Startup Statistics 2024 UK – Start Up Success and Failure Rates

Startup Statistics 2024 UK - Start Up Success and Failure Rates
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    Startup Statistics 2024

    It’s relatively straightforward to start a business in the UK. But making a success of one? Well, that’s down a whole host of factors and is anything but easy.

    One thing we love about the UK, though, is that entrepreneurial spirit is particularly prevalent in the smallest companies and startups. But just how many companies are started in the UK each year? How has it changed over time? And how many Brits who haven’t done so yet would like to start their own company in years to come?

    We’ve polled the public, we’ve crunched the numbers, dived into Government data and now present our startup statistics roundup for 2024.

    Archimedia Accounts has been dealing with startups for over 15 years, and we have a lot of commercial knowledge and experience, not just in accounting.

    The Fast Facts

    If you’re only here for the headline figures, here are the most important statistics you need:

    • More than 1 in 20 people in the UK has already started their own business
    • Over a third (35.2%) want to start their own business in the future
    • Men are likelier to have started their own business than women (6.6% of men vs 3.96% of women)
    • Over half of those aged 16 to 44 would like to start their own business in the future
    • Ambition is particularly high amongst the 24 to 35 year olds, where almost two thirds cite their desire to start their own business
    • In the UK, almost 1 in 10 of those aged 55 or over has, at some point, started their own business
    • There are over 5 million companies in the UK
    • Almost 30% of companies started in 2020/21 (height of the Covid Pandemic) failed to survive 2 years
    • Just over two thirds of companies formed in 2016/17 survived 5 years
    • Over 5% of startups fail in the first year
    • Just over a third of startups make it to 5 years, according to our survival rates
    • The majority of startups fail in the first 4 years

    Entrepreneurial Ambition: How Many People Want to Start a Business?

    In January 2024, working alongside a market research company, we polled 2,000 people aged 16 and over in the UK about whether or not they would like to start their own business.

    We asked:

    To what extent do you agree or disagree with the following statement? I would like to start my own business in the future

    • Strongly agree
    • Somewhat agree
    • Neither agree nor disagree
    • Somewhat disagree
    • Strongly disagree
    • I don’t know
    • N/A – I have already started my own business

    It turns out that over a third of people in the UK, according to our statistics, have the ambition to start their own business in the future. 35.2% said they either strongly or somewhat agree with the statement.

    We also found that more than 1 in 20 people have already started their own business, but we’ll talk about that more shortly.

    Here’s the top-level data from our survey:

    To what extent do you agree or disagree with the following statement?

    “I would like to start my own business in the future”

    Response to question above

    % of people who gave this response

    Strongly agree16.55%
    Somewhat agree18.65%
    Neither agree nor disagree14.85%
    Somewhat disagree7.90%
    Strongly disagree30.65%
    I don’t know6.15%
    N/A –  I have already started my own business5.25%
    Total of those who either strongly or somewhat agree35.20%
    Total of those who either strongly or somewhat disagree38.55%

    Percentage of people who would like to start their own business

    What we learned is that:

    • Over a third of over 16s in the UK would like to start their own business
    • More would rather not though
    • 1 in 20 already has

    But we see some really significant differences in the ambitions of people to start a company when we break it down by age and, to a lesser extent, gender too.

    So let’s dive into that.

    Gender and Startup Ambitions

    We dived into our numbers in a little more detail to find out whether men or women are the likelier to have startup ambitions.

    To what extent do you agree or disagree with the following statement?

    “I would like to start my own business in the future”

    Response to question above% of men who gave this response

    % of women who gave this response

    Strongly agree19.79%13.53%
    Somewhat agree17.62%19.61%
    Neither agree nor disagree15.34%14.40%
    Somewhat disagree8.08%7.73%
    Strongly disagree26.84%34.20%
    I don’t know5.70%6.57%
    N/A –  I have already started my own business6.63%3.96%
    Total of those who either strongly or somewhat agree37.41%33.14%
    Total of those who either strongly or somewhat disagree34.92%41.93%

    percentage of men and women who want to start a business, UK

    The statistics show that men are more likely to want to start a business than women. And more men agree with the statement than disagree.

    It’s the reverse for women, where 41.93% do not want to start a business in the future.

    Age and Startup Ambitions

    Where we see considerable differences, however, is in age groups.

