2009 Start-up Rates Higher than 2008

A good time for small business startupsHigh levels of unemployment and the need to earn a living caused more people to start a business last year than in 2008, Barclays has claimed.

Commenting on new statistics on start-up rates produced by the British Bankers’ Association (BBA), Barclays’ head of SME research, Richard Roberts, said the total number of businesses started in 2009 will exceed the 525,000 set up in 2008.

According to the BBA survey, which measures start-up rates based on new banking relationships, fewer businesses were set up in the first ten months of 2009 – 460,000 compared to 468,000 in the same period in 2008.

However, Roberts said that the total figure for start-ups in 2009 is likely to be higher when the last two months of the year are included.

“We know from our own figures that more businesses started in 2009 than 2008, so we expect the BBA’s figures for the year to overtake 2008’s in November and December.”

“It’s one of the economy’s quirks that the deeper the recession, the more positive the impact it has on the numbers of start-ups. In a really deep recession, like in the 1980s and the current one, people say go into business because they need to earn a living and can’t get a job. Or they start up part-time businesses to supplement their income, either because their partner has lost their job or because their hours have dropped.”

However, Roberts added that the type of business set up in a recession tends to be different from those under other economic circumstances.

“In a recession people set up businesses as a necessity. So, for example, you will get more people selling things on eBay and fewer people having a great idea and giving up their secure job to pursue it,” he said.

The BBA statistics also showed that business closures had risen less than expected, by just two per cent in the first nine months of 2009 compared to the same period of 2008.

“Most closures aren’t failures, they are either business owners selling up or retiring. So, when the stock market is a bit weak and property prices are falling, but their business gives them a reasonable income, they might decide to work a bit longer until someone is able to buy their business. Government measures such as the Enterprise Finance Guarantee scheme and quantitative easing have also helped a lot of firms survive.”

National Federation of Enterprise Agencies (NFEA) chief executive, George Derbyshire, said the figures reflect the NFEA’s experience that people see recession as an opportunity.

 “A lot of people believe that working for an organisation is not as secure as it used to be and so are starting a business. In a recession the level of support available is as high as it ever has been, so people should go ahead if they have plans for setting up a business despite the economic conditions. Someone who plans their business carefully stands a good chance of success, regardless of the sector they are in.”

2009 Start-up Rates Higher than 2008

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