The outcomes from a chaotic 2020 are not entirely bleak, in fact, certain areas of UK businesses have experienced their healthiest growth for some time. Specifically, the number of start-ups increased exponentially towards the final few months of the year. This may seem counter-intuitive, many businesses have been brought to their knees by the pandemic so why is this the case?
Certain industries have certainly shrunk across the last 12 months. Sectors such as retail and hospitality have not only meant furlough for the lucky ones but job loss altogether for those most unfortunate. While the full effect on UK unemployment is likely to not be fully seen for a long time yet, there can be no doubt the forced time not working has led others to take the plunge and start their own business.
Furthermore, those now tasked with working from home have seen a shift in their mentality towards commuting. Where once the morning journey into work seemed like a necessity, now to many UK workers a career that allows remote working in some capacity is essential. The impact of not adapting is already becoming clear, with 1 in 3 of those aspiring to start their own business stating lack of flexibility around work and home life as a key reason.
The effect of COVID on some industries has also caused a positive surge in startups. Compared to 2020 Q1 there was around a 16% increase in new businesses that focussed on technology. The requirement for home working solutions and improved online infrastructures means the demands created by national restrictions on travel have had at least one benefit albeit small in the grand scheme of things.
The Lean Advantages of Start-Ups
While being your own boss can seem overwhelming at first it doesn’t come without its perks, not least being able to set your own hours. Opportunities to generate a higher income for business owners are there for smaller businesses thanks to their lean nature.
While larger businesses have complex overheads, ranging from staffing to commercial rent on an office, with a newer company the costs incurred are significantly easier to keep on top of. In fact, the average number of employees for a newly found company is just one. This highlights just how common it is to ‘go it alone’ and start your own business.
But you can’t be alone. No matter how efficient one person maybe there is no way to absorb all that is needed internally when running a business. That’s why the majority of business owners turn to alternative solutions, such as establishing longer-term partnerships with a third party.
The most commonly utilised outsourced component is the financial side of the business. Having an accountant to help maintain the books is well-trodden ground for companies of all sizes, from self-employed labourers to larger corporations. However, in modern business, there are numerous areas that need to be addressed no matter how small the company is.
Insurance Coverage As a Stumbling Block
An aspect that certainly requires expert help is insurance cover. For those starting their first company, the scale of protection needed is often not fully realised. Furthermore, the policy types, processing and admin required is likely too much to keep internal even for those that are more aware of the insurance industry.
That’s why when thinking about startup insurance many new businesses are turning to expert brokers to ensure that they are protected from risks. They can offer startups the advice they really need, including what legal cover is required and what coverage is all but a necessity.
A skilled insurance broker can also provide some simplicity to the coverage process, with a more unified solution. The breadth of cover types required is complex to manage for those who chose to acquire coverage themselves. More policies mean not only more time to apply but also a much greater chance for error.
When working with a new business a broker can offer not only an expert opinion on policies required but also help ensure such coverage protects adequately and minimises inherent risks. Insurance policies that are often recommended within a unified startup insurance policy include:
- Professional Indemnity Insurance, a legal requirement in some sectors
- Employer’s Liability Insurance
- Public Liability Insurance
- Product Liability Insurance
- Data & Cyber Risks Insurance
- Office Insurance, including Contents
- Marine Cargo Insurance
By identifying an experienced broker early in the business inception a UK startup has a unique opportunity to create a long term partnership. The longer this relationship continues the better understanding of the company is built, and coverage can become effective and more efficient.
This is not only important for reducing internal strain on getting cover but also means insurance policies can be correctly updated. For new companies, the rapidly changing nature of the business means the details of policies may also need to be updated. By retaining the services of an experienced broker it becomes much easier to keep policies up to date and keep coverage as wide as possible from risks.