More than 500,000 new businesses have been started in the UK this year.
This is according to new figures from Companies House and StartUp Britain, which suggest that the start-up rate in the UK will reach new highs in 2013. This year has already seen some 15,000 more businesses started than last year, and it is expected that some 523,410 new firms will be set up by the time 2014 comes to a close.
Perhaps counter-intuitively, the downturn has presented a range of opportunities for entrepreneurs. It is often said that a recession is the best time to start a business – but, as the economy appears to begin a tentative recovery, why might now still be the right time for starting up?
Finance is improving
Although bank lending has now fallen for five consecutive years, there is an increasing sense amongst small business owners that the High Street is no longer the only place in which they might secure credit. This is reinforced by news that non-bank lending has posted growth that has helped to offset the banking contraction. Asset-based lending, for example, grew by 10 per cent in the 12 months to June, and other alternative finance methods such as crowdfunding continue to mature.
Interest rates are still low
The Bank of England’s base rate remains at its historic low of 0.5 per cent. While business lending remains significantly more expensive than this, the total cost of credit has been the subject of downwards pressure as a result of the low base rate.
However, this situation will not continue forever. The Bank of England has indicated that rates will rise when unemployment is reduced, and many economists believe that could happen in 2015 – indeed, with recent unemployment figures coming in better than expected, some believe that a rate rise could come as soon as next year. If you are currently looking for bank finance, you might therefore choose to consider a fixed rate deal.
Consumer confidence is on the rise
Although consumer confidence has dropped in the past two months, it remains significantly higher than this time next year – and is virtually unrecognisable as a measure from, for example, the beginning of 2012. Although consumers remain cautious, there is a sense that the purse strings are loosening for many.
Independents are in favour
Finally, it is worth remembering that one perhaps unexpected outcome of the recession has been a loss of trust in larger companies. There is a sense that the big firms, which many people now associate with tax avoidance, are yet to pay their fair share for the crisis and, as a result, independent retailers are more in favour than ever. You can turn this to your advantage, highlighting your independence and ensuring that you offer better service than your larger competitors.