    When we look at the proportion of respondents by age who either strongly agree or somewhat agree that they would like to start a business in the future, this is what we see:

    Proportion of people by age who agree with the statement

    “I would like to start my own business in the future”

    Age

    Proportion of people

    16 – 2457.75%
    25 – 3463.55%
    35 – 4450.63%
    45 – 5431.90%
    55+10.31%

    percentage of people who would like to start a business by age

    The age group with the highest ambition to start their own business, according to our figures, is the 24 to 34s, where almost two-thirds would like to do so.

    The second most likely group to say they wish to start their own company is those aged 16 to 24, where 57.75% agree.

    Just over half of those aged 35 to 44 want to start a business.

    For the 45 to 54 age group, the figure drops to 31.90%, though almost a third still say even at this point in their working lives they’d like to start up in the future.

    And even nearing retirement age, 1 in 10 of those aged 55 and over would like to set up their own business.

    The numbers show that in the UK in 2024, there is plenty of appetite across all age groups to become one’s own boss!

    Regions Where People Are the Most Likely to Want to Start Their Own Business

    We went a step further and looked at responses by region to determine where in the UK people are the most likely to have the desire to run their own startup.

    Here’s what the data told us:

    Proportion of people by region who agree with the statement

    “I would like to start my own business in the future”

    Region

    Proportion of people

    Greater London55.38%
    West Midlands39.20%
    North West35.00%
    Northern Ireland34.55%
    Scotland34.52%
    Yorkshire and the Humber33.74%
    South East32.49%
    East Midlands29.45%
    South West29.31%
    East of England28.88%
    Wales26.60%
    North East23.75%

    proportion of people who want to start a business by uk region map

    Perhaps unsurprisingly, Greater London stands out significantly, with over half of the population (55.38%) expressing a desire to start their own business, which is considerably higher than in any other region. Does this reflect a stronger entrepreneurial spirit or simply more perceived opportunities in the capital?

    At the opposite end of the scale, fewer than a quarter of those in the North East (23.75%) say they would like to start their own business. While a North/South economic divide may well exist, it seems it’s not North or South which determines entrepreneurial ambition.

    The top 3 regions where people are most likely to want to start their own business are made up of one Southern region, one Midlands region and one Northern one.

    Startup Entrepreneurs by Age, Region and Gender

    Having given our survey, the respondents the option to answer “N/A – I already have started my own business,” we can see which age groups, which gender and which regional origin the UK’s startup founders are most likely to be from.

    When we look at the regional data, we see a slightly different picture in terms of those who already have versus those who want to.

    Proportion of people by region who answered that they’ve already started their own business

    Region

    Proportion of people

    South West8.05%
    Yorkshire and the Humber6.75%
    South East6.50%
    North East6.25%
    East Midlands6.16%
    Scotland5.95%
    Wales5.32%
    West Midlands4.55%
    Greater London4.23%
    North West3.64%
    Northern Ireland3.64%
    East of England2.14%

    proportion of people who already own a business by UK region map

    While people in Greater London are considerably more likely than those elsewhere in the country to say they want to start their own business in the future, the region is by no means the likeliest to have done so already.

    In fact, a higher proportion of people in 8 other regions have started their own business. The South West is where people are the likeliest to say they’ve already started their own business (with 8.05% of people stating this).

    In the North East, where under a quarter of people said they wanted to start their own business in the future, 6.25% say they already have, putting the region 4th in this particular table and five places higher than London.

    Our survey didn’t ask reasons for starting or wanting to start a business. But what we could hypothesise is that the cost of living in London (and the cost of things like renting business premises) makes starting a business of any kind potentially more expensive and risky than in other parts of the country.

    Similarly, wages are typically higher in the capital, so there’s an argument that job security is a more attractive prospect.

    Proportion of people by gender who answered that they’ve already started their own business

    Gender

    Proportion of people

    Male6.63%
    Female3.96%

     

    So we can see that men are considerably likelier to start a business than women in the UK in 2024.

    When it comes to age, you’d expect a fairly predictable scenario the older people are, the likelier they are to have (at some point) started their own business. And that is indeed what we saw:

    Proportion of people by age who answered that they’ve already started their own business

    Age

    Proportion of people

    16 – 241.16%
    25 – 342.41%
    35 – 442.52%
    45 – 545.21%
    55+9.01%

    proportion of people who have already started a business by age bar chart 2024

    The numbers we saw suggest that by the time someone in the UK reaches the age of 55, there’s almost a 1 in 10 chance they’ll have started their own business.

