The UK is on track for a record year of new company creations in 2024, after figures documented a record 468,000 new business incorporation at Companies House in the first half of 2024, up more than six per cent from either half of last year.

The 248,000 start-ups launched in the first quarter of 2024 marked a 43% increase on the same period in 2020, according to the New Startup Index compiled by Beauhurst in association with NatWest.

The report said growth in the first half of 2024 was mainly driven by the wholesale, retail and professional services sectors – together accounting for around 36% of the new incorporations.

Record female businesses incorporated

Assuming this pace of business creation is maintained, the 2024 annual total is predicted to surpass last year’s record figure of 879,000, which itself was up 10.6% from 2022. A record 164,000 companies were incorporated by sole female directors or all-women teams in 2023, signalling a step forward in the ongoing challenge to create a diverse and equitable business ecosystem.

James Holian, Head of Business Banking at NatWest, said the report findings instilled a sense of pride in the resilience and dynamism of the UK’s business landscape: “Despite the formidable challenges that have marked recent times – from inflationary pressures to heightened operational costs – the UK’s entrepreneurial spirit has not just endured; it has thrived.” 

Regional breakdown

Across the UK regions, London led the way in the first half of 2024 with 161,000 new business incorporations, the highest across all regions. The West Midlands and Yorkshire and The Humber also experienced notable growth rates of 10.1% and 8.15%, respectively.

Wales and the South West were the only regions to report a year-on-year decline in new company registrations, with decreases of 9.99% and 0.85% respectively. Despite these declines, Wales still registered 17,900 new businesses, while the South West reported 23,000 new businesses in the first half of the year.

Henry Whorwood, managing director at Beauhurst, added: “Certain aspects of the economy are firing on all cylinders. UK entrepreneurs are still starting lots of new businesses. This may mark the beginning of a new normal with higher rates of entrepreneurship in the UK economy than known previously.”

Macroeconomic climate remains tough

While the figures point to the UK’s resilient entrepreneurial climate, the macroeconomic background remains tough as businesses navigate a tricky economic environment, inflationary pressures and high interest rates. 

According to ICAEW’s most recent Business Confidence Monitor (BCM), the need for certainty and stability remains a priority for ICAEW members, against a backdrop of a fragile investment appetite and staff recruitment and retention challenges. Only half of start-ups typically survive the first three years in business, according to analysis by Experian.

Advisers – strategic guidance and compliance

Access to the right information, support and strategic guidance is key to ensuring that fledgling businesses start out on the right foot in the quest for growth and long-term success. Kat Hearn, Senior Technical Manager, Practice at ICAEW said a business that engages with a chartered accountant from the start will benefit from years of experience and specialist knowledge. 

“Not only do chartered accountants provide strategic guidance, helping with direction, focus, and offering valuable industry insights, but they also ensure that all compliance aspects are handled correctly, avoiding costly mistakes. Chartered accountants serve as a reliable sounding board, offering advice and leveraging their wealth of expertise.

“By engaging a chartered accountant from the beginning, this support can grow and evolve alongside the business, developing a strong working partnership that gives the business the best opportunity to thrive,” she adds.

Good advice critical to success

Simon Gray FCA, ICAEW Head of Business, said that with growth, innovation and job creation as keys to the success of the UK economy, this record level of business creation makes great reading. “Securing the right advice and making good decisions early on determines longer-term outcomes and business viability further down the track.” 

Gray said his own experience of starting a business in 2008 at the outset of the financial crisis highlighted how discipline over costs and having a clearly defined customer were critical to early success and the longevity of the organisation.

“Arguably, the business landscape has become more complex with the increased regulation new entrepreneurs must navigate, in addition to challenges in securing finance, adopting technology and hiring the right people. Involving an ICAEW Chartered Accountant early on helps to set solid foundations and brings in expertise, not just on finance, but other factors including strategy, operations, technology and ESG considerations.”