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start-up business

Are start-ups bucking pandemic trends?


As the country continues to grapple with the effects of Covid-19, are we really witnessing a surge in pandemic start-ups? 

11th May 2022
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Just over two years on from the start of the Covid-19 pandemic, restrictions are being lifted across the country. Now the markets that were so roundly bombarded throughout the worst of the lockdown are beginning to tentatively open their doors once again.

One market sector in particular that has seemingly grasped the post-pandemic nettle, according to research from QuickBooks, are start-up businesses, which have supposedly bloomed in the aftermath of lockdown.

In a keynote speech at this year’s QuickBooks Connect, VP and UK country manager Chris Evans said that, because of Covid, small businesses had to rethink their models in order to survive the uncertain market, leading to a burgeoning trend in lockdown start-ups that work in a new, more digitally focused way, compared to their pre-pandemic predecessors. 

“When you think about furlough, flat pay, stagnant business models during the pandemic, people were losing their jobs and businesses weren’t hiring,” Evans said, adding however that “entrepreneurship boomed”.

Quoting QuickBooks’ findings, Evans highlighted that there had been a 14% increase in start-ups setting up shop and prospering in 2021 and that around 3m people working in the UK today were considering starting up their own small business. 

Digital revolution

One example Evans offered was the success story of Milly Parazo and her start-up Terrazzo Parazo, an online retailer who set up shop after losing her job during the first lockdown.

Looking to social media channels for marketing, Parazo has amassed over a quarter of a million followers on TikTok to help drive her business’s success. This focus on digital, Evans argued, is key for modern start-ups. “If you pair these digital natives with the entrepreneurial streak created by the conditions of Covid, you start to see hundreds and thousands of Gen Z sole traders with digital businesses,” he said.

A survey by QuickBooks seems to concur with Evans’s assessment, with almost three quarters (71%) of those surveyed who set up during or post lockdown deeming social media as make or break for their business’s success.

Furthermore, the survey found that one in five (21%) are spending more than seven hours a day on this for their business, which is substantially more than the four-hour standard of other companies. 

A flash in the pan?

While the news that a swathe digitally savvy pandemic start-ups are making waves in UK markets sounds positive, when posed the question, the Any Answers community remained unconvinced as to the validity of QuickBooks’ claims. “Haven’t seen any start-ups at all. Quite a few new clients but those seem driven by a need for cost savings as they all come from larger firms,” wrote user TaxTeddy, adding that, “we’re not on any social media so no change there for us.”

DKB-Sheffield was equally sceptical of QuickBooks’ findings, wondering “how many ‘new’ start-ups were actually existing businesses who now realise it doesn’t actually pay to be ‘under the radar’?”

Others were instead more surprised at the amount of time those surveyed spent on social media, with users arguing that seven hours a day seemed like overkill.

“Seven hours a day keeping social media up to date? How do they get any real work done?” wrote user MCV71, while Any Answers veteran Hugo Fair argued that the companies that rely this much on social media “are not the type of trades or people who have a business plan, let alone who look for accounting advice *before* they hit problems!”

Actively operating

And the community’s cynicism may not be completely misplaced, especially when it comes to the fortunes of the accoutning sector. Looking into recent ONS research, the department's findings have painted a different picture to that of QuickBooks. In 2021, the ONS found that the number of small accounting firms actively operating had dropped dramatically when compared to years prior. 

Instead, validating TaxTeddy’s assessment, the ONS found that it was actually the larger operations that grew during this period, albeit in an incremental fashion.

With the “new normal” still in its infancy and the UK still reeling from years of stagnation, only time will tell as to whether the supposed boom in pandemic start-ups will lead to any substantial change.

Replies (2)

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By Catherine Newman
12th May 2022 16:32

I am just outside Evesham and all of the surrounding villages have their own Facebook Noticeboard pages. There is also a site called Nextdoor. There are loads of people setting up as cleaners, dog walkers, cat sitters. I have even gone on the village Facebook pages saying I'm glad to see so many new businesses being set up but just wondering where everybody is going for an accountant. That was about 2 weeks ago. I have taken on one new client.

Thanks (1)
Replying to Catherine Newman:
By Hugo Fair
13th May 2022 14:47

If it's anything like round my neck of the woods (and the services sound familiar), then many of the people offering them think of it as 'just a hobby' - which, despite payments received, doesn't constitute taxable earnings (in their head).

Cash economy (or use of things like Revolut/Curve for the techno-savvy or simple barter for the rest of us) seems to be where this is heading ... not the seed-bed of a crop of new growing businesses creating jobs for others.

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