Here, more people are opting to bring their ideas to life in the form of a pop-up store.

Bev Hurley, vice chair of the Institute of Economic Development, says: “We are a nation of small shopkeepers. 75 per cent of all small and mediumsized enterprises don’t employ anyone and 96 per cent have less than nine people - a completely different business landscape compared to Germany and America, for example.

“Yet we keep getting hung up on high growth as the panacea to address this problem. Whereas the reality is only a few per cent of businesses will ever have the ability, motivation, product or service fit and finance to keep growing at 20 per cent per annum year on year.”

A country filled with small start-up businesses could be a reality post- Brexit. There are, of course, a number of factors that need to be considered, not least of which is how the trading relationship with the EU will be defined, as this will have a major effect on the success of these new enterprises.

Start-up support

Start-ups have always needed help and support, but could more be done to encourage people to become their own boss? Opinions are divided, it seems.

Dave Chaplin, CEO and founder of ContractorCalculator, a website for contractors and freelancers, says: “While there are 1.9 million freelancers in the UK, more could be done to incentivise anyone wanting to set up in business and for that to happen less regulation is required.

“There’s too much tinkering going on that restricts the freedom typically associated with going it alone and this needs to be looked at as we Brexit. I would suggest we have no more regulations targeting the contracting sector.”

However, Bev Hurley thinks the UK is one of the best places to set up a business in terms of speed, cost and efficiency, together with strong entrepreneurial ecosystems in some places. But, she says, it’s not necessarily a place where start-ups survive.

Bev explains: “In five years’ time only 46 per cent of them will still be here and the failure rate in businesses below the VAT threshold is frequently but anecdotally reported to be nearer to 80 per cent.

“Starting-up is just the first and easiest step. To me surviving, thriving and scaling are much more important topics policy makers and those responsible for economic development should be considering.”

Favourable conditions

The climate for new business is buoyant. The number of new start-ups continues to rise. As the economic and business landscape of a post-Brexit Britain comes into view, many more new businesses could be started if the conditions in place are favourable. Sammy Blindell, founder of online brand building resource How To Build A Brand, says: “The referendum has provided British business owners with a rapt global audience.

“The world is waiting to see what will happen in our post-Brexit economy and they’re watching businesses’ performances to gather clues. UK start-ups are jumping onto this chance for global visibility.”

Starting a new business at any time is a risk. At the moment the UK is in transition, but this isn’t preventing new start-up businesses. Indeed, it could be argued it’s given impetus to individuals to move forward with their plans.

Even in a post-Brexit world, the UK is still one of the best places to start and run a new business. More could be done to ease the burden of legislation and, of course, this could happen as the government negotiates the UK’s exit from the EU. What is certain is that the drive to start new businesses won’t be diminished. Read more like this

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