The UK’s economy continues to recover strongly from last year’s disruption, reflecting the unique nature of the COVID-19 recession and the extension of rescue measures by the Treasury. A full recovery less than five months after the last lockdown and unemployment below 5% and falling – according to the latest ONS unemployment figures – was in nobody’s predictions, including the Government’s.
The UK economy’s recovery from COVID-19
However, the ONS’s positive portrayal of the labour market is one side of the story. About one million people will still be on furlough when the scheme ends on 30th September, and it’s unclear how many will still be employed this time next month. While this will impact the UK’s economic recovery, there is an opportunity for those on furlough to use any redundancy pay to start their own business and take advantage of the COVID-19-induced era of opportunity for entrepreneurs.
Starting a business may not be the right step for everyone, but there is evidence that the pandemic has encouraged entrepreneurship, even amongst some who may never previously have considered the idea. The boom in entrepreneurship during the pandemic is reflected in the numbers, too. More than 835,000 businesses were started in the UK in 2020, making it a record year. In the US, new business registrations hit a 13-year high, with 96% of entrepreneurs stating that the pandemic had either directly or indirectly influenced their decision to start a business.
Why down marketers are good for start-ups and entrepreneurs
A common misunderstanding is that down markets and recessions are bad for start-ups and entrepreneurship. The opposite is true. Many of the world’s most recognisable businesses started in recessions or down-markets, including Uber, Airbnb, Burger King, CNN, and Netflix.
There is often greater openness to innovation and market disruption among consumers and investors during down-markets. Consumers are hungry for change, while angel investors come to life during downturns and turn to start-ups and smaller businesses in the hope of future returns. Over 57% of British angel investors continued to invest during the pandemic, and over 54% of them said they have even greater levels of engagement with their portfolio than pre-pandemic.
How start-ups can take advantage of the COVID-19-induced era of opportunity
As an entrepreneur, you can take advantage of these changing attitudes. Entrepreneurship favours the fast and agile over the slow and rigid. At times of economic downturn, large corporations are disadvantaged compared to start-ups when it comes to moving at pace and innovating. While larger businesses have the capital to absorb losses, they are also saddled with more baggage and thus unable to exploit opportunities at speed. Conversely, a well-timed, well-researched start-up idea that exploits an existing gap in the market can grow rapidly in down markets.
In contrast to the uncertainty that surrounded last year and the first six months of 2021, the next 18 months look set to be one of the fastest economic growth periods on record. Job vacancies in the UK have already hit a record high and the EY Item Club predicted in July that UK GDP would rise by 7.6% this year alone – the fastest growth in 80 years.
Along with rapid economic growth comes a desire for innovation from consumers. The combination of these factors creates the perfect environment for start-ups and entrepreneurs to maximise the opportunities presented by these challenging times.
Jumping into entrepreneurship is a brave decision at any time. But now, more than ever, the world is open to new ideas, opportunities, and change.
About the author: Martin Warner is one of Britain’s leading entrepreneurs, renowned for having built and sold his 3D printing business botObjects for $50 million in a record-breaking 17 months. Martin Warner is a global thought leader on entrepreneurship and a business mentor, educator, inventor, film producer, and investor. Having taught entrepreneurship for 20 years to thousands of people, Martin now shares his thought leadership, teachings, and coaching through his education program, Entrepreneur Seminar.