Eight things we learned about new businesses in lockdown
- Published
Since September we have been speaking to people who created start-ups during the pandemic for our business advice series CEO Secrets. Series producer Dougal Shaw explains what he learned from this snapshot.
"Lockdown put fire in my belly."
"It was a sink or swim moment."
"I thought, 'I've got nothing to lose.'"
These phrases are taken from emails and messages I received from entrepreneurs. More than a thousand have got in touch with me since we announced in September that CEO Secrets was focusing on lockdown start-ups.
This year has been one of unprecedented economic misery, especially for those who work in the hospitality and retail sectors. But for some it provided a jolt. Starting a business has been a way to take back a measure of control - and provide a sense of hope.
The number of new companies being created in the UK compared with last year has soared in the second half of 2020, according to the Office for National Statistics, external.
Here are eight things I've noticed from speaking to these new entrepreneurs.
1. People had different motivations, it wasn't all about necessity.
You might assume people created their own companies because they had lost jobs, or feared they were about to, and so were desperate to generate income.
For most this was the case. The newly married Gallaghers in Staffordshire both lost jobs they were about to start in hospitality. They made the decision to start a home-cooked food delivery business within hours of the government's first lockdown announcement - and it turned into a roaring success.
The Gallaghers were delivering 50 meals a day in Staffordshire at the peak of their business
There were many examples like that, but I realised there was something else going on too. Lockdown gave people on furlough a unique opportunity to explore business ideas that perhaps only seemed like pipe dreams before.
"Lockdown created a break in my routine that forced me to focus on my long-term goals," wrote Felix Atkin, founder of event-space rental business Sharesy.
Entrepreneurs like Andrew Woodhouse told me they hated the idea of being idle. While furloughed from his job organising corporate events, he followed his passion for fishing and set up a smoked salmon business.
Andrew Woodhouse is registered and hygiene-trained but awaiting inspection
Some people also wrote in to say they had committed to taking redundancy in order to start a new business before Covid struck, and had decided to carry on regardless.
Kavin Wadhar, the founder of KidCoachApp, explained it to me this way: "If you are an entrepreneur, you just have an itch to scratch."
Fashion entrepreneur Tracey Curran put it like this: "I can't go to my grave knowing I didn't give it a try."
2. Running a business from home made sense during the pandemic.
People were encouraged to work from home and avoid offices to minimise contact with others. So if you were thinking about setting up a business, it seemed logical to do it from the comfort of your own home. It also reduced overhead costs.
For parents it made sense for childcare, especially when nurseries and schools were closed.
Keith Tiplady decided to turn his kitchen into a chocolate factory, which also allowed him to keep an eye on his three-year-old twins in an adjoining playroom. It was straightforward to set up his business at home, Keith told me. He registered with the council and organised public liability insurance.
Keith Tiplady runs a chocolate business from his family kitchen
I also met Sarah Furness, who set up a gluten-free sweets business from her home in Ascot.
Like other parent-entrepreneurs, she and her spouse had to juggle childcare, and segregate time for herself and the business, typically when the kids were in bed.
3. Food and craft products were popular
I encountered a wide variety of businesses in the series, but recurring themes were food and handmade products. I've already mentioned some of the food businesses above.
Among craft businesses, jewellery and candle making were popular pursuits. Sewing skills were also put to use by many, making everything from face masks to, in Josephine Philips' case, vintage clothes alterations.
Josephine Philips launched Sojo as a kind of "Deliveroo for clothes alterations"
Often these were hobbies and passions that Covid-19 had turned into revenue lifelines.
Many entrepreneurs also started making brand new products or services that were specifically designed for life in lockdown.
Several companies approached me who had started window box subscription services (for people longing to reconnect with nature by growing plants and vegetables), and outdoor or home cinema providers also appeared.
4. People found their skills were more transferable than they thought.
I spoke to people who had lost jobs in specific sectors: aviation, hospitality and retail. Primarily these people had worked in public-facing roles. One thing that came across immediately was their natural presentation skills and flair for customer service.
