Three quarters of new businesses now started at home with women leading the way
According to a new study, “The Home Business Insight Report” (compiled by AXA Business Insurance and small business network, Enterprise Nation), home based businesses are an increasing benefit to the improving state of the UK economy.
70 per cent of all new businesses now started at home
Women leading the way with two thirds of home based businesses run by women
79 per cent of home based businesses expect turnover to increase in 2014
One new business a minute started in UK
The Home Business Insight Report, a study among nearly 800 home based businesses in the UK, shows this sector of small businesses is thriving with the vast majority expecting growth this year. The extra work is expected to be absorbed by increasing efficiency of existing resources (53 per cent) or outsourcing contracts to freelancers – also based in their own homes (35 per cent). Twelve per cent said they would be taking on full or part-time employees as a result.
Illustrating the rapid recent growth of home based businesses, 75 per cent of those polled have been started within the last five years, with 25 per cent setting up in 2013, and almost ten per cent starting in the first month of this year.
The main reason cited by these businesses for starting from home were the lower start-up costs and two thirds stated that modern technology has been a critical factor in enabling them to run their business from home. One in ten businesses based at home previously had business premises but have subsequently moved to working from home.
And while over a third of those setting up business from home didn’t need funding to get started, those that did were most likely to have funded their businesses through personal savings. Twenty per cent are holding down part-time jobs in the early stages to avoid the need to seek finance. However, finding the additional finance to fund this year’s potential growth is considered a hurdle for 32 per cent of businesses polled.
Emma Jones, founder of Enterprise Nation said: “Home businesses are playing an increasingly important role in the British economy. The 4.5 million micro and small UK businesses contribute £1.6bn to the British economy - 75 per cent of these are registered as having ‘no employees’. The findings in our report suggest this statistic is likely to be because most of these businesses are outsourcing their work to fellow home-based workers and this fact is going under the statistical radar.
“It’s interesting to see these people are not reliant on banks at all. Low start-up costs at home negate the need to take on board complicated routes to finance for these entrepreneurs.”
It’s also great news for women, who appear to be leading the home business trend, with 67 per cent of those businesses polled started and run by women. And around four out of ten home based business owners are in the 45-59 year old age bracket with one per cent in the 70 years or over bracket. The under 25s represent around five per cent of home based businesses.
The most popular sector for home based businesses is business services (37 per cent), followed by craft at 19 per cent and retail at 10 per cent.
The rise of the home business also means increased prosperity for the regions – with 51 per cent stating they spent more money in their local area while working from home, rather than in urban areas of high density employment when in a job.
Darrell Sansom, managing director of AXA Business Insurance says: “As one of the UK’s largest insurers of SMEs and micro SMEs we are seeing a real growth in the number of new home based businesses coming to us to arrange the right protection for their start-ups.
“However, in order to protect them in their continued growth we need to understand who these businesses are and what makes them tick. This report is an important first step in doing this and we hope that we can use the findings to work with Enterprise Nation on ways to continue the growth of a really important part of British business.”