When the recession first hit, many business analysts thought that the company formation sector would be among the worse affected. However, recent reports have found that if anything, the recession actually acted as a stimulus to company formation.

Recent figures released from Companies House reveal that the number of company formations registered at Companies House have increased by ten per cent this year, compared to the same period last year.

While, in a context of restricted access to finance and difficult economic conditions, many people may be surprised to hear that company formation figures are actually up, some leading industry experts, such Mark Whithill of business consultancy ‘White & Co’, actually expected the increase to be higher. He comments;

“The recession was full of surprises and the latest figures from Companies House just go to show that no expert can predict the tenacity of the UK’s entrepreneurial spirit”

Whithill also claims that the recent Emergency Budget, with its provisions to help encourage small businesses, will help increase recent company formation figures further.

The fact that the number of graduates considering company formation has risen by almost twenty per cent since the economic downturn, is a well documented fact. But what about the other demographic which is on the up?

Recent figures reveal that the number of people aged 60-75 considering company formation has risen exponentially in the past ten years. This can be seen as a consequence of many factors; improved living conditions, the fact that people live longer and a change in the perception of what the concept of ‘retirement’ really means.

It is a well known fact that the UK has an aging population and as the government changes to the default retirement age from sixty five and looks to increase the age from which people can claim a state pension, enterprise and industry in the UK are going to be forced to rethink their perception of age.

Matthew Greenburg, formed his IT Company last year at the age of sixty seven, he comments; “I had worked in the engineering industry for a large corporation for over thirty years. Over that time technology and systems changed exponentially and I was forced to change with it. I became extremely interested in IT and systems and once I was at retirement age I decided I wasn’t reading to stop learning, so I formed my own company.’

While the Emergency Budget didn’t include any great surprises for the small business and company formation sector, its implications will have a number of consequences for enterprise in the UK. We ask a number of small business owners and owners of recently formed companies, what they think about the coalition’s Emergency Budget June 2010;

Michelle Dylan, owner of an online retail company

I was really interested to see how the Liberal Democrats and Conservatives would overcome any ideological differences to formulate the coalition’s first real piece of economic policy and surprisingly I am impressed. Yes the increase in taxation will be tough for all small business owners – especially those like me who are in the retail sector – but I don’t think the impact reducing National Insurance and Corporation tax should under estimated.

The one area where I do wish the government had listened more to the feedback of many business owners – of which Lord Alan Sugar was one – is increasing Capital Gains Tax.

He talked of extending the Enterprise Finance Guarantee scheme. However, the EFG is broken! It was supposed to help banks lend to entrepreneurs without requiring large personal guarantees, but the banks are not honoring that and still will not share any of the risk. The EFG needs fixing before it gets extended.

Sarah Wilson, entrepreneur and owner of her own PR Company

I was encouraged by the Emergency Budget, as the changes in National Insurance and reduction of Corporation tax indicates that the coalition government is making an effort to positively support the SME sector.

However, I think that the budget ignored one of the main issues which are facing small businesses – a limited access to finance. Sure they said that they plan to extend the Enterprise Finance Guarantee Scheme, but the fact is it is not working ; banking still aren’t lending to small business and this fact not only needs to be address by the government, but also acted upon

You may or may not be aware that the Made Simple Group via www.companiesmadesimple.com were the first company formation agents to set the benchmark for forming a company online for under £25 – at just £24.99 + VAT.

About 8 years ago now, we revolutionised company formation – making it totally accessible to any aspiring company director by being both affordable and accessible via a simple online process.

Of course, being the leader in the market always sparks fierce competition – and so it’s hardly surprising that over the years, a whole tranche of online company formation agents have been born – some purporting to offer lower prices than ours (only on the advertising surface however, as they don’t advise their unknowing customers that the prices they promote don’t actually include the £15 Companies House filing fee, until they get to the checkout! – naughty).

But that’s ok – tough competition keeps us on our toes and spurs us to continuously innovate and improve our processes – ensuring that we remain steadfast as the market leaders, offering the ‘simplest’ online company formation solution in the UK.

