Would-be entrepreneurs in the UK are being put off from starting their own businesses because of the upcoming general election, according to new research from online accounting software company FreeAgent.
The poll of working Brits reveals that, while the overwhelming majority of respondents have had thoughts of starting their own business at some point, 58% said their decision had been ‘significantly’ or ‘somewhat’ impacted by the prospect of a general election in 2024.
In addition, nearly half of respondents (49%) said they had been deterred from starting a business due to economic instability caused by uncertainty around the next election, while prospective business owners indicated that they are also concerned about the ongoing cost-of-living crisis as well as weak government policies to support SMEs and entrepreneurship.
Political instability and finances are top concerns
With no date yet set for the upcoming general election, the uncertainty caused by potential political and legislative changes is making aspiring entrepreneurs nervous.
Over a third (35%) of respondents said they have been put off from starting their own business due to uncertainty around changes in tax, with 30% worried about changes in small businesses funding and 28% more generally around changes in legislation and regulation with the potential entrance of a new government.
The ongoing cost-of-living crisis has meant 73% of respondents have put off plans to start a business. Women were more likely than men to strongly agree that the ongoing crisis has deterred their business aspirations (33% vs 26%).
Furthermore, many business owners appear to have been impacted by the financial burdens of setting up a business, with a fifth (21%) of those surveyed noting that they were concerned with the potential budgets needed to set up a business, while 18% said a lack of personal savings was a particular worry.
Desire for a better work/life balance reigns supreme
Despite these concerns, however, just under half (39%) of people said they still hoped to set up a business within the next 12 months. The reasons for doing so varied but focused on the following:
- Achieving a better work/life balance (46%)
- Being able to choose the work done (34%)
- Being able to follow passions (34%)
- Having a greater sense of achievement at work (33%)
The results mirror findings from previous years’ surveys, with the desire for a better work/life balance also coming out top in 2022 (chosen by 47% of respondents), closely followed by having greater choice over work tasks (chosen by 39% of respondents in 2022). Autonomy is clearly of great importance to today’s entrepreneurs as many feel restricted by routine workday boundaries.
Confidence isn’t holding back entrepreneurs
When it comes to the success of their business, most aspiring entrepreneurs aren’t held back by a lack of confidence. Overall, 62% of survey respondents said that although they have moderate concerns about the potential failure of their business, they believe they can overcome these challenges.
However, the survey suggests there is a stark contrast between women and men when it comes to confidence in their own abilities and knowledge. Nearly double the number of women (20%) than men (11%) said they feel they lack the essential skills needed to run a business. Women are also more uncertain about their relevant experience with a third of men (33%) saying they were confident they have the necessary professional experience compared to just a quarter (24%) of women.
Roan Lavery, CEO and co-founder of FreeAgent said, “While it’s great to see that the overall appetite among the British public to start their own businesses remains strong, it’s probably no surprise that political uncertainty is putting some people’s plans on hold.
“Many budding entrepreneurs are clearly considering the possibility that there may be big political and economic changes on the way, particularly if there is a change in government, and are waiting to make any concrete plans to start their own businesses. However, this uncertainty is only going to continue until we have some kind of clear indication over when the next election will actually be held – and what the various political parties’ priorities are for the small business sector.
“Although we may have to wait for the main parties to reveal their actual election manifesto pledges, I hope that they will start to give some indication over their plans for the small business sector. By having clarity over issues such as small business taxes, late payment and access to support, SMEs will be able to better plan for the future and would-be entrepreneurs will have more confidence in taking the plunge and setting up for themselves.
“It’s vital that everything possible is done to support this important part of the economy, so that it can lead the way to recovery in the coming years.”
