Pandemic ignites UK’s strongest start-up boom in a decade

Bora Kirgiz became an entrepreneur only after the pandemic of coronavirus. He knew from the beginning that long hours as taxi driver were not right for him and his new marital life. His cousin offered him a commercial property for rent in Denton, which is a commuter town in northern England near Manchester.

He and wife Nalan fulfilled their dream of opening a café, Bona Couple Cafe & Lounge, shortly after the first lockdown ended.

“We cannot wait to open fully again on May 17,” he said. “I am very hopeful. We have good customers who really want to come here again.”

The unexpected outcome of the year-long pandemic has been a strong start-up boom in Britain over the past decade. Many people who have decided to go it alone have done so because they lost their jobs. Kirgiz, 44, reassessed her priorities and started their own business.

After the first reopening in summer 2013, business creation in the UK increased. Key drivers were low interest rates, government support and more people shopping online.

Bar chart of High streets in Great Britain with the biggest rise in independent traders showing Pandemic entrepreneurs

According to research company the Local Data Company, Denton has been in the forefront. Since March’s first lockdown, Denton has seen the greatest increase in independent businesses on high street in Great Britain. There have been 27 new openings and 13 closings.

Bona Couple is one of many new hospitality businesses that are bringing new life to a town still reeling from the closure of its hat factories 30 years ago. Denton’s centre was plagued for years by empty shops after banks, food shops and chains closed. 

Erdington, a suburb in Birmingham, is in second place. Birkenhead near Liverpool, Bradford in West Yorkshire, and all three struggling post-industrial areas are also in the top 10 most closely monitored 1,200 high streets. 

Barbers are the most well-known business, with 1,969 businesses opening and 1,234 shutting, a 5.1% increase. There are also a lot of beauty salons, grocers, and ice cream parlours.

According to Companies House figures for the fourth quarter of 2021, there was more than 810,000 business incorporations within the UK. This is up 22 percent compared to the same period lastyear.

Line chart of '000 showing The number of UK business incorporations soared during the pandemic

The number of companies that were incorporated in the third quarter last year was 221,000, which is the highest figure in the past decade. The first three months of this calendar year came in second, with more than 211,000 incorporations.

This trend continues into the second trimester. According to the Office for National Statistics’ weekly data, the number of business incorporations rose by 20% in April compared to the same month in 2019.

The same story is told by the Interdepartmental Business Register. This government record contains 2.7 million companies. While the figures are not as precise as the Interdepartmental Business Register, which does not include single-person limited companies and non-profit organisations. However, the growth pattern is clear.

It was able to record that there were 137,000 new UK businesses in the first three months. This is an increase of 14 percent compared to the previous quarter, and the highest number since 2017’s quarterly records.

This follows a 24 per cent annual increase in business creations in the last quarter of 2020, which “is contrary to expectations that business creation would be lower due to the coronavirus pandemic”, stated the ONS, which published the data.

Bar chart of Count of business births, Q4 2020- Q1 2021, annual % change showing UK business creation is strong in retail and logistics

The top three industries that saw the most growth in business creations in the quarter were logistics, wholesale, and retail. These trends were consistent with the rise in new businesses to address the increasing demand for online shopping as well as home delivery services.

Ronald Nyakairu, senior manager for Insight & Analytics at LDC, said that changing work and holiday patterns had been key contributing factors.

“The increase in staycations has provided a boost to local businesses in popular seaside towns such as Scarborough and Great Yarmouth, while the move to working from home has seen often neglected commuter suburbs like Kilburn, Denton and Erdington enjoy an increase in footfall.

“With vacancy rates at record levels, the number of units available to let has never been greater. This has facilitated generous property terms for independent retailers including rent-free periods or landlord contributions.”

Andrew Gwynne (local MP) says this is definitely true in Denton. He said that units are rented out almost immediately after becoming vacant.

He said that Manchester residents searching for homes with gardens because they work from home more often had also been a catalyst for the start up boom. “The traditional terraced housing in old Denton used to be short term tenancies. They are now being bought by families. It’s gentrifying.”

These new arrivals bring their tastes with them, supporting a new delicatessen/artisan bakery.

Yusuf Ceyhan: ‘We have all had enough of staying in. We want to spend money and come somewhere classy’ © Jon Super/FT

Yusuf Ceyhan will soon open a wine bar in the vicinity of his Denton restaurants. He has lost more than £100,000 in the pandemic but is investing another £70,000 in his new venture.

“We have all had enough of staying in. We want to spend money and come somewhere classy,” he said. 

Even though indoor dining was banned in 2013, local entrepreneurs transformed The Postroom, an old post office located in the town square, into a chic restaurant and cocktail bar.

Ross Anderton: ‘We are all Denton lads and we want to give locals the same quality you get in central Manchester’ © Jon Super/FT

Ross Anderton used the opportunity to travel the world building stage sets. He now manages the venue. “We are all Denton lads and we want to give locals the same quality you get in central Manchester,” he said. “You don’t have to spend £20 on a taxi into town to have a good night out.”

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