By Samuel Takawira
The UK within the last year has experienced a significant drop within its National Output since the year 1709. In 1709 the UK economy was very much still regarded as an agricultural economy and in 2020 economists have been seeing similarities in the lack of pace and growth within our economy. The recession within the last year has meant that businesses have had to adjust to a form of survival mode meaning that unemployment has increased in order for organisations to have less financial strain. Research by the financial times states that employment will rise from 4% - 6.8 by the end of the year. Such research has subsequently caused many to question their career prospects and starting a business has remained a major uncertain question.
WHAT ARE THE MAJOR MOTIVATIONS & REASONS FOR STARTING A BUSINESS IN A RECESSION?
History has shown that some of the most successful companies started when they faced a turbulent economic period. For instance, Microsoft (founded by the billionaire Bill Gates), FedEx, Uber, WhatsApp and Instagram are some of the most renowned global international businesses that have generated a large amount of money as a result of the excellent entrepreneurial skills utilised by their owners. Navigating through a recession will undoubtedly seem difficult however, as the consumer behaviour and spending changes individuals can find a new source of income by pursuing a new business venture.
Excellent entrepreneurs are likely to be optimistic and acknowledge that the economic conditions are much more favourable than they seem. The interest’s rates are low, property is cheaper and there are lots of skilled, educated and unemployed staff available which means that the foundational support is available. Furthermore, research from the Company House Register suggests that at the end of September there were 4.63million companies on their register which is an increase from when the pandemic started. The number of new businesses registered in the third quarter of 2020 increased by 51,269 (30 per cent) compared with the same period last year. This has been found to be the largest third-quarter increase since 2012 when quarterly breakdowns were first recorded. Further research comes from the deputy director of the university-backed Enterprise Research Centre who investigated the reason for the new businesses and they found that the labour market has forced individuals to find a new source of income. It has also been found that over-50s and under 24s have been the individuals across society who have been best positioned to start a business within the pandemic. This is due to how they need income to replace their employment and often without young families to support, they can perhaps take greater risks.
Throughout the pandemic the UK has seen major success from new companies such as local food deliveries. This is due to how the global pandemic has seen individuals become more conscious of their diet and their general wellbeing. This is a typical example of the type of business that individuals have started as a result of the pandemic. The pandemic has also caused individuals to start pursuing business ideas based on their interests. For instance, hobbies such as sewing, anything related to beauty products, cooking or reselling vintage items have increased a large amount of people’s incomes. Additionally, research has also shown that the use of e-commerce and social media within a pandemic and recession has contributed to much of the success of starting a new business idea. Success within these difficult financial times has been due to how individuals have made excellent use of their resources such as the internet and investing into their chosen interests with their own finances.
GENERAL ADVICE FOR SMALL BUSINESSES WITHIN THIS TURBULENT PERIOD
Research has shown that the majority of small businesses that start within such testing times collapse due to poor financial management. The general consensus which is being stated by financial advisors is that future entrepreneurs must consider not only the business but their personal finances. Common sources of funds – including savings, an extra mortgage on a family home or an early withdrawal from a pension fund – can have implications for long-term personal economic well being. Research into some of the most successful businesses within this pandemic and recession have been found to have conducted accurate research and development in order to generate revenue and later tempt investors. Further research also suggests that the future style of working is going to be homeworking which means that making the most of the internet and establishing an online presence is going to be crucial for small businesses to thrive within the modern world that we occupy. The competitive nature of markets regardless of the products and services that they offer changes as a result of a recession which presents smaller businesses an opportunity to meet the new demands of consumers.
In conclusion, the recession period that the nation faces have caused many to question the uncertainty regarding their chances of producing a successful business. This article has shown that it is possible to produce a successful within this current period and much success is determined by remaining optimistic and looking at the current conditions of the economy to be favourable rather than adopt a pessimistic perception of the current economy.