Two in three Brits (64 per cent) want to start their own small businesses at some point in the future, according to FreeAgent.
This is over ten per cent higher than last year’s survey (51.2 per cent). A small proportion (11 per cent) plan to start their business this year while a further fifth (21 per cent) plan to do it over the next few years.
It’s the younger generations who are most entrepreneurial, with 80 per cent of respondents aged 18-34 saying that they dreamed of owning their own business at some point in their lives. Over half of 35-54-year-olds have also expressed a desire to start their own business. Meanwhile, a third (33 per cent) of the over 55s are interested in breaking out on their own.
What motivates Brits to start their own businesses?
In 2021, the dominant response was that business owners could choose what work they want to do (41.7 per cent) and be their own boss (36.3 per cent). This year the top reason was creating a better work-life balance (47 per cent). Earning more was the seventh-most popular reason at 27 per cent. Other motivations include:
- Wanting to be their own boss (44 per cent)
- Choosing what work to do (40 per cent)
- Following their passion (34 per cent)
- Gaining a greater sense of achievement (30 per cent)
Almost a third (30 per cent) said they want to fit work around their family commitments and this proportion was higher for female respondents (35 per cent of females compared to 24 per cent of males) as well as people aged 54 and younger (37 per cent of 18-34-year-olds; 29 per cent of 35-54-year-olds; and 15 per cent of respondents aged 55+).
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Covid-19 and Brexit
Covid-19 has forced almost half (49 per cent) of respondents to push back their timelines of starting their own businesses. Conversely, the impact of Covid-19 meant that 27 per cent of respondents moved their plans forward. A further 24 per cent of respondents said that Covid-19 hasn’t impacted their business plans at all.
The responses around Brexit were more mixed – 40 per cent agree that Brexit puts them off starting their business, 27 per cent disagreed and a further 34 per cent didn’t agree or disagree.
What concerns the next generation of entrepreneurs?
Nine in ten of those who want to start their own businesses have concerns, namely:
- The financial burden of setting up (51 per cent)
- Dealing with tax (i.e. National Insurance, VAT, MTD) (39 per cent)
- Complying with business regulations such as GDPR and IR35 (32 per cent)
- Managing business finances (29 per cent)
- A lack of government support for freelancers and small businesses (27 per cent)
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The research also highlighted ongoing confusion around Making Tax Digital (MTD), the government’s ongoing plan to digitise tax for UK businesses.
Research from FreeAgent last year found that only 14.6 per cent are confident about their understanding of the new legislation. This confusion is set to continue into 2022 with 82 per cent of respondents stating they are unaware of the upcoming 2024 deadline for MTD for Income Tax Self Assessment (ITSA), which will require self-employed people, sole traders and/or landlords that have income over £10,000, to use digital software to manage their finances and file their tax returns.
Awareness is most prominent in the youngest age group (18-34-year-olds) of whom 23 per cent were aware, compared to 17 per cent of 35-54-year-olds and 14 per cent of people aged 55+.