Business finance experts are calling for more support for small business owners after the number of company insolvencies registered in January 2022 were more than double those of January 2021.
Dean Salmon, accounts senior at The Accountancy Partnership, said both financial and educational support is needed.
According to its own research, on average new entrepreneurs rate their business knowledge at a mere 5/10.
“The pandemic unexpectedly produced a record number of entrepreneurs, with nearly half a million new business registrations occurring despite the vast economic uncertainty – a record 84,758 additional businesses when compared with the previous year,” said Salmon.
“Naturally, a larger number of businesses means a greater proportion of these enterprises will come to an end within the first year – particularly due to the new challenges posed post-pandemic such as inflationary trends, supply chain disruptions, energy price hikes and material shortages.
“However, small businesses are fundamental to the health of the UK economy. They create three out of five jobs and account for half of the nation’s private sector turnover, so it is important that we provide new owners with the support they need to continue past their first 12 months of trading.”
The Accountancy Partnership offers online accountancy services, including a dedicated accountant, completion of accounts and tax returns, and online accounting software.
“By educating and guiding owners through the available resources to assist with future challenges, we can help to limit the number of businesses that cease trading and ensure fledgling companies are best equipped for the future,” added Salmon.
The job market during the pandemic in 2020 was scarce, with 370,000 redundancies made throughout the August to October period alone and the unemployment rate rising to a staggering 5.1% by the end of the year.
“When you consider that there were also 726,000 fewer people on company payrolls in January 2021, it isn’t unreasonable to assume that job losses served as a primary motivation for the many concerned people who were forced to find new ways to make ends meet – especially as starting a successful business in normal circumstances is incredibly difficult,” said Salmon.
“As the job market begins to pick up post-pandemic, new entrepreneurs may be rethinking their decision to go alone – which is completely fine.
“However, a number of resources and organisations are available to offer advice and support on a wide range of potential challenges, allowing new business owners to remember their reasons for first taking the leap into entrepreneurship.”