Startups.co.uk: 20 years in business

When Startups.co.uk was founded in the year 2000, the UK was home to 3.5 million private sector businesses, 99.9% of which were small and medium-sized enterprises (SMEs).

At the turn of the millennium, the world was still enjoying that hopeful decade between the fall of Soviet Communism and the start of the War on Terror.

Economies were booming, Britain was still squeezing some optimism from the twin phenomena of New Labour and Cool Britannia, and everyone was getting very excited about the first generation of something called ‘internet businesses’.

Today, the UKs business landscape looks very different. SMEs still constitute 99.9% of the UK’s business population, but there are 5.9 million of them. Self-employment has risen from just 12% of the labour market to 15.3%. And nearly every business is an internet business.

So, how did we get from there to here?

Below, we go on a whistle stop tour of the last 20 years, taking in the events, people, and businesses that have been responsible for shaping and transforming the last two decades in UK business.

2001 – SME population: 3.49 million

A foot-and-mouth epidemic ravages the UK. More than six million livestock are slaughtered in an attempt to halt the disease. The overall cost to the UK economy is estimated to be £8bn.

On 11th September, two hijacked Boeing 767s are flown into the World Trade Center’s Twin Towers in Manhattan. Nearly 3,000 people are killed and global stock markets crash. The London Stock Exchange declines by 5.7% overnight.

2002 – SME population: 3.56 million

The UK economy stagnates in the first three months of the year, but the BBC reports on a growing trend for something called e-shopping, which has increased by a staggering 39% on the previous year. In total, £23.3bn is spent online, accounting for 1.2% of all sales.

Notable British ecommerce companies launched in 2002 include adult toy and lingerie company Lovehoney.

2003 – SME population: 3.67 million

The Institute for Employment Studies conducts its first Annual Small Business Survey, with over 8,000 respondents.

The report finds that 50.9% of small businesses are managed solely by men, while 12.3% are managed by a majority of women. The rest have women among their directors, but not in a majority.

When asked about barriers to achieving their business objectives, 16.2% say competition, 14.5% say regulation, and 12% cite the economy as their main obstacles.

The UK economy begins to recover slowly throughout the year.

And Startups.co.uk publishes its first ever Young Guns index, a list of the 30 most promising entrepreneurs under 35 years of age in the UK. Among them is Innocent Drinks founder Richard Reed.

2004 – SME population: 3.91 million

The UK economy sees its best year since 2000, growing by 3.1% in total throughout 2004.

Facebook is launched. Eventually, it will become a vital marketing tool for small businesses across the world, as well as for demagogues, terrorists, and all manner of hate groups. But for now it is a social student directory for Harvard University.

2006 – SME population: 4.11 million

The Companies Act 2006 comes into force. It is the longest Act in British Parliamentary history, containing 1,300 sections over 700 pages.

The Act changes almost every aspect of the Companies Act 1985, with new provisions for directors’ duties, and private and public companies. It also transposes the EU’s Takeover Directive, which deals with mergers and acquisitions, and the Transparency Directive into UK law.

Startups 20 businesses founded:

• Ella’s Kitchen – organic food for babies and toddlers
• GoCompare – financial services comparison website
• Not On The High Street – online marketplace for small, independent businesses

2008 – SME population: 4.27 million

The global economy crashes and the UK suffers its worst recession since the Second World War. GDP shrinks by 6% in total over six consecutive quarters, and wages and employment fall sharply.

However, the recession proves fertile ground for a new generation of entrepreneurs, who respond to these unprecedented economic circumstances with bold, game changing ideas.

One of the big disruptions to the world of work is the emergence of the gig economy, using technology to match flexible workers with businesses and consumers for a variety of on-demand or temporary functions. Notable businesses include Uber, Airbnb, and Startups 20-featured Deliveroo.

In the same year, we publish our inaugural Startups 100 index, celebrating the 100 most innovative and disruptive businesses of the year. Beatthatquote.com, a price comparison website tops the list. It goes on to be acquired by Google in 2013. In third place is Startups 20 business Zopa, the world’s first peer-to-peer lending and borrowing marketplace.

Startups 20 businesses founded:

• Zoopla – online property information database

2009 – SME population: 4.36 million

The UK ploughs on into its longest recession on record. In light of this, The Bank of England cuts its base interest rate to 0.5% – the lowest of its 300-year history.

In January, the government unveils a £20bn loan guarantee scheme to support small and medium sized businesses.

Startups 20 businesses founded:

• Crowdcube – equity crowdfunding platform
• Seedrs – equity crowdfunding platform

2011 – SME population: 4.58 million

The Apprentice has a format shake up. The candidates now compete for a £250,000 investment in their business idea instead.

Winners include 2016 Young Gun Mark Wright, who went on to found digital marketing agency Climb Online – possibly the most successful Apprentice winner there’s ever been – and 2017 Young Gun Joseph Valente, who went on to found boiler installation firm ImpraGas – also possibly the most successful Apprentice winner there’s ever been.

2012 – SME population: 4.81 million

Despite a much shouted about £9.9bn boost to the UK economy during the London Olympics, and a £4bn windfall for the capital alone, many small businesses see no direct impact from the games, and many lose out.

According to a Guardian poll, just 16% say the games have had a positive impact, while 84% say they’ve not received any extra business.

