With a new º£½ÇÊÓƵ Government focused firmly on driving economic growth amid a backdrop of high inflation, increasing borrowing costs, and a labour market struggling with uncertainty, it is essential to support the record number of new businesses being created across the º£½ÇÊÓƵ.
These start-ups are not only playing a critical role in helping to navigate these economic headwinds but are also leading the charge in fostering competitiveness, innovation, and job creation.
Start-ups are bringing new technologies and disruptive business models to market, tapping into emerging sectors and local communities. Yet, despite their growing importance to the economy, there remains a lack of understanding about the characteristics of these businesses and those founders who have identified opportunities and taken the risks to launch new ventures.
In association with Starling Bank, I recently completed a detailed study of new businesses through a survey of 1,176 participants in the 2024 º£½ÇÊÓƵ Start-up Awards. The awards, which celebrate the best companies under three years old across ten º£½ÇÊÓƵ nations and regions, provided detailed data on these firms, revealing a dynamic and ambitious group of entrepreneurs who are making an impact in their sectors and local economies.
More importantly, the study offers crucial insights into the º£½ÇÊÓƵ’s start-up ecosystem by shining a light on the founders, their businesses, the environments in which they operate, and what they need to grow and succeed. This will hopefully help foster a better understanding of the key role start-ups play in the º£½ÇÊÓƵ’s economic recovery and provide a clearer picture of where further support is needed to ensure their continued success.
So, what does the 2024 Start-Up Report tell us about the challenges facing new firms in terms of their origins, management, funding, and business support?
As with other studies of entrepreneurs, the motivations for starting a business are often rooted in seizing opportunities, with 81% of founders citing this as a key driver. Notably, 70% of entrepreneurs launch their businesses within a year, demonstrating the fast-paced nature of the start-up world. Over half of these businesses begin at home, reflecting the accessibility of entrepreneurship in its early stages.
Funding remains one of the biggest challenges for start-ups, with nearly half of founders needing little to no capital (under £10,000) to launch their business. Most start-ups are self-funded (85%), while other sources of funding include support from family and friends and angel investment. Looking ahead, 60% of entrepreneurs aim to raise additional funds within the next 12 months, with a quarter seeking significant investments of £500,000 or more, demonstrating a real appetite for scaling their ventures.
Given the recent attention to the development of artificial intelligence (AI) and its potential to revolutionise businesses and industries, it is interesting to note that 59% of start-ups are currently leveraging AI in their operations.
For those not yet using AI, four out of five of these businesses aim to adopt it within the next 12 months, highlighting its growing influence in driving efficiency and innovation.
Recruitment remains a top priority, with 87% of entrepreneurs planning to hire new staff with the most sought-after skills for new recruits including administrative and organisational capabilities, alongside expertise in marketing, sales, and creative functions.
When it comes to public relations, over two-thirds of start-ups manage their PR and branding in-house, reflecting a hands-on approach to shaping their identity. Social media is a critical tool for founders, with LinkedIn (87%), Instagram (72%), and Facebook (59%) being the platforms of choice for reaching and engaging audiences.
In terms of business support, several factors contribute to the success of start-ups, including a customer-centric approach, high-quality products and services, and a focus on innovation and technology. Support systems, particularly banking and mentorship, play a vital role in enabling entrepreneurs to achieve these goals.
For primary banking needs, 57% of start-ups rely on challenger banks, with founders seeking additional support from banks in the form of diverse financing options, networking opportunities, and dedicated business advice.
Mentorship is another cornerstone of success with half of all founders currently benefiting from such external advice. Interestingly, 27% work with male mentors, while 23% choose female mentors, highlighting the value of guidance from diverse perspectives. Furthermore, 85% of entrepreneurs express a strong interest in collaborating with universities to drive innovation and access specialised knowledge, although very few universities are meeting this demand from new businesses.
Nearly four in ten of founders are currently selling products or services overseas which reflects the fact that a significant portion of entrepreneurs still operates domestically, with many likely focusing on their home market before attempting international expansion. This is not surprising as selling overseas often presents additional challenges such as logistical complexities, regulatory hurdles, and financial risk, which can deter many small businesses.
Despite this, over half of those who are not trading internationally intend to sell their products or services overseas within the next 12 months
Therefore, the 2024 Start-Up Report paints a detailed picture of the entrepreneurial landscape in the º£½ÇÊÓƵ, highlighting not only the resilience and adaptability of start-ups but also their ambitions for growth.
As they embrace innovation, secure funding, and build networks, entrepreneurs continue to shape the future of business while navigating the challenges of creating wealth and employment and with the º£½ÇÊÓƵ Government prioritising economic growth, it is critical that more is done to create an environment in which new businesses can thrive.
