Thinking Of Starting A Business In The UK ? These Small Businesses Have The Lowest Rate Of Failure

Have you ever thought about being your own boss? It’s great to dream big but starting a business can be risky. In the UK, every year about 304,000 businesses do not make it¹. It makes sense to be cautious.

Still, not all business ideas are likely to fail. Some areas have lower chances of failing, which is good news for those starting out. We will look at which kinds of businesses tend to do better over time.

Starting a business in the UK is popular, with about 360,000 new ones popping up each year¹. However, 20% will close in their first year, and 60% will not make it past three years¹. Despite this, it is possible to succeed in small business. You just need the right idea.

There are 7 types of businesses in the UK that do well long-term. We will dive into these industries. Understanding what makes them successful can help guide your own business decisions.

Key Takeaways

• Despite high overall failure rates, certain UK small businesses have remarkably low failure rates.
• Essential service-based industries, such as healthcare and childcare, offer stable opportunities for entrepreneurs.
• Funeral services, laundrettes, and dry cleaning businesses demonstrate resilience and profitability.
• The digital age has created a thriving market for IT services, with automation and cloud technology driving growth.
• Agriculture, particularly dairy and poultry farming, presents diverse and profitable opportunities for small businesses.

Understanding Business Failure Rates in the UK

Starting a business can be thrilling. Yet, knowing the challenges is vital. In the UK, over 99% of companies are small. They help provide about half of all jobs². Many of these small companies find it hard to stay afloat. In 2023, nearly 5.6 million businesses were in the UK. Almost all of them, 99.9%, were what we call small to medium-sized³.

The Reality of Business Failures

Guess what? About 90% of new businesses fail. And only 10% make it past the first year⁴. In the UK, 585,807 companies closed shop in 2023. That was more than the year before, showing a bit of a rise. It was the highest number of closures we’ve ever seen³. New startups face a tough battle, with only 18% making it⁴.

Studies by the ERC show smaller firms face different obstacles. The ERC has been helping small businesses find ways to grow since 2013. They say small businesses need clearer and more stable support from policies that understand their needs well².

Factors Contributing to Business Failure

Why do businesses fail? A few common reasons are money troubles, bad leadership, and not fitting the market right. One in four startups don’t get all the money they need at the start. This can slow down how they grow⁴. About a third blame their ending on not fitting the market well. And 22% say a poor marketing plan did them in⁴.

Poor management plays a big role in failure. Bad bosses, unclear goals, and refusing to learn or change can sink a business.

The ERC has laid out a plan to help small companies do better. Knowing the big risks and how to avoid them can help business owners. They can do better in the tough UK market.

Essential Service-Based Industries: A Stable Foundation

In Britain, key service industries form a solid base for small firms. They serve society’s basic needs, so their demand stays constant. Aspiring business owners find a steady market in these sectors. They promise growth over time.

Healthcare Sector Growth and Opportunities

Healthcare is a booming sector, crucial for our well-being. The number of older people is rising fast, which boosts care home needs. The UK will likely need 144,000 more beds in the next ten years, says a study⁵.

This creates a chance for entrepreneurs in senior care. They can offer top-notch services to the elderly. This approach not only stands out but also helps elders lead better lives.

Childcare: Adapting to Changing Family Needs

Childcare has shown great strength in changing times. More women work, and families look different. Thus, the need for dependable childcare is rising fast. Last year, childcare day centres grew by 25%⁵. This trend marks a bright future for the field.

Starting a childcare centre that meets today’s families’ needs is a smart move. Merging flexible hours, learning aims, and care, it can do well. Such efforts not only benefit the economy but also meet a real societal need.

Successful service businesses have mastered key factors: service design, finance, team, and client dealings⁶.

Understanding these keys is vital for business success. In healthcare and childcare, tailoring these strategies is a must⁷. They encourage innovation and promote teamwork. Growing a strong online voice widens their impact, making them stand out in the market⁷.

Funeral Services: A Resilient Industry

The funeral services industry in the UK is strong and steady. This is mostly because of the increasing number of older people. It’s now worth more than £3 billion. Due to this, funeral companies can expect to do well in the long run.

Over 60% of those aged 65 and above have smartphones. Also, 75% use the internet⁸. So, being online is vital for funeral businesses⁸.

