As businesses struggle to recruit talent and vacancies continue to grow, research from Oracle NetSuite in the UK has revealed the situation could get even tougher as a large proportion of people plan to leave employment in favour of founding their own business.
Of the 2,000 UK workers and business founders participating in the study, 85% said they want to start their own business. Eighteen percent plan to do so by the end of 2022, while a further 62% expect to branch out on their own within the next two years.
Adam Taylor, who founded PetShop.co.uk in 2010, says the huge shift towards people wanting to be their own boss makes sense in the context of the rise of the entrepreneur and the influence of social media. He noted that when he was at university, the top jobs to go for were traditional sectors like finance or law; for the next generation that moved to tech giants like Facebook, Apple and Google; now the trend is entrepreneurship, driven by a flurry of successful UK start-ups like Gymshark and Lounge. He says:
Because of the huge success and fast growth of them, awareness has risen and it has probably given people a real confidence realizing this isn't something that you have to spend years developing and building. Part of it's been popularized by that. On top of that are the whole Instagram and social media entrepreneurs, who have their channels to promote products and then launch their own lines as well.
The fact that eight in 10 people plan to start a business in the current economic conditions is startling, and UK business founders appear well aware of the challenging timing, citing rising inflation, a possible recession, geopolitical events and supply chain disruption as their top worries.
Taylor sees these concerns as very justified, adding an additional challenge for founders that the ability of investors to loan money at present is decreasing as well. However, while there is extra risk and extra potential cost for people launching a business in the current climate, there could be upsides as well, he adds:
We always see with any disruption, there is also a huge opportunity because other people will be scaling back their investment and maybe not launching new products. As an entrepreneur, because you've got cheaper overheads and more flexibility, you can often outmanoeuvre them.
PetShop has experienced strong growth, with 50% revenue increases year-on-year for the past six years, and turnover rising to £20m by December 2021. Taylor says technology has been vital to this success, adding that tech is the most essential thing for any business today, whether it's managing accounts or stock, running a website or as a communication tool:
We wouldn't have been able to be successful without it. With any technology that’s a platform or infrastructure, it's how you utilize it. A lot of people have access to the same technology, but then the creativity or the entrepreneurial side comes in around how do you best utilize that to offer the very best customer service, offer the best supplier relationships and offer the best business decisions as a team to make sure you are ahead of your competitors and winning market share.
PetShop has used technology to find ways to be the cheapest by not just focusing on price, via subscription, bulk-buying and auto pricing, Taylor explains:
Plus all the data we collect from the transactional side, from the website performance and so on, we anonymize it and share it back to the brands. That's become a whole revenue stream in itself. So technology is the backbone of our business, it's been key to our success.
Respondents to the survey are clearly aware of the importance of technology, with 98 percent of future founders saying technology will play a key role in the success of their business, while 87 percent of founders using cloud technologies are seeing the benefits it offers, from running their business remotely, getting an accurate view of the business and conducting accurate financial reporting.
Taylor agrees that cloud is definitely the only way to go for companies nowadays, based on it being accessible anywhere, and the ability to see live, accurate information:
The other thing we've benefited from hugely is the the free investment and the free updates in your software system. Not all cloud systems are continuously innovating, but if you choose the right ones, such as Oracle NetSuite or Shopify from the e-commerce perspective, you basically are piggybacking on millions of pounds of investment in R&D that you yourself couldn't afford going into your product.
It definitely was one of the best business decisions we've made, to futureproof our business, we benefited from the continual updates but it's also made everything possible, all the functionality we wanted to do.
PetShop is in the process of launching some new features, including cost per day calculations, taking into account the higher quality dog foods, which require fewer grams per meal. Taylor explains:
This enables us to have all our products priced per meal on a mass scale, so this more expensive bag you feed less so actually the cost per meal is less. We can do that because our cost prices and our accounting systems are all in NetSuite and they speak seamlessly to our e-commerce side.
As well as the right technology being crucial to the success – or not – of a new business, Taylor advises potential founders to seek expert help and financial support. PetShop was established with the help of a £5,000 loan from the Prince's Trust, and Taylor said joining some form of business mentorship scheme or program really helps clarify what the priorities and initial structures should be.