A pandemic, a recession, and a window of opportunity: How lockdown bred a thousand small businesses

While some of us were busy baking banana bread, others were launching their own businesses. Sarah Young speaks to the UK’s budding entrepreneurs about how they made it work, against the odds

Thursday 29 October 2020 16:40 GMT

When the coronavirus pandemic and subsequent lockdown arrived in the UK in March, Philippa from Essex, was made redundant from her 15-year-long career in the city. Like hundreds of thousands of other workers, the 36-year-old lost her entire income practically overnight. “Redundancy was a strange feeling and as a single mum with no support I was worried,” she says. “I am not a risk taker and so this felt like a big risk...paying the mortgage was my main concern.”

Despite the uncertainty of the new normal and the mass shakeup of the job market causing around 700,000 job losses in the UK, Philippa and her sister Jessica, 27, decided it was time to be brave. In June, just weeks after Philippa’s redundancy notice, the sisters launched a new family-run boutique, Three Sisters Farm, after noticing a gap in the market for sustainable dried flowers.

“Lockdown was a pivotal moment for us as we strived for certainty within an uncertain world,” Philippa explains. “We both had the desire to work for ourselves but were not sure what this entailed. We could see a shift in consumer behaviour, with an increase in supporting small businesses, shopping local and online. So, this gave us the confidence to enter the market.”

And the risk paid off. The pair signed up to online floristry courses, became web designers overnight and invested in £100 worth of photography equipment. The venture has since proved such a huge triumph that they have successfully graduated from their living room into a commercial unit and have plans to become the leading supplier of dried flowers to the retail market.

The economic impact of coronavirus cannot be overstated. Approximately 9m people had to rely on the government furlough scheme to pay their wages, and many of these will move on to the job retention scheme on 31 October as their employers are still not confident enough to bring them back full time. According to the Institute for Employment Studies (IES) close to half a million redundancies are likely to be announced this autumn, on top of the 240,000 that have already been recorded by the government up until June. The Bank of England has issued warnings about a historic recession, and with the UK due to leave the European Union from 1 January, there could be more turbulence yet.

While many have had to endure this financial rollercoaster holding tightly to the purse strings, others have used the economic shock as a window of opportunity, to revamp their businesses or, like Philippa, start an entirely new one. More than 95,000 new businesses were created between July and September, according to recent analysis of VAT, HMRC, Companies House data and business surveys, marking a 5.3 per cent increase on the same period last year, and a 7.2 per cent increase on the previous quarter.

It is likely that this increase is a by-product of the upheaval sparked by widespread job losses and an uptick in the number of new businesses doesn’t necessarily mean they will all be successful (Forbes estimates that only between 45 to 51 per cent of small businesses survive the five-year mark) but the outlook is certainly not all doom and gloom.

There are roughly 5.8m small businesses in the UK, with the Office for National Statistics (ONS) stating that entrepreneurs are set to play a “vital role” in the UK’s recovery, particularly those involved in online retail. While Covid-19 has been a blow to physical retail stores, notably the British high street, it has accelerated e-commerce, with online sales from April onwards peaking at almost double the previous year’s levels.

In particular, sales of household goods thrived as the demand for home improvement continued and people entered nesting mode while stuck indoors. As shopping for the home was at the front of people’s minds, it seemed smart that savvy entrepreneurs should give the people what they want.

When Jess Messenger, 31, from Derbyshire, decided to learn a new skill during lockdown, she had no idea that in the space of just three months she and her partner Lee, 33, would be running a hugely successful Scandi-gothic inspired candle and wax artworks company – The Scent Coven – with a cult following on Instagram and products they could barely work quick enough to keep in stock.

“I started researching candle making in February, by March I was making test candles in our kitchen and by June we had a line to launch,” Jess says. “It has been a complete whirlwind. We only expected to sell a handful of stock but, within three weeks, we had turned over £3,000 in sales. We were still making from our kitchen over a stove, so we spent a week converting our garage into a studio and invested in machinery to help melt larger quantities of wax to ensure we could keep up with demand.”

We only expected to sell a handful of stock but, within three weeks, we had turned over £3,000 in sales

Jess Messenger, The Scent Coven

Also tapping into the lockdown candle craze were Ailidh and Robbie from Edinburgh. The couple had always flirted with the idea of running their own business but, as they entered lockdown, they took the leap and decided to spend their newly-free evenings and weekends creating Summer Morning Studios, a homeware brand that is all about making “candles too pretty to burn.”

“Once we came up with the candles idea, lockdown was the perfect opportunity to just go for it,” says Ailidh. “It was really quick for us. Creating an Instagram account and putting the idea out there was a massive first step but as soon as we shared product pictures, we began quickly gaining followers and had people messaging us wanting to buy the candles, all before we'd even launched.”

The couple, who also work full time, were overwhelmed when their first product drops sold out within a matter of minutes, and struggled to keep up with the demand of their small one-bedroom flat. “It’s been crazy. When we were in full lockdown, everyone was obviously spending much more time than usual in their homes – it's only natural that people turned to things like scented candles,” Ailidh explains.

And therein lies the power of social media. While it has its downfalls, for budding entrepreneurs, platforms like Instagram can make a real difference, with Ailidh saying it was the one tool that helped them get their business off the ground. Philippa agrees, adding that you don’t necessarily need a business degree, tons of cash or expensive equipment to get started, as long as you come armed with an innovative idea and a mobile phone. “This platform is hugely powerful. You have free access to a wealth of information, facts, mentors, insights and audiences all from the comfort of your sofa,” she says.

Starting a business is difficult at the best of times, let alone during a global pandemic and historic recession. But, as the old adage goes, “success breeds success”, and one of the things many of these flourishing entrepreneurs are finding comfort in is the fact they are beginning to find themselves in a position where they can hire their first employees from the huge pool of other people looking for work.

Philippa and Jessica have just hired two new members of staff to help them keep up with demand, both of whom had been made redundant during lockdown, while Natasha and Jack, co-founders of Lockdown Liquor & Co - which sells premium blended cocktails - are in the process of growing their team.  

Their intention initially when setting up Lockdown Liquor was to raise funds and awareness for NHS Charities Together, however they quickly realised that it had huge potential and moved fast to set it up into a business. In a matter of weeks, they found themselves working with brands like Twitter, Facebook and Spotify, which in turn saw them sell more than 10,000 bottles.

“I think for us we have always been quite entrepreneurial, and we saw an opportunity and we decided to grab it which subsequently led to us being able to give people jobs during a time when there was so much uncertainty,” Natasha says. “What was rewarding was to see how something quite small can actually make a difference in people’s lives.”

There’s no doubt that the Covid-19 pandemic has added to the challenges of running a small business, regardless of their size, location, or funding. But, what is clear is that they will play a crucial role in helping the British economy to rebound. All they need to do now is continue to survive and thrive.

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