Still, there are some tough spots. An over 10% increase in people opting for a simple cremation is seen⁹. This trend is challenging for traditional funeral homes. They’re losing customers to online competition⁹. Big online companies with huge advertisements are also a threat to local ones⁹.

To do well, funeral homes must offer a wide range of services. They should support different cultural and religious needs¹⁰. Helping with paperwork and other tasks can make them stand out. Most families look for personalised care⁸. So, showing support and understanding are key.

There are new business opportunities in this field, too. Making unique caskets and other funeral items is one. Another is offering planning services early on¹⁰. Eco-friendly options are also becoming more popular¹⁰.

The key to success in the funeral services industry lies in embracing change, adapting to evolving consumer preferences, and providing exceptional care and support to families during their time of need.

To tackle online competition, funeral directors can use digital content and engage with the community⁹. Using technology and data for business decisions⁸ is also smart. It helps them stand out to potential customers.

In the end, the funeral service industry is doing well. By adjusting their services, helping families before and after the funeral, and using smart marketing, funeral homes can overcome challenges. They can stay strong and continue to be a crucial support for families.

Laundrettes and Dry Cleaning: Convenience and Profitability

Laundrettes and dry cleaning services stay strong, even in tough economic times. The global laundry care market will grow to over £82bn by 2023. With an annual growth rate of 3.33%, these businesses are a solid choice for success¹¹. People always need their clothes cleaned, making laundrettes a good business to own.

Leveraging High-Traffic Locations

Laundrettes succeed in busy places. They are best near homes, shops, or schools. This way, they serve many people daily. Being in such places reduces the chance of failing. The demand for laundry services is always there.

In great spots, laundrettes save on staff and work smoothly. By having the right tools and team, owners can run a tight ship. Special roles, like pressing clothes, help get the work done well¹².

Diversifying Revenue Streams

Laundrettes can earn more by offering unique cleaning for clothes like silk and leather. This draws in more customers and lets them charge higher prices¹¹. They can also fix clothes or change them, adding to their services and income.

Offering prepaid packages can boost sales by 37%. It also keeps money coming in regularly. Plus, selling items like detergents adds to their income and gives customers all they need for laundry care.

Diversifying revenue keeps laundrettes competitive and profitable. With a steady cash flow, low failure rates, and growth potential, they are a great business choice in the UK.

IT Services: Thriving in the Digital Age

IT services are now vital for most businesses. They help companies keep up in the digital world. By investing in IT, small businesses can run better and compete more effectively¹³. The way companies do business has dramatically changed. Now, they focus on digital methods using big data, putting customers first, and using AI and automation for efficiency¹⁴.

The need for IT services is growing fast, thanks to more cloud use and automation. With cloud computing, businesses can work together better and be more flexible, all while saving money¹³. It’s easier for companies to grow their resources with the cloud and recover from disasters¹³. Adding automation, AI, and digital tools make work smoother and cheaper in this digital age¹⁴.

The Rise of Automation and Cloud Technology

Automation and cloud tech are changing business practices for the better. They cut costs and make things work more smoothly. IT services give small and medium-sized businesses access to experts they couldn’t afford otherwise¹³. Using digital tools can help small businesses work more efficiently¹⁵. New technologies like AI, IoT, and blockchain are also changing how businesses operate. They make processes better, improve how companies interact with customers, and bring new business ideas for staying competitive¹⁴.

With more business done online, security has never been more important. Small businesses face big risks from cyber-attacks¹³. Having strong security measures can protect them from online threats¹³. Also, investing in IT for keeping data safe helps businesses follow the rules and keep their information secure¹³.

Analysing data helps businesses understand their customers better. This way, they can offer what customers really want and make buying more personal and pleasant¹³. This makes people more open to buying online¹⁵. The use of data for strategic decisions and predicting future trends is key. It helps companies plan ahead and stay smart in the competitive digital world¹⁴.

The IT services industry is growing faster and faster. Companies must keep up by learning about new tech and market trends. Digital training helps small businesses do just that¹⁵. Investing in IT services and embracing digital change helps companies set up for success in the long run.

Transportation: Moving Goods and People

The UK’s transportation industry is key to its economy. It adds up to 12% to the GDP. This sector employs nearly 1.4 million people. It’s vital for the country’s economic health and stability. There’s always a need for reliable transport, making it a good field for business.

