Business birth rates are simply the number of businesses which start in a year and the figure is compiled by the Office of National Statistics. The ONS also publish a figure for business death rates which covers closures. The source of the figures is primarily from tax offices such as PAYE and HMCE (VAT). It does not defer to the less reliable data of the number of companies formed. The ONS figure claims that 345,000 businesses were 'born' in 2013 whereas Companies House advise that 517,210 companies were formed.
The headline story is that the business birth rate increased by a significant 28.5% in 2013. The figures for the previous year are published in November, so we cannot see the 2014 figures. However, we know that there is a culture of start-ups in the UK so they will be following a similar trend.
Not all of these start ups will be classified as small businesses, but we can say that most of them will be. The Federation of Small Business estimate that 47.8% of employees in the private sector work for small businesses. A small business is defined by the Companies Act as one that does not have a turnover of more than £6.5 million, a balance sheet of more than £3.26 million or more than 50 employees, so there will be some fairly substantial companies in this bracket.
This is clearly a significant area of opportunity for recruitment consultants. Small businesses are less likely to have internal recruiters or the skills to recruit effectively in-house. They may also have less time to dedicate to recruitment.
There are also more specialist, niche areas which may provide opportunities. Although at this point in time the business death rate is not rising at the same speed as the birth rate it is likely to increase over time. There will be a lag but it is unlikely that businesses start ups will simply rise exponentially. This means that there will be a number of people who have started companies which closed down who may need to consider returning to work as an employee.
Company directors and business owners can have a particularly difficult time if their company closes down. They will not be able to claim the redundancy that employees can and often they are unable to claim benefits.
One example of such a niche opportunity is the reallocation of armed forces personnel. An industry was created around retraining and recruitment. Could the same opportunity arise in a couple of years' time for entrepreneurs in need of work? It is notoriously difficult to employ former entrepreneurs but they will have some very useful skills including networking, sales skills and high drive.
There are opportunities in this significant area for recruiters who are prepared to predict future challenges and find viable solutions.