‘Let’s try it and see’ is the Made Simple ethos – and so we’re always open to testing out new ideas from the team. Following on from the success of our recent ‘Deal of the Week’ campaign – we’ve decided to reduce our flagship ‘Bronze’ company formation package (usually £24.99 + VAT) to the outstanding offer price of just £16.99 + VAT. And of course, at Companies Made Simple – we’re totally transparent with our pricing, what you see is what you get – there are certainly no hidden catches – if we state £16.99 + VAT, then £16.99 + VAT it is.

Now that means two things – 1) we’re genuinely offering the cheapest company formation package in the UK – and 2) with our £35 Barclays Bank Account Cash Back offer, it actually means that if you purchase the company and get your bank account accepted – then you are making a tidy profit of £18.01! Not bad eh – that’s got to be an exclusive.

We’re trialling this new price of £16.99 + VAT – our plan is to run it for a while and see what happens. So, if you do need to form a company – or you know anyone else who needs to – then don’t hesitate to point them to www.companiesmadesimple.com .

After days of debating and negotiation, a deal has been made between the Conservatives and Liberal Democrat parties to form a coalition government, consequently, last night, Gordon Brown resigned as Prime Minister. Mr Brown tendered his resignation to the Queen who offered the role of Prime Minister to Conservative leader David Cameron.

As Mr Cameron addressed the numerous journalists, Conservative party members and his new staff. His tone, while positive was by no means a soaring rhetoric reminiscent of the last Tory Prime Minister’s – Margaret Thatcher – acceptance speech in which she quoted Francis Assisi. No, throughout his speech Mr Cameron spoke several times of the difficulty ahead and the potential difficulty of a coalition government. A sentiment echoed by both the SME and company formation sector, if recent reports are to be believed.

According to independent reports, by both the Forum of Small Business and the Federation of Private Enterprise, many recently formed companies and small businesses are extremely dubious about a Coalition and feeling that the impact on enterprise could be catastrophic, with over fifty per of all respondents claiming that the they have lost faith in the future of the British economy.
David Male, founder of the FPE, comments; “As our report reveals most small business owners would like there to be an overall majority government in the House of Commons. Many feel that while the previous administration could have done more to support enterprise in the UK, having two parties in power who have radically different ideology, will result in inconsistent policies.”

Company formation statistics, obtained from Companies House provide an interesting sideshow on what’s currently happening in the British economy.

Surprisingly, company formations in the UK actually increased in 2009 compared with 2008 by 7.4%.  Whilst 2008 was down on 2007 by 26%, this was largely due to a change in legislation in 2007 that led to a flurry of formations before the 2008 budget.

Looking at the last 3 months of 2007, 2008 and 2009, the figures show a promising trend so that the period from October to December inclusive for 2009 was over 10% up in the equivalent period for 2008 and even 2% up on the figures for 2007.

This positive trend has continued in 2010 with the first 10 weeks of the New Year showing figures up 25% on the equivalent period in 2009 and 12.4% over those for 2008.

So, what conclusions can we draw from this?

A simplistic view might be that these numbers indicate UK Inc coming out of recession.  The problem is, companies are formed for so many different reasons that it is very difficult to get underneath the headline statistics and really know the reasons why so many companies are currently being formed.  Whilst it is possible that a gradual increase in confidence and optimism around the country may have led to an increase in the numbers, it is hard to argue that this in itself is any indication of sustained recovery.

Another argument might be that this is further indication of more and more people being made redundant and deciding, in the midst of a bleak employment market, to “start up on their own”.

Another explanation might be provided by fiscal issues.  The increase in tax rates due to come into force from 6 April 2010 makes the operation of a limited company even more compelling as a way of sheltering profits.  This would definitely affect many who had operated previously through unincorporated entities.  With the tax year almost over as this post is written, it will only be after 5 April that we can see whether there is any substance to this argument.  However, this on its own wouldn’t really explain the increase in figures overall in 2009, and particularly the last quarter.

The likelihood is that the increase in company formations statistics is probably down to a combination of the above factors  – and perhaps some others.  Whether or not we are seeing a genuine restructuring of the business landscape of the UK is hard to fathom, but I for one will be watching the company formation numbers with interest.