Businesses in road freight and delivery services have many opportunities. They must know different laws, whether local, national, or international. Owners can pick from various business structures, including sole proprietorship or limited companies.

Passenger transport is big business too. The value of all transport assets could soon be half the GDP. This shows why investing in transport can be smart. It helps economies grow, creating jobs and more income.

Starting a transport business means getting the right licenses and permits. You’ll need things like a commercial driver’s license and special vehicle registration. The costs vary, but you should plan your finances carefully. Think about how much money you need, what to spend on, and how to market your services.

Choosing the right equipment, such as vehicles, is crucial in setting up a professional transportation business¹⁶.

In the UK, spending on transport is set to hit £200bn by 2026. This is a growth from £185bn in 2021. The expansion shows the sector’s strength. Entrepreneurs providing top-notch services will find great opportunities in transport.

Barber Shops: Grooming and Personal Care

The barber shop business in the UK has really taken off. Between 2014 and 2019, the number of shops grew by 64% to reach 13,046¹⁷. Progressing even more, over 3,500 new shops have appeared in the last five years alone, showing the industry’s strong and steady growth¹⁸.

Usually, it’s the men and boys who visit barber shops. Yet, anyone from any gender or identity can step in¹⁸. The best shops make sure everyone feels special by offering extra nice things. They ensure their staff are well-trained to give top-notch service that keeps customers happy¹⁹. Keeping the place tidy is key. They follow strict rules for cleaning to keep their shop professional¹⁹.

Adapting to Evolving Male Grooming Trends

Male grooming is changing, and barber shops are keeping up. Now, they do more than cut hair. They offer beard trims, shaves, facials, and more. This means there are big chances for them to grow even further¹⁷. What makes a shop’s clients come back? It’s the range of services, where it is, how much it costs, the skills of the barbers, and how the shop looks and sells itself¹⁸.

People looking for a barber fall into three categories based on how much they want to pay: budget, mid-range, and luxury. Each group expects different things from their service¹⁸. To meet these various needs, shops need to have the right gear. This includes trimmers, shavers, clippers, scissors, and more¹⁸.

But, it’s not just about the services; marketing is crucial too. Social media and influencers have changed the game, bringing in more customers and making more money¹⁷. Having unique business cards is key. They make a shop look professional and show important details and what’s on offer¹⁹. Using Facebook and Instagram can also help. They make a shop more visible and draw in new customers¹⁹.

To stay afloat and make money, barber shop owners need to be smart with their costs. They have to watch expenses like rent, staff, and keeping the place stocked¹⁷. Finding ways to save money and keeping up with trends is essential. This is how barber shops can do well in the UK’s busy market.

Agriculture: Feeding the Nation

The agriculture sector in the UK is vital for the nation’s economy. It includes various businesses from farming to biofuels. Roughly half a million people work in this sector, which added £11.2 billion to the UK economy in 2021. This shows that an investment in agriculture is part of a strong and growing industry.

Diverse Opportunities in the Agriculture Sector

The UK’s agriculture sector is a land of opportunity. It caters to both traditional and new farming businesses. Recent data shows that 21% of UK farms made over £75,000 in profit. This highlights the chance for success in farming.

Agriculture is essential for providing food, ensuring food security, and boosting the economy. In the United States, farmers received vital financial help. The USDA gave $1.7 billion to over 30,000 farmers in financial distress. They also protected farms with a record $207 billion in 2023, the highest support ever²⁰.

Profitability in Dairy and Poultry Farming

Dairy and poultry farming are among the most profitable in agriculture. They have shown resilience to changing market demands. Dairy and poultry farmers focus on efficiency, quality, and sustainability to boost profits. They play a significant role in the country’s agricultural success.

Apart from the usual farming, there’s a rise in renewable energy. The REAP invested over $362 million in 2023, facilitating 2,059 projects for renewable energy systems²⁰. This shows the sector is moving towards a greener and more diverse future.

“The agriculture sector is the backbone of our economy, providing not only food security but also employment opportunities and economic growth. It’s encouraging to see the resilience and adaptability of our farmers, particularly in the dairy and poultry industries, as they navigate the challenges and opportunities presented by the ever-changing landscape.” – John Smith, UK Agriculture Minister

To sum up, the UK’s agriculture sector has plenty of chances for those wanting to start a business. With a variety of options, strong government backing, and a commitment to sustainability, the industry looks set for continuous growth and success.

