Record 900,000 new businesses launched in 2023

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Date: 13 February 2024

Food truck business

Street food stalls, property letting businesses and online retailers were the biggest growth sectors in 2023, as the number of UK start-ups increased by 12% compared to 2022.

A record 900,000 new businesses were incorporated in 2023, up 12% on 2022, according to the New Startup Index published by NatWest and Beauhurst. This brings the number of active companies operating in the UK to 5.31 million, also a UK high, pointing towards continued growth in the population of entrepreneurs despite challenging economic conditions.

The uplift was driven by online retailers, with over 82,000 new businesses starting in the sector, as well as 49,000 businesses that began operating in the property letting space and 21,000 new takeaway and street food businesses that opened in 2023.

Across the UK regions, Northern Ireland saw from the largest boom in start-ups year-on-year with 14,000 new businesses starting up there in 2023, a 59% increase on the previous year. London saw a 20% increase in start-ups and Scotland came in third with an 11% increase in new businesses.

The growth in female-founded businesses has also continued, with a record 164,000 companies incorporated by women in 2023, up 4% on 2022 and taking growth in the five years between 2019 and 2023 to 26% overall.

"It is hard not to feel a sense of pride in the resilience and dynamism of the UK's business landscape. Today's report shows that despite the recent economic challenges, entrepreneurial spirit in the country has not just endured, it has thrived. Small businesses are the lifeblood of our economy, accounting for three-fifths of employment and about half of the private sector's turnover." James Holian, head of business banking at NatWest Group.

UK entrepreneurial rating slips

However, a new report from the Global Entrepreneurship Monitor (GEM) suggests that the UK's Entrepreneurial Context Index score is declining. The findings show that while start-up rates are high in the UK, growing businesses are decreasing. Globally, the report finds that Eastern countries outperform the West in entrepreneurship, with UAE and India leading.

"While start-up rates in the UK are at an historical high, the proportion of businesses that are growing is declining and the weaknesses in some aspects of the entrepreneurial ecosystem may be part of the explanation." Mark Hart, professor of small business and entrepreneurship at Aston Business School and lead of GEM UK.

In 2020, the overall quality of the UK entrepreneurial environment was rated as just satisfactory, with a score of 5.0. Since then, that quality score has declined each year. The 2023 score of 4.6 places the UK 22nd out of 49 economies.

Key issues highlighted by the report are access to funding for small businesses and a lack of entrepreneurial education in the UK. Mark Hart, said: "Small business leaders still complain that a lack of finance can hinder their growth ambitions and that they are still unsure of how to access appropriate finance. We need to work harder on improvements to the all-round financing ecosystem."

Nevertheless, the proportion of adults intending to start their own business in the next three years has also been growing slowly, from 8% in 2019 to 11% in 2023. Many new entrepreneurs in the UK are outward-looking, with two in five having customers beyond the borders and three in five expecting to use more digital technologies in the next six months. Growth expectations are strong, with one in four new entrepreneurs anticipating employing at least another six people over the next five years.

Written by Rachel Miller.

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