A new study has found that almost 7,000 businesses were dissolved in 2022 just months after they were incorporated.
Analysis of businesses that were incorporated and dissolved in 2022 by Real Business Rescue has revealed the industries where new businesses struggled the most. Almost 7,000 UK businesses (6,928) that were less than a year old were dissolved in 2022; on average, these start-ups lasted 164 days; the most common age, however, was just 92 days.
The findings show that the sectors where new businesses are most likely to fail in the early days are:
- Online retail stores;
- Property rental;
- Hairdressing and beauty businesses;
- Takeaway food shops and mobile food stands;
- Management and IT consultancies;
- Freight transport.
More than one in five (22%) of these short-lived businesses were London-based. Birmingham had the second highest number of firms that closed months after they were incorporated, followed by Cardiff, Manchester and Leicester.
Shaun Barton, national online business operations director at Real Business Rescue, said: "Our research has highlighted the intense strain put on new businesses over the last year … while there are a whole host of reasons to strike off a company, for these new businesses, it is likely that they never got off the ground at all.
"Many small businesses saw demand for their products and services fall as the economy struggled for growth and consumers reined in their spending. Rising inflation and soaring interest rates affected all businesses new and old and, despite introducing government support programmes, the sharp increase in energy bills has also contributed to the struggles facing businesses over the past few months.
"Now with the government scaling back support and protection for businesses in relation to their energy bills from April 2023, we expect to see corporate insolvency and liquidation rates rise considerably in the coming months. New businesses formed this year are doing so in a particularly volatile environment."
Searching for side hustles
Despite the challenges of running a business, the cost of living crisis seems to be fuelling an interest in side hustles as Brits search for ways to earn extra money. A study by Fasthosts has found that Google now sees approximately 3,800 Brits per month searching for "easy ways to make money" and 24,000 looking for "how to make money online".
According to the research, the most popular side hustle searches in the UK are:
- Paid surveys: With about 5,200 searches a month on average, the phrase "paid surveys" has seen a 49% increase in search volume between December 2021 and now.
- Sell clothes online: Since December 2021, the term "sell clothes online" has seen a 72% increase in searches to about 3,300 per month.
- How to make money on Tiktok: This search has seen a 24% increase in searches since December 2021, averaging 2,600 a month.
- How to sell feet pics: This bizarre side hustle has seen a 96% rise in searches.
- How to become a virtual assistant: This has seen the highest increase in searches in the past year with a 170% rise.
- How to start dropshipping: This could be a lucrative opportunity as it has not yet become an oversaturated market, with just a 25% increase in searches.
Written by Rachel Miller.