You may think that launching a business during a recession would be a foolish thing to do. With gloomy headlines heralding high-street closures a staple of the Covid-19 pandemic, starting up a business during lockdown would seem a one-way ticket to failure. But dig a little deeper, and the current crisis is proving fertile ground for a surge in start-up growth.
New businesses are launching at a faster rate than ever before, according to research from Companies House. In the third quarter of 2020, new business incorporation soared by 30.2% compared with the same quarter of 2019. This massive increase in start-ups – up 51,269 – is the largest Q3 year-on-year increase in nearly a decade. Between July and September 2020 alone, over 221,020 new businesses were created.
As strange as it seems, a tough economic period might actually be the best time to launch a business. Many of today’s global corporations can trace their origins back to when the wider economy was in turmoil. From the likes of Walt Disney to General Motors and from Airbnb to Uber, recessions have helped catapult new businesses onto the road to success.
The UK has seen its fair share of start-up successes during economic downturns, too. From Wilko launching during the Great Depression of the 1930s to modern businesses such as PureGym starting during the deepest recession since the Second World War, start-ups haven’t let economic downturns stand in their way.
If you’re worried about starting your business during a financial crisis, take heart from these 10 brilliant British businesses that have been there and done it.
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10 British businesses that started in a recession
Household essentials and homeware store Wilko first opened its doors in Leicester in 1930 at the height of the Great Depression that saw global stock markets plunge, soaring unemployment and widespread poverty. Founded by James Kemsey Wilkinson and his fiancé Mary Cooper, the store proved so successful that the couple opened a second store just two years later, and by the start of the Second World War in 1939, nine branches were operating.
The business has remained in the founding family’s ownership for nearly a century, with an annual turnover of more than £1.5 billion.
Today’s Wilko is a high-street staple, with 400 stores nationwide stocking over 200,000 products. It launched its own-label products in 1973, with over 14,000 of its own branded products line its shelves today. The company has kept pace with the times, amassing over 145,000 Twitter followers and over 500,000 Instagram followers.
2. Hays Travel
When John Hays opened his first retail store in Durham against the backdrop of 1980s economic hardship, little did he realise it would grow to encompass nearly 550 retail shops and 300 travel agents. Annual turnover has soared past £1bn in the past four decades, and Hays Travel now has over 7,500 employees.
Hays hasn’t been on pause during the pandemic either. While Covid-19 has decimated the travel industry, Hays bought ailing Welsh travel agent chain Tailor Made Travel in September 2020, bringing around 100 new employees into the Hays family.
3. Sage Group
Better known simply as Sage, the start-up transformed accounting and bookkeeping with its innovative software. It had humble beginnings – it was founded by David Goldman, Paul Muller, and Graham Wylie in Newcastle to develop estimating and accounts software tailored to small businesses.
Fast-forward nearly four decades, and in 2017 Sage was the UK’s second-largest technology company with over six million customers worldwide. Today, it has over 13,000 employees across Europe, Africa, Australia, Asia, Latin America and North America.
4. JD Sports
It may be a ubiquitous high-street destination for sports fashion, but JD Sports started life in 1981 with a single shop in Bury, Greater Manchester. Founded by John Wardle and David Makin, the British retailer rapidly expanded to open its first store in Manchester’s Arndale Centre just two years later. By 1989, JD Sports had expanded south, opening its first store on London’s Oxford Street.
The expansion proved a formula for success, with JD Sports listed on the Stock Exchange in 1996 and is today a constituent of the FTSE100. Its rapid growth has continued – it operates in 20 countries worldwide with over 2,300 stores and 50,000 employees.
With a clear proposition – everything costs £1 – Poundland is a British variety homewares store that transformed value-based shopping. Founded by Dave Dodd and Steven Smith in 1990, it had a start-up capital of just £50,000. The first pilot store was opened to the public in December 1990 in beer-brewing capital Burton upon Trent.
Its bargain-based approach proved popular with shoppers. The 500th Poundland store opened in Birmingham in 2013, and annual turnover exceeded £1 billion for the first time in 2015. It holds numerous Discount Retailer of the Year awards and floated on the Stock Exchange in 2014.
6. Pets at Home
The 1990s saw inflation nearing 10%, and Black Wednesday in 1992 witnessed the UK crash out of the European Exchange Rate Mechanism. That didn’t stop Pets at Home founder Anthony Preston, who opened his first pet supplies store in Chester in 1991.
Expansion came quickly. In 1999, Pets at Home acquired 140 Petsmart stores in the UK and opened its 200th UK store in 2007. Innovations quickly followed, including in-store pet grooming, a Very Important Pets loyalty programme and a veterinary business. It was voted the Sunday Times Best Big Company to work for in 2013 and now operates over 450 stores and over 450 veterinary surgeries.
7. PC World
Head to the high street to buy a printer or laptop, and chances are you’ll wander into a Currys PC World. These technology emporiums have come to dominate the high street in just a few decades, with the first PC World store opening in November 1991 in Purley Way in Croydon.
The initial store was a huge success. Founder Jan Murrey reached a whopping £50 million turnover by April 1992 – just 12 months of opening – as he rapidly opened four stores across London. The following year Dixons Group plc purchased the fledgling chain and the merged business is today known as Currys PC World.
While the original store opened before home computing and the internet had taken off, today Currys PC World is the largest specialist electrical retailer in the UK and Ireland.
When Graham Bosher founded Graze, it was a business that was ahead of its time – delivering healthy food and snacks through the letterbox to subscribers. Bosher had previously co-founded DVDs-by-post business LoveFilm in 2002 before selling it to Amazon, which went on to become Amazon Prime Video.
The business was founded during the deepest recession in the UK since the Second World War, triggered by the collapse of the US’s mortgage lending market. In the UK, massive financial institutions were in dire straits, with Northern Rock and RBS needing bailouts by the Government. Graze expanded into the US in 2013 and now offers over 200 snack combinations.
With headlines focused on Lehman Brothers’ collapse in September 2008, which triggered one of the biggest runs on stock markets in history, PureGym launched in Leeds, offering no-frills health and fitness. Its approach upended the model of expensive gym memberships, and today the company offers 24/7 gym access to over 1.1 million members across 260 gyms nationwide.
The UK was just the start. In just over a decade, the brand acquired Fitness World Group. Today, the combined business is the second-largest gym and fitness operator in Europe, with 500 sites across the UK, Demark, Poland, and Switzerland.
The end of the first decade of the new millennium ushered in a modern financial crisis, but the launch of Sipsmith saw the microdistillery dig deep into the past to bring London gin into the 21st century. Following years of decline in gin-making, Sipsmith was the first copper-pot distillery to open in London in nearly 200 years – and is only one of four gin distilleries in the capital.
The three founders – Sam Galsworthy, Fairfax Hall and Jared Brown – had to petition for a change in the law to allow their small distillery to launch. Recent innovations include the launch of the Sipping Society and exports to over 50 countries worldwide. Since 2009, hundreds of new distilleries have launched across the UK, heralding a movement that ignited the trend for gin drinking.
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