Despite the challenging year for many businesses, it seems 2020 was also a great year for new business start-ups. Data from Companies House and the Office for National Statistics show that 780,766 new businesses were formed in the UK in 2020. We know that it’s not all good news and many companies, big and small, have foundered in the current climate, however even when taking into account the number of companies dissolved in 2020, overall, the number of companies in the UK in 2020 is 8.2% higher than in 2019.
Locally, Cambridgeshire and Peterborough have seen more new businesses established during 2020 than in any previous year, setting a new record. Despite the considerable economic challenges posed by the Covid-19 pandemic, 10.9% more new companies were registered in the area compared to during 2019. Bringing the total number of registered companies in Cambridgeshire and Peterborough to 54,497, up from 50,160 at the end of 2019, which is 8.6% growth overall.
The local area with the highest number of businesses formed was Peterborough with 2,511, followed by South Cambridgeshire with 1,296 and Huntingdonshire with 1,268.
Is an economic rebound on the horizon?
The latest news that both locally and nationally we are seeing high levels of new business start-ups in the midst of a pandemic is really positive and signals a strong economic landscape. This growth in new businesses will also hopefully go some way to supporting an economic rebound this spring as consumer confidence returns.
Over the course of the past year, we have seen an increasing number of both new and established businesses coming to us for advice, particularly around contracts and policies. We have been pleased to see now more than ever businesses focussing on ensuring they seek the right advice from the outset to ensure they have the correct policies, agreements and contracts in place, to prevent issues further down the line.
What has triggered this growth in new business formations?
Although it is good news that we are seeing a rise in company formations, the reality is that many new companies are created by those who have lost their jobs because of the economic downturn caused by the Covid-19 pandemic. For some, being furloughed or being made redundant has given them the time and the drive to realise their ambitions and goals of starting their own businesses or some may have seen an opportunity to provide a much-needed service or product at this time. In our article Starting a business – Is now a good time? we outline the procedures and processes that must be followed when setting up as a sole trader or limited company in the UK.
In the past, during an economic downturn we have seen increases in entrepreneurship, as people who are made redundant decide to set-out on their own, and 2020 is no different. The Office for National Statistics reported that redundancies rose to 370,000 in the three months to October 2020, the most since records began in 1992. Redundancies particularly hit industries such as retail, travel and hospitality and with 77 per cent of the UK’s 6m small businesses being sole traders, many of these new business start-ups will be people setting out on their own having previously been employed in these industries.
Sectors seeing the highest growth included e-commerce, clothing and, unsurprisingly, retailers of medical goods.
Thinking of starting a new business?
Depending on the type of business you are thinking about starting, there are some key points to consider and ensuring you get the right advice at the outset is crucial to securing its success.
One of the big decisions for any new business is how it will operate ie sole trader, partnership, LLP or company. A specialist corporate legal adviser can offer advice about which would suit your business plans and discuss other aspects you should consider.
For more information about starting a new business read our article ‘What should I consider from a legal perspective when starting a new business?’.
Our corporate, commercial and employment law teams at Hegarty Solicitors offer comprehensive advice on all aspects of setting up a new business. From company incorporation and secretarial services, to terms and conditions, shareholder and partnership agreements, bespoke articles of association, employment contracts and buying or leasing business premises.Contact our corporate team