UK start-up survival rates reach a new 3 year high claims the BGF Index

It’s never been easy starting a business from scratch. Ask any accountant and they’ll tell you that. There are tough challenges to be faced, and many obstacles and bureaucratic hurdles to overcome. So, it’s hardly surprising that so many new start-ups fall by the wayside quickly. The figures for failure are actually quite sobering: 43 percent of new start-ups go under within the first twelve months, whilst roughly 50 percent fail within the first five years of trading. As accountants we know the challenges that new businesses face, and we have done our level best to help these new businesses succeed and prosper.

However, things seem to be changing. The prospects for start-up businesses are looking brighter now than they’ve done for many a year. How do we know this? Well, according to the bi-annual Barclays and Business Growth Fund (BGF) Entrepreneurs Index, the number of British start-ups surviving in business is now at a three-year high.

The BGF Index tracks entrepreneurial activity throughout the UK, and has found that the number of active companies in the UK has risen from 3,139,630 in December 2014 to 3,260,879 in June 2015. This rise of 120,249 new start-ups is the biggest increase since the index began in 2012. What’s more, during the same period the number of company dissolutions dropped from 193,699 to 170,359 for the first time since 2012. The icing on the cake is that business investments have also risen during the period, up 5 per cent to 1,541 leading to wealth creation of at least £200,000.

According to the BGF Index, the major proportion of growth (21 per cent) came in the service sector in the year to June 2015. This is followed by financial services (8.3 per cent), computer software (7.2 per cent) and industrial products and services (7.2 per cent).

Speaking about the Index’s latest finding, Dena Brumpton, head of wealth management, Barclays UK, said:

“The dip in the number of companies that are dissolving is testament to the growth in business confidence we have seen in recent years, allowing UK businesses not just to start up, but to succeed.”

“Since 2012, the appetite for creating new businesses has grown exponentially, due to a number of factors – from an improving economy to the rise of entrepreneurs over the age of 50 – the UK’s start-up scene is thriving.”

However, not everything is quite so picture perfect. Although the picture for start-ups was broadly positive, the number of high-growth companies across the UK has actually decreased. In fact the number of enterprises with revenues of between £2.5m and £100m dropped from 21.5 per cent for the 12 months to December 2013 to 20.8 per cent in the year to December 2014.

Commenting on this drop in growth, Stephen Welton, chief executive, BGF, said:

“The fact that the first half of 2015 has seen the UK’s biggest rise in the number of active companies since the Entrepreneurs Index began in June 2012, and also the first decrease in the number of these businesses failing is extremely positive. [However], we need to continue to invest in ambitious British businesses in order to contribute to the health and robustness of the UK economy.”

If you are considering starting a new business, then speak to the accountants at Steven Glicher. We can help you not only with small business tax advice and general accounting issues: we can also assist you with all areas of general business advice. If you have any concerns over starting up or need advice on how to consolidate or develop your small business, then ring Steven Glicher accountants on 0161 485 8007 or email info@stevenglicher.co.uk.

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