6th December 2017
Many of these businesses haven’t been incorporated in traditional offices, but in kitchens, garages and garden sheds around the country. Technology has enabled companies to operate from almost anywhere. Our study has found that there are now 2.7 million home businesses across the UK, a rise of 40 per cent since 2000.
18 PER CENT OF HOME BUSINESSES ARE CONSIDERING A MOVE INTO A MORE COMMERCIAL SPACE
But what would happen if these home businesses were to take the next step? For many an ambitious home business, the first move on the road towards growth is a new business premises, outside of the home.
This can have transformative effects. From a change of mindset, to more space and a greater ability to hire employees. This act of stepping up is what we’re exploring in this report.
Our research has shown us that 18 per cent of home businesses are considering a move into a commercial space. This equates to 470,000 businesses – all poised to take their businesses to the next stage.
We’ve found that the businesses thinking about moving have a higher turnover that those that aren’t, with an average of £97, 200 among the potential Step Ups compared to £83,000 among the other home businesses. They tell us they estimate a move out of the home could see their turnover increase by a third and their profits climb by a fi h (21 per cent) in the year after moving. Meanwhile, 12 per cent of those looking to move expect their revenues to double.
Combining the survey findings and the data from the ONS’ Labour Force Survey, we estimate that home businesses that said they’d like to move out currently have a turnover of £45.6 billion per year and take home £15.8 billion in profits. Given that the average expected uplift in profits stands at a fifth and turnover at a third, we’ve calculated potential Step Ups could unlock £3.3 billion in profits and £15.4 billion in turnover if they take the plunge.
The difference between the two groups is also significant when it comes to employment. Home businesses looking to move already employ three people on average, compared to two for those that would rather stay. On average they also anticipate hiring at least one extra person if they move, with one in six expecting to hire two more. We’ve calculated that this could see 670,000 additional people employed.
Although many home businesses expect to see some sort of rise in revenues and profits after moving, the main driver for our group of ambitious home businesses is the desire to professionalise, with 58 per cent citing this as their most important reason. This is followed by gaining space for inventory, which was second and desire to take on additional staff members, which was third.
The economic impact of these home businesses stepping up and relocating their businesses out of the home is sizeable. These ambitious companies could start to see a real difference in their attitudes, their abilities and their bottom lines. In the next chapters, we’ll take a deeper dive into some of our data and look at who our would-be Step Ups are, where they live and what they do. We’ll also explore some of the challenges they face.
£3.3 BILLION COULD BE UNLOCKED IF THOSE EYEING A MOVE TAKE THE PLUNGE