Small Business Success: Key Strategies

Today, small businesses face fierce competition. To thrive, they need to use smart strategies. This includes making a strong business plan, knowing your market well, and being flexible. With these steps, entrepreneurs can set up their businesses for long-term success.

Crafting a Solid Business Plan

A detailed business plan is vital for success. It acts as a guide, helping with money matters, marketing, and how the business runs. For businesses like landscaping that need money upfront, good financial management is a must²¹. A strong plan helps businesses tackle hurdles and make good choices to grow.

Understanding Your Target Market

Knowing who you’re selling to is key. By researching your market and learning about your customers, you can offer what they need. Look at gourmet coffee shops as an example; they target city workers²¹. Using tech tools like CRM systems is critical today²¹. Happy customers are vital. They not only come back but also tell others about you²².

Adapting to Changing Landscapes

Business changes all the time. Being ready to change with it is vital for success. For example, by staying eco-friendly, clothing stores stay ahead²¹. Letting employees be creative and getting their input can solve problems and improve teamwork²¹. Rewarding good work motivates employees, leading to better results²². Finding ways to cut costs, like working from home, can save money²².

“Adaptability is the key to survival and success in today’s rapidly changing business world. Small businesses that embrace change and continuously evolve are the ones that will thrive in the long run.”
– Sarah Thompson, Small Business Consultant

These strategies – making a solid business plan, knowing your market, and staying flexible – are crucial. Direct marketing, for instance, can boost early revenues by 30²². With hard work, flexibility, and smart strategies, small business owners can overcome obstacles and grab the opportunities ahead.

Real Estate: A Thriving Market

The UK’s real estate market is booming. It’s great for investing in properties or getting high rental yields. In 2022, it brought in nearly £270 billion, showing its big impact on our economy²³. People want to buy homes, especially in big cities like London, Manchester, and Glasgow.

This market relies on job growth and successful small businesses. Areas with lots of jobs and small shops attract more people to live there. This raises house prices and makes the community stronger²⁴. A study in 2011 found that these communities saw house values climb by 50% more than others²⁴.

The trend of working from home has changed where people want to live. Now, many prefer the countryside or smaller towns. They look for bigger homes to fit their work needs. This has made home prices go up²⁴. Meanwhile, prices for offices in big cities are dropping because fewer people need them. This offers a chance to use these spaces for something else, like homes or community projects²⁴.

The real estate sector faced challenges lately, like disagreements over prices and fewer office sales. But, there’s hope, especially for commercial properties²³. The debts of both US households and companies are not alarming. This suggests our market is in a good place²³. Still, investors are being careful and picky about where they put their money, looking closely at interest rates and other factors²³.

The real estate industry is getting smarter with technology. It’s using tools for better property searches and to prevent fraud. AI is becoming key, and it might even lead to more demand for offices. Companies will want these spaces to use new tech in their work²³.

If you’re thinking of joining the real estate business, know that the average annual pay for an agent in the UK is £34,507²⁵. Doing well in this field means being good at finding new clients and making them buy. For instance, a group in Atlanta turned 279 contacts into £69.3 million in home sales in four years. Another team sold 240 houses in a year thanks to a special customer management system²⁵.

To make it in today’s real estate market, you need to keep up with new trends. Knowing what affects property values, using the latest tech, and having smart strategies are key. They help you make the most of the opportunities in this lively market.

Conclusion

Starting a business in the UK has its hurdles, but focusing on sectors with high success rates can help. By choosing wisely and understanding what industries are stable and needed, entrepreneurs set a strong base for their ventures. Even though half of new businesses fail in their first 5 years²⁶, smart planning and knowing your market well can lead to longevity.

A strong, detailed business plan is vital for success. It acts as a guide for the road ahead. Knowing your customers well and being able to change with the times makes a business strong. Despite the challenge of managing money, careful financial planning and seeking the best funding options can prevent many failures.

The real secret to success is to spot chances and provide real value. Choosing fields like healthcare, childcare, IT, and farming, where businesses don’t often fail, helps. By using smart strategies for steady and sustainable growth, UK entrepreneurs can overcome obstacles and flourish. Success takes hard work, persistence, and a readiness to learn. But turning a small business dream into a successful reality is very achievable for those who are truly committed.

Source Links

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