Company Formation - The Figures Are Up!

In the current economic climate, it still surprises us that the company formation statistics have been reasonably resilient.

Pronouncements from Companies House over the last few months have suggested that the numbers of companies being formed have fallen considerably and this has been latched onto by some parts of the media. However, the reality is different.

We have carried out an analysis of the formations from the first week of January to the end of May. Whilst the year on year figures for the early months are showing a decline, the overall position is not so poor. In fact, between 4 January and 24 May, 146,167 new companies were formed compared with 153,238 in the corresponding period for 2008, a fall of 4.61%. However, if one reworks the figures excluding January, the fall is only 2.13% and seems to be improving all the time. In fact taking the month of May alone, the figures are actually up by 6.8% with 33,685 companies formed in that period compared to 31,539 in 2008 for the corresponding period..

A four week rolling average also confirms the position with the statistics at the end of May suggesting an increase of 9.03%

We will be watching this data and updating it regularly, but if the company formation figures are anything to go by, there are definitely some encouraging signs.

As a consequence, many people are considering starting their own company. While, the concept of forming a company in a recession may seem ridiculous to some, many business analysts are suggesting that now might just be the perfect time.

The recession provides entrepreneurs with the chance to get a share of voice and market. If you get the product and the proposition right. A sector that appears to be doing well in the SME. We spoke to one of clients, Paula White, who formed her London base PR agency last year;

“I had grown sick of being a wage slave, I had recently had a child and I wanted more flexibility and control over my own financial future. So I started my own PR Company. All of my colleagues and friends thought I was mad to give up the stability of my salary to start my own company especially in a recession."

However, White found that the credit crunch provided her with perfect opportunity to pitch for business.” We found that large corporations were being stretched. Yet, despite the fact that they didn't have huge advertising and marketing budgets anymore, they could still afford PR. As my company did not have the large overheads of an office and staff, I was able to charge a lower rate which they could afford."

The food sector has also experienced an unprecedented boost. Supermarkets are one sector that has experienced a boom as consequence of the recession due primarily to their innovative marketing strategies. Instead of ignoring the impact of the recession they have used it to inform some of their most creative advertising campaign.

In conclusion, it would seem that the decision to form a company in a recession is one that should not be taken lightly. However, if you plan your business well and execute it strategically, you and your company could emerge from the recession stronger than ever.