They told me they were surprised at how transferable their skills were to new activities.
Sophie Southwood explains why cabin crew skills are transferable
I visited Sophie Southwood who lives near Guildford. She has worked all her adult life as cabin crew for Qantas. She's now on unpaid leave and has turned her hobby of floristry into a business.
"A cabin crew's real talent is anticipating people's needs," she told me. "It's ingrained in us."
Victoria Gordon began stitching artistic face masks from home and selling them online after losing her job with a High Street fashion retailer in Newcastle.
Victoria Gordon lost her job in retail and starting selling face masks on Etsy
She told me she used her shop floor skills, built up over a decade, to help manage her online shop, as it helped her with stock control, pricing and after-sales service.
5. Customers wanted to support local enterprises.
Many start-ups I encountered began by serving their local community, then built outwards.
The Gallagher chefs, chocolate maker Keith Tiplady and mask maker Victoria Gordon all started with family and friends as their first customers. For these entrepreneurs, it was feedback from this initial, trusted group that gave them the confidence to reach further.
These businesses often used Facebook and Instagram to find a small, targeted customer base in their vicinity.
6. Companies did well that focused on online.
Perhaps obviously, given many physical shops and face-to-face services had to close during lockdown, companies that offered their services online, or who sold physical items online and then delivered them direct to customers, both appeared to do well.
Terry Fox wrote to me saying she began offering online sewing classes and found hundreds of people joining each session.
The founders of LiveToYourLivingRoom told me they were offering virtual gigs for bands that normally played small venues, and were now attracting 100-150 people per show, after just a few months.
Lisa Pilgrim and Kirby Bryant set up virtual online wine tastings
On the one hand, people were literally stuck at home and so had to consume this way.
However, this may also have been part of a more fundamental shift.
"The pandemic has greatly accelerated changes that would have happened slowly due to the rise of online shopping," according to Prof Joshua Bamfield, director of the Centre for Retail Research. We've reached a stage this year that he had previously thought would only arrive by 2025.
7. Social media is your marketplace.
This is the 21st Century after all and many of our lockdown entrepreneurs talked about the importance of social media as a way to reach customers.
This has given younger entrepreneurs an advantage, recent graduate Sehrish Ahmed told me.
Sehrish Ahmed used lockdown to try out a business idea
She started selling jewellery online when job opportunities dried up, using Instagram and TikTok as the shop window for her brand Rose Eclipse. She knew how to jump on the latest TikTok trends, she explained.
8. Not all of these businesses will be permanent.
Despite the 2020 boom in start-ups, not all will be long-term fixtures. Some of these lockdown businesses were only ever set up on a temporary basis, either as a stop-gap between jobs, or a side-hustle during furlough.
Andrew Woodhouse and his salmon-smoking business is a good example. When he returned to work after furlough, he had to scale back his growing business. He now does just enough to keep it ticking over.
Recent graduates Joshua Barley, Sonny Drinkwater and Kieran Fitzgerald set up Snackcess, selling boxes of healthy snacks that companies can send out to employees working at home. Originally, it was meant to be a short-term project because the three were struggling to find the usual graduate placements during the pandemic.
These three graduate friends set up their own healthy snack business
Kieran has now started a graduate job, but the business has been so successful that Sonny and Joshua have decided they're going "to try and see this through".
"Entrepreneurs will often find it difficult to accept the restrictions of being an employee once again, after they have tasted the excitement, freedom, and sense of achievement associated with being on their own," says Prof Cyril Bouquet of the IMD Business School.
What's more, even when entrepreneurs are in it for the long haul, in general around 20% of start-ups fail in their first year and only around half make it to five years.
"It is very unlikely that a first entrepreneurial attempt will be the most successful one. Many people stop after the first failure," says Prof Bouquet.
For those that are lucky enough to be succeeding right now, there was one other thing I noticed. They were all guarded about celebrating their achievements at a time when they knew so many were suffering.
You can follow CEO Secrets producer Dougal on Twitter: @dougalshawbbc, external