New research from GoDaddy shows optimism in the wake of a pandemic with micro-businesses taking the opportunity to launch.
The Rise of Micro-Businesses
Defying the odds, it seems that many new micro-businesses opted to launch in the peak of the pandemic. In fact, there was a 14% increase nationally with new ventures for these businesses between April and June 2020. GoDaddy, a company empowering everyday entrepreneurs, noted a 62% YOY increase (Q2 2019 – Q2 2020) in UK-based customers. Their State of the Nation review of the UK micro-businesses landscape shows continued growth and birth of new enterprises.
New Ventures from Uncertainty
It seemed that job insecurity of the pandemic was one of the key catalysts for 15% of companies. COVID-19 is not unique in this sense. In fact, the rise of micro-businesses mirrors the rise of many new businesses during the global economic crash of 2008. Situations such as furlough or redundancy present opportunity in the wake of challenge, giving many entrepreneurs the time to focus on new business opportunities. Many pre-existing micro-businesses were forced to sell online for the first time during the pandemic. Now these same companies are benefiting from online sales as a new revenue stream.
Move Over, London
It seems that the suburbs are experiencing a moment. The State of the Nation review identified six micro-business hubs across the country. These all experienced bursts of micro-business activity between 2017-2019 and have continued their growth trajectory into 2020. Micro-business activity is seemingly concentrated on the outskirts of some of the UK’s largest cities. Caerphilly, Warrington, Salford and Wellingborough were just some of the suburbs that have gone from sleepy towns to micro-business hubs. 96% of all UK enterprises are currently identified as “micro-businesses” meaning that they will play a key role supporting the country’s economic recovery.
Optimism for the Future
When asked about challenges and opportunities for the sector, the survey found encouraging levels of confidence and resilience, even at the height of the pandemic. Looking ahead, 85% are confident their business will continue, with a third of these expecting their business to thrive. Similarly, 70% of the companies say that their business will recover fully within 12 months. Interestingly, these results are in spite of 38% of UK’s smallest businesses experiencing temporary closures, and almost 3/4 having lost revenue (72%) due to COVID-19 restrictions.
In addition, it seems that micro-businesses still plan to keep up business spending, with 29% confirming that they are continuing to invest in their businesses currently, and 1 in 10 planning to invest more over the next 3-5 years, because of COVID-19. When asked about their needs in order to survive another national or local lockdown, they indicated government-funded business grants (39%), extended furlough scheme (10%) or a freeze on business rates (7%).
