Earlier this week, the judging for the 2020 Wales Start-Up Awards was completed. As a result of the Covid-19 pandemic, the normal face-to-face interviews with the finalists did not take place. Instead, all of those shortlisted had to produce a short ten minute video about how they had set up their business, the challenges they faced and plans for the future.
Whilst it was something we would never have contemplated previously, the concept worked brilliantly well and enabled those entrepreneurs who had spotted the opportunity and taken the risk to turn an idea into a business to show how they had done that in their own way.
What was even more interesting was that out of 108 finalists that were competing across 26 categories, none had actually closed down and only a couple had stopped their operations during the Covid pandemic.
In fact, the vast majority had thrived during this period despite some considerable challenges with a number having to pivot into new products, services and markets.
This resilience was echoed in the latest statistics released last week from the Centre for Entrepreneurs thinktank using Companies House data.
This showed that whilst new business formations had dropped by 19% in March, 29% in April, and 3% in May as compared to the same months in 2019, it had grown by a record-breaking 47% in June.
Despite these major drops in the creation of new businesses between March and May, overall startup figures for 2020 were down by only 3% across the UK which, given the scale of the economic downturn over this period, is nothing short of a miracle.
And it would seem that the pandemic, rather than stifling enterprise, has led to entrepreneurs creating new businesses in response to the crisis. For example, in terms of entrepreneurial activity by sector, the data suggests evidence of an emerging ‘covid economy’ with major increases in disinfecting services (+400%), manufacture (+243%) and retail (+317%) of medical goods, manufacture of workwear (+227%), wholesale of pharmaceuticals (+196%), manufacture of cleaning preparations (+178%), specialised cleaning services (+85%) and research on biotechnology (+69%).
In addition, the number of consumer businesses that were able to serve customers in lockdown have also increased significantly including 13,904 new internet retail businesses (+110%), as well as growth in sports retail (+89%), games and toys retail (+89%), computer retail (+99%), bakeries (+58%), and clothing retail (+53%).
All UK regions and devolved nations saw growth in June with London and the West Midlands leading with 60% increase in the number of businesses. However, the devolved nations experienced the sharpest fall in formations during lockdown and the slowest recovery in June i.e. Scotland and Northern Ireland are down nearly 20% year-on-year while Wales is down 11%.
Within Wales, here are also considerable variations with Anglesey showing an increase of 38% as compared to a decline of 60% for Denbighshire. Other start-up hotspots for Wales over this period include Ceredigion and Newport.
One interesting trend within the Cardiff Capital region is the trend to open businesses outside of the Cardiff over this period with half of the local authorities in the region showing an increase of 7% growth in the number of start-ups as compared to a drop of 13% for Cardiff.
This may suggest that individuals are setting up businesses in their homes when they are not having to travel into the capital city combined with the temporary closure of all of the co-working spaces and incubators where such businesses would normally gravitate towards.
Therefore, it would seem that Wales is lagging behind every English region when it comes to the creation of new businesses during March-June 2020. Whether that is related in any way to the different support mechanisms and the restrictions that was placed on business in different parts of the UK will need further research but it is clear that more needs to be done in encouraging greater levels of entrepreneurship as Wales emerges out of the recession.
With the Bank of England suggesting that the UK economic downturn as a result of the Covid 19 pandemic will be shallower but longer, the fact that an additional 25,000 new businesses have been created in June 2020 as compared to 2019 is excellent news for the UK economy as a whole, especially as it is large firms that are currently shedding jobs across the nation.
Obviously, the challenge now for policymakers is not only to support those new businesses that are creating employment but to help them to grow so that they take on those individuals that have lost jobs in other businesses. That should certainly be one of the priorities for the Chancellor when he announces his Autumn budget later this year.