A report published by NatWest has found that changes brought about due to the pandemic have inspired record numbers of UK adults to start their own business.
1 in 7 adults now plan to become an entrepreneur, an increase of 50% on last year, and despite data that suggests the number of existing entrepreneurs in the UK dropped by nearly 25% during the course of 2020.
NatWest partnered with Universities and Business Schools across the UK to interview over 9,400 adults between the ages of 18 and 80 for the report, spanning 43 economies and covering two-thirds of the global population. Aston Business School, University of Strathclyde, Ulster University and Queen’s University collated the data in partnership with NatWest, producing the 2021 Global Entrepreneurship Monitor (GEM) report as the largest authoritative study of entrepreneurship.
The report also outlines the key areas where conditions need to improve to give future UK entrepreneurs a stronger chance of growth and success. The area cited as most in need of improvement is entrepreneurial education at school age, followed by government entrepreneurship programmes, improved government policy on business support, and better sharing of research and development.
Clear differences also continue to exist based on demographics and ethnicity. Younger people aged 18-29 are the most likely to start their own business, with 55-64 year olds the least likely to do so, whilst BAME communities have nearly double the number of existing entrepreneurs (14%) compared with the overall population (7.5%).
Comparing the conditions for entrepreneurial activities globally, the UK ranks in the top third of the 43 economies surveyed, at 14th, two places behind in the US (12th) and ranked at the same standard as Germany. The top three economies worldwide based on entrepreneurs’ views are Indonesia, the Netherlands and Taiwan.
Andrew Harrison, Head of Business Banking at NatWest Group said:
“The findings from this year’s GEM report present a mixed picture of the UK’s SME landscape, showing that whilst the pandemic has clearly had a detrimental impact on overall numbers of entrepreneurs, increasing numbers of young people are now planning to start their own business. We are hopeful that this significant uptick in future intent, combined with an economy that has shown robust signs of recovery, suggest the worst of the downturn has now passed.
There is a lot of work still to be done to address the gaps in the wider environment to ensure future entrepreneurs are given the best opportunity to thrive, and this report highlights where the public and private sectors can come together to make a real difference.
As the biggest supporter of UK small business, NatWest will continue to support entrepreneurs at all stages. From our Dream Bigger programme in schools, Business Builder for early stage entrepreneurs, to our Entrepreneur Accelerator hubs around the country for high growth, green and diverse businesses, we want to help more businesses start, scale and succeed.”
Small Business Minister Paul Scully said:
“NatWest’s new report shows the UK’s entrepreneurial spirit is firing on all cylinders and the Government is working around the clock to ensure our innovators and budding entrepreneurs get the right support to start and grow a business.
“Our support schemes are already providing a boost to entrepreneurs, such as our Help to Grow: Management course which equips business leaders with the tools to take their business to the next level.”
Mark Hart, 50th Anniversary Professor of Small Business and Entrepreneurship, Aston University added:
“The GEM survey undertaken in the last few months of 2020 showed a sharp fall in the number of individuals in the early stages of setting up a new business compared to the pre-pandemic high in 2019. This is hardly surprising but the analysis has also shown that the entrepreneurial foundations of the economy and society are still strong and these will be crucial for the recovery after the pandemic and in dealing with the on-going economic fallout from Brexit.
Those ethnic-minority communities that have borne the brunt of the pandemic in terms of infection, hospitalisation and sadly deaths demonstrated their resilience by maintaining their previous levels of early-stage entrepreneurial activity (TEA rate) which were significantly higher than for the non-ethnic minority population. Clearly, the pandemic has had no damaging impact on the level of entrepreneurial activity by immigrants and ethnic-minorities although it has depressed it for life-long residents and the non-ethnic population.
There is clearly an appetite for people to start their own businesses in the next three years and many report new opportunities because of the pandemic but they are delaying the actual decision to get the business operational.”