A new study by AXA suggests that the massive shift towards self-employment seen in the UK is set to accelerate in the next twelve months. One explanation offered is that many seek a safety net as they feel their current employment is insecure. And people working in corporate or professional roles are most likely to feel exposed rather than lower income workers.
One in ten (11 per cent) British people intend to start their own business in the next twelve months, according to a survey of 9,000 UK residents by AXA Business Insurance. This equates to 3.5 million people potentially venturing into self-employment.
The study finds that few are idle dreamers: 87 per cent of respondents could cite significant steps already taken to start their business (applying for finance, taking qualifications or developing a website). Forty per cent are developing client relationships to the extent they already have projects underway.
If even half of these intentions are borne out in 2017, this would mean the UK’s shift towards self-employment is more radical than previously thought. Government figures already show three record breaking years in row for people starting businesses, and AXA predicts an even steeper acceleration in years to come.
Safety nets sought as Brexit looms?
Given the economic and political uncertainty born of Brexit, the findings beg the question why so many people would risk starting up now. One answer may lie in a feeling that their current employment, ‘working for the man’, is unstable, subject to redundancy, relocation or disruption.
Four in ten of these budding entrepreneurs say their current job is unlikely to last beyond 2021: one in ten say it may not last the year out, and an equal number say they don’t feel secure from one month to the next.
Defying expectation, the most insecure were not in low-income or ‘zero hours’ jobs, but often in middle management or corporate roles. Forty five per cent of those who do not see their job lasting beyond 2021 were in such roles (titles including ‘Chief Financial director’, ‘CEO’, ‘Senior Marketing Manager’, HR Partner’).
Brexit was top of mind when respondents were asked why they felt the job market was insecure. It was cited by a sizeable 27 per cent. Related to this, a further 20 per cent quote ‘current government policy’ as a reason to feel insecure, while a quarter name poor management culture in their company and just seven per cent feel under threat from automation.
A desire to reduce dependency on outsiders – employers, larger companies – was revealed as a major motivation behind starting a business for many. Two thirds of those surveyed named ‘independence’ or ‘self-reliance’ as their goal in starting up, 39 per cent explicitly using the word ‘control’ when asked to explain more.
An appetite for going it alone
Fifty three per cent will quit their job once they start up. A more cautious thirty per cent will seek to reduce their hours – an option now open to many more people since flexible working rights were extended to all UK workers in 2014. And almost one in five say they will never give up the security of a job, but will run their business as a spare cash cow.
Most inclined to throw caution to the winds are older people: seven in ten of those over 45 say they will quit the day job, compared to just two in ten of the youngest entrepreneurs. The higher appetite for risk may well be a reflection of older people having a better financial cushion should things go wrong.
Savings do prove to be crucial, as half of would-be entrepreneurs said they would draw upon them to survive a fluctuating business income, after that they would rely on their partner’s income (40 per cent), credit cards (for a quarter) or loans from family and friends (29 per cent).
An appetite for radical change among older people was also seen in the types of businesses planned. Eighty eight per cent of over 55s say they would start their business in a field unrelated to their current job. Across the age groups, 67 per cent said their startup idea is not directly related to previous jobs, and entirely unrelated for almost half (47 per cent).
Gareth Howell, managing director, AXA Insurance, comments, ‘This research just reveals the tip of the iceberg. We believe there is a seismic shift underway in the way people work and plan for their futures. Running a business is no longer the preserve of the few, but is becoming a normal career progression, whether it runs alongside a job or is the sole source of income.
‘Disruption is becoming the norm in our working lives too: by the age of 25 most people have had at least four jobs, and by 55 – seven. Combine this with an external world that looks less and less predictable post-Brexit, and starting a business can be seen as a good insurance policy, particularly for those with a good financial cushion or who can keep their day job going too.’