One of the things many business owners complain about when asked about what it is like to form and run a company in the UK, is the amount of bureaucracy and re tape the have to endure. However, a recent report conducted b y the Charted Institute of Personal Development, has claimed that many small businesses and recently formed companies are flouting health and safety legislation.

The report found that an overwhelming 80% of all the businesses surveyed, said that at some time since they were incorporated, they did not have any first aid capabilities, while 10% of business owners admit that they have not carried out a risk assessment of their office.

Sian Williams, business advisor to the CIPD comments; “While we appreciate that running a small business is dominated by activities such as form filling, Health and safety is an area where all businesses, no matter how small, need to be diligent. It is understandable that many small businesses feel intimidated by all the legislation and red tape, but they are there for a reason; to protect business and the people who work for them.”

There is information available to help small businesses adhere to their legal obligations. Have a look at the St John’s Ambulance website for more details.

The success of shows such as The Apprentice and Dragons Den has revolutionized the public’s perception of business and enterprise, but not, according to a recent poll conducted by the Forum of Small Business Owners, for the better.
The poll found that only 7% of all the small business owners surveyed felt that the programmes reflected their experience of being an entrepreneur, while 80% felt that shows such as Dragon’s Den and the Apprentice inadequately portray what running a business is like.

Paul Platt, founder of the Forum of Small Business, comments; “The findings of this report indicates that there is a severe lack of adequate representation of enterprise in the UK. Obviously, shows such as The Apprentice and Dragon’s Den have to incorporate some artistic license, but the fact that there is a distinct lack of factual information available to people considering becoming an entrepreneur is concerning.”

In a report by the Office of National Statistics, over 50% of recent company formation owners think that business television programmes do not offer any form of helpful advice for people thinking of starting their own business.

When Gordon Brown announced he was appointing Lord Alan Sugar as the government’s small business advisor, most small business owners, felt pleased that someone who has been on the front line of business for a number of years, was going to have an input in small business policy. However, this initial positivity was short lived as Lord Sugar managed to alienate almost all the small business sector, by referring to them as ‘moaners’. However, a recent report out today has revealed that we are again going to take a leaf out of Lord Sugar’s book as more and more companies look for there very own ‘Apprentice’ !

As we are now officially out of recession, many companies are switching their survival strategy to growth plans and one of the most important aspects of growing a company is higher more staff. However, as National Insurance is set to increase and the economy is still far from stable, many small business owners are looking to extend their staff resource by hiring more apprentices.

Gavin Murray, owner of Talk IT comments: ‘When I initially started the company formation process, I knew I would need to take on staff. However, as the recession progress our finances got progressively worse and we just couldn’t justify taking on more staff, even though we needed the resource. Consequently, we took on an apprentice and we have never looked back. Our appetencies are hard working and eager to learn. They also keep our company at the cutting edge of the sector, as they are constantly looking at new ways the company can develop and questioning outdated industry orthodoxies.”

The fact that the government is expected to announce that the UK’s economy is officially out of recession, shortly, has provoked both economists and journalists to assess the main results of the ‘credit crunch’ on business as they see it.

While it clear that the recession has had a number of far reaching consequences for UK business – the number of employees considering company formation has increased, redundancy has risen exponentially and crucially many companies have gone into administration – what many commentators have failed to address up to now, is the fact that recovery from the recession will also have an impact on businesses in the UK. Namely, the fact that economic recovery will now create a more competitive context for enterprise.

According to a report commissioned by the SME Forum, over 60% of all small business owners feel that competition within their sector will now increase. Mark Andrews, small business advisor comments; “The recession has presented many challenges to the SME sector. Businesses that have survived ,will undoubtedly emerge from the recession more cost efficient and ready to grow. However, as the barrier to market entry lower, these businessess may have to be prepared to do battle to for market share.”

Over 50% of all the 700 companies asked are concentrating on increasing their market share in 2010, 25% are planning to stabilize their cash flow while the remainder are focusing on recruiting new staff.