Digital startups soar during cost of living crisis
Despite challenging conditions, the number of UK digital microbusinesses turning over more than £100,000-a-year grew substantially during 2023, and almost a fifth (17%) now bring in six-figure sums, according to new figures published today.
The findings come from Venture Forward, a multi-year research initiative by GoDaddy that analyses data from more than half a million UK digital microbusinesses – typically those with fewer than 10 employees. It shows resilience from UK entrepreneurs during the soaring cost-of-living with the number of microbusinesses turning over more than £100,000 being up from 11% last year.
The growth is similar for microbusinesses bringing in over £50,000, which stands at 33% today compared with 25% last year. In comparison, the median annual earnings for full-time employees in the UK was approximately £34,963 in 2023.
GoDaddy’s data shows the value of e-commerce for fast-growth businesses. 55% of entrepreneurs who own microbusinesses that are turning over more than £100,000 annually say that their website provides the main source of their income. A fifth (21%) invested their initial capital into a website when launching their venture, underlining the importance of digital infrastructure.
Of businesses that are now turning over more than £100,000 a year, over half (54%) were started in the past three years, demonstrating the speed at which successful digital businesses can be built.
Many digital microbusinesses required relatively small initial investments – 43% were started with less than £5,000 of initial capital, as digital tools reduce the barriers to entry entrepreneurs looking to start a new venture. Remarkably, one in five (21%) said their company cost them as little as £500 to create.
E-commerce platforms enable bricks-and-mortar only entrepreneurs to enlarge their catchment area, reaching a wider selection of customers, selling in more ways and becoming truly unstoppable. A website also means the business can run 24/7 without the need for employees to man the shop, so sales can take place outside of opening hours.
The opportunities offered by setting up an online presence are likely to continue in 2024, as:
- Over four fifths (83%) of people who own +£100,000 microbusinesses are optimistic for growth
- In contrast, just one in five (22%) say they are confident in the UK economy as a whole
- 1 in 3 microbusinesses in the UK are ‘breadwinners’, contributing 51% or more to household income
- About 1 in 4 women with a microbusiness in the UK are the ‘breadwinners’ in their home
The GoDaddy data shows that six-figure turnovers take time – but not necessarily money – to achieve. Over half (58%) of owners with £100,000-a-year microbusinesses work over 40 hours a week on their venture, whilst only 27% of all microbusiness owners said they do the same.
Andrew Gradon, head of GoDaddy UK & Ireland said: “It is remarkable to see that so many entrepreneurs have built six figure businesses – many with very minor initial investment – and that the trend is going upwards, as we’ve seen an increase of 55% on digital microbusinesses bringing in over £100,000 revenue. It is testament to the strength of Britian’s small business community, and the fact that British entrepreneurs really are unstoppable.
“Entrepreneurs who operate bricks and mortar only businesses are potentially missing out on huge growth at minimal cost, so there has never been a better time to diversify and sell in more ways”.
