New research carried out by Sage Group and The Entrepreneurs Network highlights the untapped potential and strong appetite to start up a business in the UK communities hardest hit by the pandemic. Sage published the research as it announced a multi-year partnership with MyKindaFuture to deliver training and mentorship to disadvantaged and underrepresented groups. 

For people in the UK’s most deprived communities, starting a business and becoming your own boss is seen as a route to a better life, both in terms of income and wellbeing, with respondents citing more fulfilling work (61%), higher income (62%) and improving their quality of life (64%) as key motivators. However, the majority (over 60%) cite lack of confidence as a barrier to getting started. 

The research, carried out among potential business owners and current small business leaders in low-income communities in Newcastle and London, found that:    

• Nearly half have the creativity and ideas needed to set up a business, but over 80% are held back by fears over administrative, tax and legal compliance 
• Lack of mentoring is a clear barrier; while 73% of SME owners surveyed had access to a mentor and more than half sought their advice, less than half of the 58% of potential SME owners who have someone to turn to had done so
• 70% of potential business owners do not feel close to having enough money to start a business, and 79% would not consider the New Enterprise Allowance as a viable support option. In addition, only a third (34%) feel comfortable taking out a loan and half believe they would not be granted one if needed
• With the right support, delivered in a more targeted and accessible way, around 20% would potentially take the leap to being business owners, translating to 38,000 more people working for themselves in these two communities alone
• This has a potential knock-on effect of empowering 188,000 more people to become their own bosses, and creating up to over 200,000 more jobs if replicated across just the most deprived 10% of UK communities and those most in need of levelling up support

To help inspire more businesses, back potential business builders, and level up these communities, Sage today announces a three-year, multimillion-pound UK partnership with MyKindaFuture, an organisation that supports underrepresented talent. This partnership will provide training and mentorship via Jobcentre Plus to help underrepresented people seeking employment develop their business ideas.  

The partnership is part of Sage’s Sustainability and Society strategy, Knocking Down Barriers, and its goal to support a new generation of diverse and sustainable businesses in the UK and around the world.

In light of the report findings, Sage and The Entrepreneurs Network are calling on the UK Government to take decisive action to unlock more opportunities and foster confidence in areas worst hit by COVID-19, including:

• Expand the New Enterprise Allowance (NEA) to £100 a week for up to a year and allow recipients to access more of it immediately as a lump-sum. As part of this, expand eligibility and market the NEA more directly towards young people in communities with high levels of deprivation
• Incorporate entrepreneurship into the Government’s lifelong learning programme, and fund SME mentoring via expanding schemes such as Peer Networks
• Deliver resources to new entrepreneurs aimed at demystifying the administrative elements of building a business, including via social media networks (YouTube, Instagram) and a simplified online hub mapping out the process of starting a business to more effectively reach people within deprived communities. 

Sage CEO Steve Hare commented: “The most deprived communities in the UK have taken a huge hit over the last 12 months. We know that starting and growing a business is a proven route to long term employment, high job satisfaction and wealth creation, but that opportunity is not always accessible to everyone in these areas. As a business that supports millions of SMEs globally, we want to knock down these barriers.

"I passionately believe that everybody should have the opportunity to thrive and have seen first-hand the long-term benefits individuals, families and communities experience when given that chance. Our partnership with MyKindaFuture will provide real support, the right tools and quality mentoring so that people can build and own their own businesses and be part of an inclusive recovery.”

Report Author Sam Dumitriu, Research Director from The Entrepreneurs Network commented, “In communities where work tends to be low paid and career opportunities limited, entrepreneurship is a real and viable path towards higher earnings, greater flexibility, and more fulfilling work. Even in the face of the significant setbacks in financial outlook and wellbeing caused by the pandemic, there are thousands of potential business owners in communities across the UK with strong ideas, but most lack the confidence and resources to take that leap.

"If we can put the right support in place by expanding and revamping the New Enterprise Allowance, making it easier for budding entrepreneurs to learn from established SMEs, and demystifying the administrative aspects of starting a business, we will create highly valued work and empower hundreds of thousands of people to build businesses, change their lives and create jobs in their communities."

Will Akerman, MD at MyKindaFuture, commented: “We are thrilled to have joined forces with Sage for the ‘start up support’ element of our wider mentoring programme, designed to support all underrepresented people who are either looking for a job or looking to start up a business. We want to ensure no one is left behind and this collaboration is going to go a long way to doing just that!”