Many complain of excessive use of “Berlin Wall-like” barricades reducing footfall to key shopping areas, as well as various other council-enforced restrictions.

One billion smartphones are now owned worldwide.

Startups 20 businesses founded:

• Deliveroo – on demand restaurant meal delivery service
• Gymshark – gym and workout wear

2014 – SME population: 5.23 million

In a speech to the Federation of Small Businesses (FSB), David Cameron announces that the Conservatives will scrap or amend thousands of rules that affect small businesses.

In total, he says, more than 3,000 rules will be dropped or changed under the government’s Red Tape Challenge, including 286 pages of hedgerow regulations…

Measures include a £1.1bn package of business rates relief, £100m in broadband vouchers to help small businesses get online, and up to £2,000 each in growth funding for 20,000 small businesses.

The government’s own figures report that the initiative has saved each UK business £230 annually.

But in fact, far from supporting the Red Tape Challenge, a report from Unchecked.uk finds that 75-80% of participants would prefer to maintain or strengthen existing regulations, not weaken them. Many of the regulations eventually dropped are so called ‘zombie’ provisions, and therefore deliver no cost savings.

Startups 20 businesses founded:

• Mindful Chef – healthy recipe box delivery
• Starling Bank – mobile-only business banking

2015 – SME population: 5.38 million

The Small Business, Enterprise and Employment Act (SBEEA) receives Royal Assent in March.

The wide-ranging act includes provisions for everything from childcare to employment and access to finance. Its two main aims are to improve transparency and trust in UK companies – in light of a general decline since the financial crisis – and to simplify a number of company filing requirements.

A record breaking 608,110 businesses are founded in the course of the year, showing a sustained year-on-year increase from 2014 (581,173), and 2013 (526,447). The Centre for Entrepreneurs suggests the UK is undergoing a sustained shift towards entrepreneurialism as societal attitudes towards work change. Autonomy and flexibility are increasingly more important than having a long and stable career.

At the same time, a Global Entrepreneurship Monitor report finds that there is “a high level of regard” for entrepreneurs in the UK, and that optimism about startup opportunities has recovered to pre-2008 levels.

Startups 20 businesses founded:

• Bulb – 100% renewable electricity and 100% carbon neutral gas energy provider

2016 – SME population: 5.49 million

On 23 June, in a shock referendum result, the UK votes by a narrow margin to leave the European Union. Although a decision on the UK’s future relationship with the EU is still a long way off, many small businesses are concerned that the outcome could have severe implications for international trade, access to talent, and for the health of the economy at large. Prime minister David Cameron resigns.

In November, in another shock result, the presenter of the US Apprentice is elected president of the United States of America.

2017 – SME population: 5.68 million

Another general election. Theresa May’s gamble doesn’t pay off and she loses her majority. This severely weakens her negotiating position with Brussels and her power to pass legislation in parliament, making a quick resolution to the UK’s departure from the EU less likely than ever. Small businesses are left in limbo.

In February, Startups.co.uk is acquired by lead generation firm MVF Global, which appeared in our Startups 100 index just five years earlier, and Young Guns the year before that.

2018 – SME population: 5.66 million

2018 witnesses the first fall in the SME business population since 2000.

General Data Protection Regulation (GDPR) comes into force across Europe. It’s primary aim is to give individuals more control over their personal data, and to implement stricter regulations around how businesses store and process data about their customers.

Startups 20 businesses founded:

• Cazoo – used car seller

2020 – SME population: 5.97 million

As COVID-19 cases climb around the world, countries begin to implement measures and restrictions of varying severity to halt the spread of the disease.

Britain goes into a nationwide lockdown on 23 March, forcing thousands of small businesses to close for an indefinite period. Many had already been struggling with dwindling customer numbers before the lockdown, so chancellor Rishi Sunak’s announcement of an unprecedented package of financial support for businesses forced to shut their doors is welcome news.

By the summer, the economy starts to slowly reopen. Retail and hospitality businesses are allowed to operate as long as they have strict social distancing measures in place.

In the Autumn, as cases begin to rise, the government introduces a three-tiered lockdown system, meaning businesses in different parts of the country will be subjected to different restrictions depending on the local threat.

Nevertheless, the latest Business Population Estimates – published on 8 October – are encouraging:

• The private sector business population has increased by 113,000 (1.9%)
• SMEs employ 16.8 million people – 61% of working people in the UK
• Total SME turnover is estimated to be £2.3 trillion (52% of all private sector turnover)

What next?

It’s been quite a couple of decades, for the world, and the world of business.

Global events have caused terrible tragedy, and inspired incredible change. Startups have captialised on new technologies such as the smartphone and social media to transform the way we do, well, everything. And we’ve been through more than our fair share of financial crises.

There will always be factors outside of your control – risk, reward, and unpredictability are all part of the game when starting a business. What we think the above proves is that, no matter what kind of climate you’re starting up in, great ideas and perseverance win out in the end. Just click on the links above and read the inspiring stories of our Startups 20 businesses.

Whatever happens in the near future, the UK’s small businesses have proved themselves a resilient and adaptable bunch, far more so than their large, lumbering cousins. Not only have they survived, many have thrived, and done amazing things to help other people and businesses in their communities.

Who knows what major events and new technologies will shape the next 20 years.

We at Startups can’t wait to find out.