Redundancy forces people to go it alone
Rise in ‘necessity’ entrepreneurship over ‘opportunity’

A new report from Opal, the B2B division of the TalkTalk Group and UK's leading provider of next generation communications technology for business, has revealed that the reduced hours and threats of redundancy of the last 12 months have forced employees across the country to go it alone, creating a new breed of the “accidental entrepreneur.”

With unemployment rates still high and the promise that there could still be more pain to come for the British jobs market, many would-be employees have become “accidental entrepreneurs”. What’s more, Opal’s study has found some early evidence to suggest that ‘necessity’ entrepreneurship is increasing and ‘opportunity’ entrepreneurship could be decreasing – placing new pressures on UK start-ups.

The report, commissioned by Opal this month, surveyed the owner-managers of 250 start-ups across the UK, established in the last 12 months, asking what motivated them to start and exploring the pressure points along the way.

More than a third of those surveyed (36 %) said that recent redundancy had been the catalyst to launching their own business, 20 per cent had been forced to launch after having their hours slashed by their employer, and a further 15 per cent had gone it alone after falling victim to pay freezes or pay cuts.  Relatively few (12 %) said they had always had the idea to go into business, with the majority of respondents (28 %) saying they had come up with concept close to launch.

Pressures

Opal’s report has revealed the additional pressures faced by necessity entrepreneurs, who are quite literally starting up to survive.  Many (43%) are being overwhelmed by the challenge of becoming their own HR person and billing department and IT expert.

Asked what the main pressure had been on them since starting, a third said they had struggled to manage their finances, 20 per cent found it difficult to deal with HR issues and a further 15 per cent found had struggled with the maintenance of IT and Telecoms contracts and equipment. 

In the first six months of launching, a third of respondents said they were working more than an 80 hour week, with a further ten per cent working up to 100 hours.

Emotionally, starting up has also taken its toll, with 37 per cent of respondents admitting to having suffered from depression since they launched their own business.  A further 23 per cent said they had suffered problems in their relationships, 17 per cent endure regular insomnia and 12 per cent have noticed a deterioration in their general health.

This new breed of accidental entrepreneur could also be impacting on employers’ productivity as almost a third admit to working actively on their new venture during office hours for up to six months prior to launch.

Chris Collinson, Director of Small Business at Opal, said: “The recession has proven to be a catalyst for a new breed of entrepreneurs, accidental entrepreneurs who often have not had the luxury of time to research and seek advice, so can quickly find themselves out of their depth. 

“The findings of our research have demonstrated that in their haste to start-up, business owners are making costly mistakes are the outset.  Twenty per cent of those surveyed said they had chosen to sign for expensive leased premises before becoming established and a further 33 per cent said mistakes made with their telecoms and IT provision, were now proving to be costly.  It is vital that potential entrepreneurs take the time to seek advice at the outset, to avoid making costly mistakes further down the line.”

Opal, part of the TalkTalk Group, is a single supplier for the small business, covering broadband, voice and mobile. Working with more 200,000 business and public sector customers nationwide, it provides consultancy services and cost-effective network-based solutions, with no need for prior technical knowledge.

More information about the options available to businesses are available from Opal direct. Visit www.Opal.co.uk for more details.