Is now a good time to start a new business?
Tuesday, 13 October 2020
As we cautiously ease back into some sort of normality, it’s obvious that we need to be careful as already, COVID-19 infection rates are rising. I’m sure the Government is determined to see the UK economy recover. However, whilst it has invested billions into aiding this, I don’t think that significant funds will be made available to everyone, but it will focus on a much more targeted approach. The ‘Eat Out to Help Out’ initiative was a prime example, trying to stimulate the hospitality industry.
I’m always amazed at how businesses can find new ways to diversify, and not only survive but prosper in new areas. This, of course, is not a new phenomenon; the farming industry is a prime example of how diversification can be so successful. Nowadays, these projects can outstrip the original farming business in terms of profit. There are not many farmers that don’t have holiday lets, B&Bs, cafés and shops, renting converted barns or outdoor activities.
Unfortunately, travel and hospitality businesses have suffered more than most, and whilst we hope that the weather and circumstances extend the season for as long as possible, it’s likely to be a struggle to survive. I was thinking, however, that entrepreneurs are a hardy bunch, and this might be a good time to start a new business; at least you are starting from a low base. Also, it’s not unusual to see a surge in new businesses starting up, often as a result from people being made redundant.
However, what I would say is that there can be a high failure rate with business start-ups. One of the best ways to mitigate this is to seek professional advice. If you have an advisor, they can help you make sure that your new business is set up in the best way, that you’re correctly registered with HMRC, and with many other areas. In addition, an advisor can provide you with support and tools for managing the business start-up, such as cloud-based software for accounts, budgets and cashflows.
Finally, the techie bit. UK GDP grew by 6.6% in July 2020, a very encouraging sign, but it still remains 11.6% below the pre COVID-19 level. Whilst this is a smaller curve than the ‘V-shaped’ graph predicted by some, including the Bank of England, it’s still encouraging. However, the recovery will be slow, maybe taking many years to get back to pre-pandemic levels.
There are three main reasons for this:
- Unemployment is going up, which will have an impact on consumer and business confidence.
- The support provided by the Chancellor is winding down.
- The recent rise in new COVID-19 cases, which has led to additional restrictions.
A bit more uncertainty has to be factored in as we wrestle with the EU over ‘Brexit’, which can only further reduce the pace of growth towards the new year. Let’s hope that Christmas isn’t cancelled!