Amongst all the bad news about businesses suffering now, it is good to find out that the pandemic has caused a surge in young people starting their own businesses. This is according to research commissioned by domain registrar and website builder GoDaddy.
Key findings
- One in ten (9%) of 16 to 24-year-olds have started their own business since February 2020
- Three quarters (75%) of 16-24-year-olds surveyed said they started their own business because there were not enough employment opportunities for them in the current economic climate
- This group overwhelmingly favour e-commerce and derive 12% more revenue from online sales than the average business owner
- Creative industries (17%), retail (15%) and leisure (11%) are among the most popular sectors for young entrepreneurs
As the research shows that 9% of young entrepreneurs have started their own business since February 2020, this suggests that, based on the latest Office for National Statistics (ONS) population estimates for this age group, over 630,000 ventures were launched by them in the UK since the start of the pandemic.
A further one in five (18%) young people surveyed say they have a concrete business idea and are in the process of setting up their own company, indicating that the number of youthful start-ups is expected to increase further this year. These research findings suggest that the average age of a UK entrepreneur, which was 40 years old in 2019 according to Companies House data , is likely to go down in the 2020s as a part of the legacy of the Covid-19 pandemic.
Creative industry boost
Creative industries and retail are the most popular sectors for 16-24-year-old entrepreneurs surveyed, despite the challenges faced by both industries in the last ten months. Nearly one fifth (17%) of the ‘early entrepreneurs’ launched a creative business (specialising in art, music or design), which based on the latest ONS population estimates , equates to around 108,000 new companies, closely followed by retail (15%) with an estimated 95,000 new businesses.
This surge of young start-up entrepreneurs comes in response to the pandemic, which has disrupted the job market and forced many people to take professional opportunities into their own hands.
Making the most of a bad situation
When asked what encouraged them to launch their own business, three quarters (75%) of 16-24-year-olds surveyed said there were not enough employment opportunities for them in the current economic climate. In fact, prior to pursing their own business ideas, almost one in five (19%) people in this age group had tried and failed to find work in their chosen field.
Sakshi Anand, senior director at GoDaddy UK and Ireland, says: “Despite the challenges of 2020, our research shows that young entrepreneurs have managed to make the most out of a difficult situation and have demonstrated the ability to flourish in a challenging economic environment brought on by the global pandemic.
“In addition to those young entrepreneurs who have already started a business over the last year, and with 91% surveyed as already selling online or planning to sell online, we’re excited to see what 2021 will bring for our new generation of UK’s entrepreneurs.”
Older entrepreneurs
The research also reveals that older entrepreneurs tend to favour more traditional industry sectors. Among 750 business founders of all ages in the UK, the most popular sector is professional services (14%), followed by retail (13%), construction and real estate (11%), manufacturing (10%) and technology (9%).
Methodology
This research was carried out by Censuswide for GoDaddy in three separate surveys of over 3,250 people in total in the UK:
Survey 1: Random sample of 2,002 people between the ages of 16 and 24.
Survey 2: Random sample of 500 16 to 24-year olds who have either already started a business or are in the process of doing so – this survey specifically recruited young people who have either already launched or were in the process of launching a business.
Survey 3: Random sample of 752 UK small business founders of all ages.
The surveys took place between 18 and 29 December 2020.
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