Record numbers of people have started businesses during the pandemic. Now there are a record number of corporate liquidations, hit by the stress of being the boss and made worse by the impending recession.
In 2020-21, 810,316 businesses were created, the highest number on record, and another 753,168 the following year, according to figures from Companies House.
But 581,824 businesses were dissolved in 2021-22, another record and an annual increase of nearly a third, even though some of those businesses would have closed sooner without support during the shutdowns.
This year is shaping up to be even worse for many small business owners struggling with the cost of living crisis. A survey of 1,000 small business owners by Opinium on behalf of accounting software company Sage found that 38% were on the verge of burnout, with 17% blaming rising prices for energy, soaring inflation and supply chain delays.
More than half said they were considering giving up altogether, and 54% said their mental health was affected by worries about their ability to hire and retain staff.
Sam Kennett launched his digital marketing business, Social Hand Grenade, at the start of the pandemic after being laid off.
“Through the relationships I had established, I had a few clients that I could take on pretty quickly,” she said. “Then the lockdown really hit and no one knew when we were going to come out of it. So a lot of people cut their budget, like businesses do, and I lost most of my clients. I had to rebuild everything from scratch when I came out of lockdown.
Things started to look up, and Kennett even managed to find the time to set up Chat Up Fines, a campaign against online harassment, with colleague Richard Pryor.
“Now everyone is worried about this massive recession and they’re all starting to cut their budgets again,” Kennett said. There are only two clients left and she has started applying for jobs to make ends meet.
“I get up at 4:30 a.m. every morning and start work around 5:00 a.m. Half the time I don’t finish until 7 or 8 p.m., when my eyes squint and I can’t read.
Aoife Fitzmaurice, Sage’s vice president for the future of the workplace, said small businesses have shown incredible resilience throughout the pandemic.
“But the continuing effects of this, along with runaway inflation and a recruitment crisis, are weighing on business owners,” she added.
Louise Doherty was forced to shut down her tech startup, Yoller, a social networking site, in June. She had raised £1million in investment and launched the site in 140 countries, but the stress of working 19-hour days trying to keep things together left her in tears.
“I was obsessed with work, all the rest of my life was pushed aside,” she said. “I would often start at 6 a.m., work hard, then go to bed at 1 a.m. and a few hours later start all over again.
“The moment I knew I was burnt out was when I forced myself to take a vacation – when I came back and saw the mountain of work waiting for me, I burst into tears.”
Soaring inflation and the hiring crisis would force others to quit, Doherty said. “Overwork is encouraged in all kinds of jobs, and in my startup journey, I’ve seen how the mental health of founders is consistently ignored and overlooked,” she said.
“The scale of the damage trail breaks my heart. For small business owners who often work alone, the danger is that there’s often no one around to say, ‘You’re too stressed’.”