Is It Time to Start A Small Business This Year?

The business industry has undergone some drastic changes in the last year. Many sectors suffered under the pandemic, and some even closed their doors for good as a result. However, there also appears to be growth ticking away in the background of the economy.

Many small businesses overcame technical obstacles and thrived in 2020. According to recent data by the Department for Business, Innovation and Skills, there were 5.9 million SMEs at the start of 2020. The private sector increased by 1.9%, equating to over 113,000 SMEs launched in 2020. 

The SME sector counts for three-fifths of employment in the UK’s private sector and total employment of 16.8 million. 4.6million of these businesses had no employees and survived the pandemic on their own. Impressive, right?

Construction is the most popular industry for SMEs, while the mining, quarrying, and utility sectors only account for 1% of SMEs. Despite closing their premises in the UK’s first lockdown, construction businesses open in the second lockdown and continued work as usual. The construction industry could recuperate and generate some cash flow while other sectors continued to lose revenue. 

London is at the heart of the business industry in the UK, and over one million private sector businesses operate there. The North East of England only holds 163,000 private sector businesses – making it the least popular region in England to begin a small enterprise. However, this is a statistic skewed more by demographics and population spread rather than the business incentives on offer or the entrepreneurial spirit of locals.

As we move into the post-pandemic era, the business industry is likely to continue transforming. Business owners are likely to use a flexible approach towards working arrangements so employees can choose between remote and office work. SMEs will continue to face challenges in the wake of the pandemic. 

As any good business book will highlight; Cash flow and profitability are the biggest financial concerns for most SMEs. A whopping 80% of business owners are concerned about profitability in the coming year. Profitability is vital to maintaining individual businesses and the UK’s economy overall. 

SMEs are also concerned about the reduced business opportunities available in 2021. Consider investing in business insurance to protect your company and seek risk management advice. 

The availability of finance impacts business owners’ decisions and the overall success of the company. However, to stay open, businesses must continue to pay fixed costs and employee wages, distribution costs and much more. Over half of UK SME owners remain optimistic for 2021 and, hopefully, recover the UK’s economy and business sector. 

The hospitality and events management sectors are not so optimistic about the future of their businesses. The hospitality sector remained closed for a large portion of 2020 and the start of 2021. SMEs within this sector are concerned about their revenue generation and the mental health of their employees. As SMEs begin to reopen, employees are likely to be under pressure to deliver excellent customer service and drive up profits.

Some owners are concerned about employee absenteeism in 2021. More people will be taking sick leave for illness or self-isolation, resulting in other employees working more extended hours.

If you own an SME, make sure to keep a close eye on your finances and check in with your team.