A Virgin StartUp report has revealed that budding entrepreneurs bring a £196 billion boost to the UK economy.
The report, The start-up low down: How start-ups are changing Britain, was created in partnership with the Centre for Economics and Business Research. It revelas that more than a third of all active enterprises in the UK are start-ups and were launched in the last three years. It also reveals that UK start-ups employee 3.24 million people nationwide, accounting for 12 per cent of all employment in the country.
The increase in entrepreneurship around the UK is also boosting employment numbers, with almost half of people saying that they were unemployed when they applied for a start-up business loan.
The report looked at the three year survival rates of start-ups between 2009 and 2014. It found that more support is needed in these early stages - 42 per cent of businesses don’t survive past the three year mark. Many (61 per cent) said that they lacked confidence or access to funding to achieve growth over the last three years. The study also revealed that 2009 was the worst year of the deepest recession and saw a lower number of new start-ups appear across the UK. However, since then, the number of new businesses launching every year in the UK has risen by more than 50 per cent to reach 350,000 businesses launched in the UK during 2014, and an estimated 366,000 launching this year.
“I’m so proud of everything Virgin StartUp and the thousands of entrepreneurs we support have achieved over the last three years. I’ve seen first hand some fantastic, disruptive businesses who are making huge progress in their industries,” Richard Branson said. “Our report marks Virgin StartUp’s third birthday and shows the fantastic boost start-ups are bringing to the economy. Entrepreneurship truly is alive and well across the UK.”
The report also found that entrepreneurs in the education and health sector are seeing the most success, with a survival rate 10 per cent more than the industry average at 68 per cent. Hospitality businesses, on the other hand, are faring somewhat worse with just over half of them surviving three years. This has been attributed to the sector facing a range of structural challenges in recent years, such as the ongoing struggle to convince British households to holiday in the UK and the introduction of the national living wage in early 2016.
The fastest growing sector, according to the report, is ‘The Flat White Economy’, which refers to the UK’s booming information and technology sector. The Flat White Economy has experience rapid growth over the last few years including an 80 per cent increase in the annual number of new technology start-ups from 2009 until 2014. This reflects the growing importance and demand for digital technologies in the UK and elsewhere.
Mei Shui, managing director at Virgin StartUp, added: “It’s clear from our report that start-up companies are a key cornerstone of economic growth in Britain and the governments start-up loan scheme has played a pivotal role in establishing that fact. Now more than ever UK entrepreneurs need to be given the best chance to survive and thrive but so many start-ups hit a glass ceiling after their first few years trading. Our own research tells us access to growth funding is one of the main contributing factors to low survival rates for new businesses across the country. The Chancellor has spoken about getting the economy match-fit and we think one way to do this is by addressing access to growth funding in this year’s autumn statement.”
Find out more on the Virgin StartUp website.