    Hats off to the 1.16% of the youngest respondents who’ve already taken the plunge.

    How Many Businesses Are Started in the UK Each Year?

    The Office of National Statistics publishes data about new startups each year in the UK. Their data shows that in the year 2022/23, the number of companies in the UK surpassed 5 million. And they also share information about new companies formed. We took a look at those numbers for the last few years:

    Number of new companies formed year after year

    Year

    Number of new companies formed

    2016-17664,750
    2017-18620,285
    2018-19672,890
    2019-20665,495
    2020-21810,316
    2021-22753,168
    2022-23801,006

     

    number of new companies formed from 2016 to 2023 line graph

    Startup Survival and Failure Rates in the UK

    But how many survive? Number of new companies formed by year from 2016 to 2023

    We hear all sorts of figures banded about when it comes to the survival rates of small businesses. But the ONS figures shed some accurate light on the question. Here’s the data:

    Proportion of Companies Formed by Year Surviving

     2016-172017-182018-192019-202020-212021-22
    % of companies surviving 1 year95.20%93.70%94.80%94.60%92.90%93.40%
    % of companies surviving 2 years71.10%72.90%74.10%74.60%71.20%
    % of companies surviving 3 years54.10%56.10%57.60%55.90%
    % of companies surviving 4 years44.90%46%47.30%
    % of companies surviving 5 years38.40%39.60%

    What we can see is:

    • More than 1 in 20 companies founded during the height of pandemic (2020-21 year) failed in the first year and by the end of the second year almost 30% had failed
    • Taking an average of all first year failure rates since 2016/17, we can see that 5.85% of all companies fail in the first year
    • The majority of start ups fail within the first 4 years

    So what makes it so hard to hit the 5 year mark?

    According to our co-owner and Client Finance Director, Chris Demitrou, there are a number of reasons for these low five year survival rates. He comments:

    “Why do so many businesses fail to hit the five year mark? Well, there are a few reasons but one of the most common is a lack of understanding when it comes to cashflow. It’s common for new founders to underestimate their costs and overestimate their sales. Unless you’re incredibly conservative in your projections, you do risk finding yourself in hot water early in the lifetime of your business.

    Another common thing we see is that businesses get through year one often successfully when the owner is working alone. The owner is putting in all the hours and doing all the work, handling sales, customer service, operations and all the admin. When they get to a point where they bring in staff, costs start to rise dramatically and this can lead to financial difficulties if not managed properly. There’s also the added time required to actually manage these people.

    We also see people just having had enough! If you run a business by yourself (or handle most of it by yourself) it can be stressful. Many founders who are still working solo get to a point a couple of years in where they’re simply stressed and burnt out. Imagine yourself in that position of running a business by yourself, possibly not earning as much as you did when you were employed and then also finding yourself working far more hours than you ever have. Then imagine a great job opportunity comes up. Lots of founders in that position give up on the business and go back into employment.

    Ultimately, I think what lots of failure comes down to is something that is outlined extraordinarily well in a book called The E-Myth. It’s that lots of people assume that just because they’ve worked for someone else in an industry and been very successful in doing so, they can set up their own business in that industry. But ultimately running your own business requires different skills to working successfully in someone else’s and this too can contribute to people giving up or their businesses becoming financially unviable.

    It’s always a shame to see businesses fail early. But we take heart from the fact that over a third survive five years, which is no mean feat at all.”

    Our friendly team of certified accountants based in Nottingham deliver top-rated accounting services to help small businesses and limited companies soar. To learn more about our services, please contact us today.

    So What Does the Future of Startups Look Like?

    We expect to see more and more businesses founded each year, and it will probably only be a few years until we’re at 6 million businesses established in the UK.

    However, it’s an increasingly tough landscape for businesses to compete in, with a cost of living crisis, Brexit complicating exports in many ways and more competition than ever before. So we wouldn’t expect to see an improvement in the startup survival rates any time soon.

    What do we love, though? It’s the fact that so many Britons give it a go. The entrepreneurial spirit and ambition of people in the UK, coupled with the relative ease with which it’s possible to start a business here, make this one of the best places to start up anywhere.

    We’ll see you in 2025 for our next round-up.

    Picture of Chris Demetriou

    Chris Demetriou

    Chris is Head of Business Advisory​ at Archimedia Accounts and is a specialist in tax. For more advice book a FREE consultation:

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