The discovery of the novel coronavirus in late 2019 shifted our realities drastically, and no one could have predicted just how much of an effect it could have on our everyday lives, let alone be able to prepare for the subsequent results adequately. Societies and economies worldwide experienced an unprecedented shock to their systems, and many now needed to find ways to replenish and rebuild to their previous state, or somewhere close to it. While society worked on protecting and maintaining its current state as much as possible, our economy took a hit.
The spread of COVID-19 saw many businesses closing their doors and the abandonment of our globe’s biggest capitals and high streets for the first time. It soon became difficult to envision when they were heaving with bustling shoppers and businesspeople.
However, with lockdown, the rise of furlough, and unemployment, the pandemic offered many people a ‘sink or swim’ opportunity. The break-in everyday routines gave people the time to finally take the leap of faith and bring to life the dreams and business ideas they had spent many years debating and putting on the back burner, which means that by September 2020, the British economy saw 4.63 million new companies registered, a 30% increase compared to the same period in 2019—giving the UK its largest third-quarter increase since 2012.
Potential factors explaining the rise in entrepreneurship
For those who have had the burning desire to begin their own business for some time, redundancy and a highly competitive job market would have encouraged them to get started finally. Before, they may have had difficulty finding the time to invest enough energy to give their business the boost they needed to achieve sustainable success. Still, the extra time they will gain from not needing to work would have allowed many the opportunity to set a solid foundation for their new ventures.
- Work from home/furlough
Like the previous point, working from home or being on furlough would have afforded many people extra time to dedicate to side businesses or develop new businesses. The increased sense of autonomy, free from commutes and work-related travel, and any other distractions that came with it, would have given many the time they needed to kickstart their business ideas.
- Increased Opportunities
The rise of COVID opened up many new markets and therefore a range of new opportunities. With a precipitated shift towards the digital world, running a business from the confines of your own home became the new normal state of many entrepreneurs. It allowed many the freedom to explore new avenues, especially for those following e-commerce trends.
Whilst this rise in start-ups during a global crisis may seem like an enigma, studies have shown this phenomenon has occurred on several occasions in times of calamity. Many innovative and successful start-ups and businesses have emerged from periods of crisis, examples including Dropbox, Uber, Airbnb, WhatsApp, Groupon, and Pinterest, all of which were founded during or just after the global financial crisis of 2007 and Alibaba’s Taobao which was founded during the SARS outbreak in China in 2003.
Which industries saw the most considerable rise in 2020?
The ‘COVID economy’ definitely presented itself uniquely compared to other circumstances. Whilst there have been some innovative business ideas that have transformed from the last year, most start-ups have been formed in direct response to coronavirus, either producing products or services to deal with the pandemic or in response to trends that developed during the pandemic.
In July-August 2020 companies manufacturing soaps and detergents increased by 64% year-on-year, disinfecting services rose by 70%, and wholesale pharmaceutical goods saw an upsurge of 55%. And the sudden urgency for scientific innovation allowed many small start-ups their chance in the spotlight. DnaNudge, the world’s first lab-in-a-cartridge consumer nutrition business, rapidly responded to the needs of the many during the novel coronavirus, re-coding its diagnostic chip for COVID-19 RNA, and creating an in-field test that provides results in around an hour. This significantly impacted the coronavirus testing initiatives and offered a quick solution for testing essential workers, such as healthcare staff.
The UK also saw an accelerated shift towards digital services and products and a growth in e-commerce and online shopping. A majority of trends seen during this tumultuous period can be explained by populations experiencing an extended stay in their houses, either working from home, on furlough, or unemployed, as a direct result of the coronavirus pandemic, and the spread of infection control measures, such as ‘social distancing’.
When broken down even further, looking at specific items or products that saw significant spikes during this period, a lot of these can also be explained by the lockdown phenomenon. Some of the products that saw the most significant increase were goods such as DIY supplies, home furnishings, electronic items, and sportswear, slotting into the overall lockdown trends spurred on by the nation-wide lockdown.
The growth in e-commerce is set to be the definitive economic take-away from this turbulent time. Many have argued that businesses that put e-commerce at the heart of their operations or were adequately prepared to quickly move their operations online and supply through e-commerce, were those who were able to thrive, even during the initial economic dip at the beginning of the pandemic. With the shift towards a digital economy already starting to occur before the emergence of COVID-19, the pandemic only served to accelerate it further, triggering changes in behaviour across a wider spread of the population that seem to have lasting effects. The Office for National Statistics (ONS) October 2020 Retail Sales Publication reported ‘online sales reaching higher than usual levels throughout the pandemic’, with online purchases representing 28.5% of total sales.
How to ensure a resilient economy moving forwards?
Larger corporations would benefit from taking inspiration from innovative start-ups. More innovation and at a grander scale is needed to ensure sustainability. Manufacturing firms who were able to repurpose their functions from, e.g. paints to hand sanitiser or automobiles to ventilators and responded with agility rather than inflexibility, were those we were able to seamlessly carry on their operations. Being innovative is a precondition of being resilient and is something that businesses should strive to be, especially moving forwards in light of the economic turbulence caused by the novel coronavirus.
How can Animo help?
Our expert consultants welcome the opportunity to support businesses with any new projects. With valuable and comprehensive experience in ensuring resilient business practice, our consultants can help guide key stakeholders during the beginning stages of forming new ventures. If you have any queries regarding services related to this matter, or any other business queries – get in touch today! Call us on +44 (0)207 060 0935, email us at email@example.com or fill out a contact form below, and one of our specialist consultants will be happy to offer their support!