Why microbusinesses are crucial to levelling up

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Microbusinesses are the engine of the British economy, especially when it comes to levelling up. Businesses with 10 employees or less make up 95 per cent of companies in the UK, so when they thrive, we all do.

However, they are rarely analysed as a standalone group and are under-researched, sometimes misunderstood and often under-served.

At GoDaddy we are trying to change that. Our Venture Forward study developed in partnership with the University of Kent analysed 2.3 million microbusinesses, looking at how the make-up of British entrepreneurs has changed since the start of the pandemic, and measuring the importance of their businesses to local economies.

‘Microbusinesses have the power to contribute to levelling-up disadvantaged areas’

The data shows that among the disruption of the pandemic, a new breed of everyday entrepreneur has emerged. The percentage of start-up owners aged under 35 has more than doubled since March 2020, rising from 16.4 per cent to 34 per cent. Among this group, the proportion aged 18-24 has soared from just 1.7 per cent pre-pandemic, to 8.6 per cent in the two years after the Covid-19 outbreak.

The demographics of entrepreneurs have also started to become more diverse, with the proportion of female entrepreneurs increasing from 32 per cent pre-March 2020 to 39.8 per cent in the months since, while the proportion from disadvantaged communities has risen from 13.2 per cent to 15.1 per cent.

The representation of business owners from minority ethnic groups is also gradually increasing. Black founders account for 5.4 per cent of pre-pandemic businesses and 6.6 per cent among those created after March 2020. The corresponding figures for Asian entrepreneurs are 10.1 per cent pre-pandemic and 11.9 per cent after it began.

At GoDaddy we are focused on empowering entrepreneurs and making opportunity more inclusive for all, so it’s encouraging to see that our enterprise community is becoming more diverse.

However, the data also shows that the UK’s microbusiness landscape remains dominated by a North-South divide. The top three regions where company founders live are the same before and after March 2020: London (21.7 per cent/22.6 per cent), the South East (18.5 per cent/17.0 per cent) and the South West (10.2 per cent/9.8 per cent).

By mapping the concentration of microbusiness owners against local population sizes, GoDaddy has produced a “venture density” ranking for every one of the 650 constituencies in Great Britain. London is the capital of our microbusiness community, with the top 14 entries all located there. Of the 50 constituencies with the highest venture densities, only six are not in London, South East or South West. This is something we must look to address.

I’m fortunate to work first-hand with an incredible selection of microbusiness owners. One such owner is Birmingham-based Cleo Morris, 28, who set up Mission Diverse in October 2020 to connect minority and under-represented communities with companies through entrepreneurship and employability training, education and mentoring. Around 70 per cent of Mission Diverse sign-ups are women, with the majority coming from black backgrounds, and Cleo wants to have trained 1,000 entrepreneurs over the next five years.

Cleo’s work is evidence that the UK’s enterprising spirit is not confined to London and the South. Throughout the country there are budding entrepreneurs with brilliant ideas and energy, key to levelling up, who just need the right support and advice to get started.

Venture Forward clearly shows that with the right policy infrastructures in place, microbusinesses have the power to contribute to levelling up disadvantaged areas. Over half of all microbusinesses turn over more than £25,000 a year and three quarters employ at least one other person. Put simply, the more microbusinesses there are in a community, the better the job prospects and finances of the people that live there. That ties right in to the government’s levelling up agenda.

Further research was conducted by GoDaddy as part of the Venture Forward study which reveals that the number of “side hustles” has grown by almost half in the past two years as Brits contend with the rising cost-of-living. Business owners who are also in separate, full time employment has risen from 20.8 per cent prior to March 2020 to 31 per cent today (a 49 per cent increase).

Our research also highlights that many of these microbusinesses may have been born out of economic necessity during a turbulent time for people’s jobs and earnings. Prior to the pandemic the number of microbusiness owners who were unemployed before starting their business was 5.7 per cent, while those in part-time work was 7.9 per cent. These figures have risen to 7.3 per cent and 11.7 per cent respectively since March 2020.

One such owner is part-time postman Cameron Langston, 22, from East London, who set up Bark + Shout, a pet accessory company, during lockdown in April 2021 to supplement his income. His day job helps pay the bills while he reinvests the extra income from Bark + Shout back into the business to help it grow. The success he’s had so far means he’s hoping to be running Bark + Shout full time by the end of the year.

Cameron’s “side hustle” shows how many people are setting up their own companies to generate extra income, especially now that the financial challenges of the pandemic are being exacerbated by a cost-of-living crisis. However, the shift to ecommerce and opportunities presented by the second digital revolution have made it possible for people to create businesses quickly and easily. The important thing now is that these entrepreneurs are given assistance to build a business with a long-term trajectory.

Cameron, like many other microbusiness owners born out of the pandemic, has benefitted from being able to take his business entirely online. With GoDaddy’s support, entrepreneurs and business owners have been able to get online quickly and build an online presence so they can sell their goods anytime and anywhere, and ultimately grow their business.

At GoDaddy we are committed to sharing our findings with national and regional policymakers. We want to use data from our studies to improve knowledge about the country’s microbusinesses, and create opportunities for anyone to succeed in business, wherever they are in the country.

We all stand to benefit from a strong microbusiness community, so let’s ensure they are given a key role in the levelling up agenda.

Ben Law is head of UK and Ireland, GoDaddy

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