- Work/life balance and independence top list of why people want to be their own boss, new research reveals
- Changes needed to the benefits system to back those striving to go from unemployment to self-employment
- Government urged to adopt targets for growing self-employment, including more women and disabled entrepreneurs
A better work / life balance and greater independence are more important to most people starting a business and working for themselves than creating personal wealth, according to landmark new research from the Federation of Small Businesses (FSB), with two thirds (67%) citing the independence it gives as a key motivator.
The UK’s leading grassroots business group is calling on the Government to set a target of supporting and encouraging 500,000 more small businesses to exist by January 2028, starting this new year. This would take the small business community back to its pre-pandemic size of six million.
FSB’s new analysis suggests a package of targeted measures to achieve this, which would not only stimulate economic growth and jobs, but also improve equality of opportunities and social mobility. This includes changes to the benefits system to increase the number of people moving from unemployment to self-employment, in-turn reducing the benefits bill longer-term.
The research finds the top three reasons for being your own boss among those who’ve taken that step or are planning to are independence at work (67%), followed by a better work/ life balance (53%), and thirdly creating wealth for the individual and their family (45%). The attraction of self-employment as a way of balancing work, personal and / or family life is even more prevalent (71%) among those who have been on benefits.
But barriers remain which, if addressed, could unleash much-needed new and dynamic entrepreneurship, and in turn grow local economies in communities right across the UK.
More than a quarter (28%) of sole traders say reform of Universal Credit (UC) would support them to start and / or grow their business. For those out of work who try to build their own business, UC rules can currently leave them worse off than those who are employed and in receipt of UC. FSB is calling for a longer new business start-up period allowed under UC, from 12 months to two years. Meanwhile, income for those who are self-employed should be assessed quarterly rather than monthly, to take account of fluctuations in business, including seasonal businesses.
Almost a quarter (23%) of women aged 45 and under say better access to the Maternity Allowance would improve their ability to start or grow their business. The value of Maternity Allowance is significantly lower than that of Statutory Maternity Pay. FSB is calling for these to be brought closer into line; for Maternity Allowance not to be treated as “unearned income” under UC; and for a subsidy scheme for sole traders who are new mothers to cover the costs of stepping away from their business for up to nine months.
FSB’s other recommendations to support those moving from either employment or unemployment into starting a business include:
- A ‘New Traders Allowance’ for jobseekers, as a more effective and ambitious replacement for the New Enterprise Allowance (NEA).
- Encouraging up-skilling by expanding the areas in which the self-employed can claim tax relief for training.
- Supporting side-hustles by doubling the trading allowance, from £1,000 of trading income to £2,000.
FSB is also calling on the Department for Business and Trade to set a target of 250,000 more disabled entrepreneurs by 2030; and a target for 50 per cent of self-employed individuals to be women by 2035, up from the current level of 37 per cent.
FSB’s Policy Chair, Tina McKenzie, said: “Entrepreneurship provides many with a path to financial freedom and independence. For some, it’s a long-held dream; for others it comes after an unexpected career shift or change in life circumstances.
“As our new research shows, the main motivation for wanting to be your own boss is often not primarily about making money beyond a liveable income; it’s about the freedom it gives in terms of fitting in with life, health or family circumstances – and provides a fantastic way to unlock opportunity and talent, and improve lives.
“Replenishing the small business community to its pre-pandemic size of six million is also a no-brainer for the economy, which is why the Government should commit to a target of 500,000 more small businesses existing by 2028 – and follow our evidence-based recommendations to achieve that. This would not only be good for growth overall, but also crucial for local economies, communities and individuals in all parts of the UK.
“In committing to growing the number of self-employed, the Government would also be helping itself to achieve its aims of reducing economic inactivity and cutting the benefits bill.
“It seems absurd that the benefits system currently works in a way which can financially suffocate those who’ve taken the bold step of trying to start a business, just as that business is beginning to get off the ground. Building a successful business from scratch takes more than 12 months, and it’s high time Universal Credit rules were changed to take account of that, and back those striving to move from unemployment to self-employment. The system should also recognise that self-employed income fluctuates and therefore income should be assessed quarterly rather than monthly to better reflect the reality of running a new business.”
Ends
Note to Editors
- Entrepreneurs, start-ups and business growth: FSB Report on Self Employment - Part 1 fsb.org.uk/resource-report/entrepreneurs-start-ups-and-business-growth.html
- Steps to Growth: FSB Report on Self Employment - Part 2 fsb.org.uk/resource-report/steps-to-growth.html
About FSB
FSB is a non-profit, non-party-political organisation that offers its members a wide range of vital business services, including advice, financial expertise, support and a powerful voice heard Government. Founded in 1974, FSB celebrated its 50th anniversary in 2024. More information is available at www.fsb.org.uk. You can follow us on X (formerly known as Twitter): @fsb_policy and on LinkedIn: FSB Westminster.
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