Necessity-led entrepreneurs see retail and wholesale start-ups jump by 88 % Year on Year, CRIFVision-Net

Growth in new company start-ups

Overall, Ireland saw an 8% growth in new company start-ups and a 7% increase in insolvencies in Quarter One this year

• Other sectors to see double-digit growth include manufacturing (87%), motoring (41%), transport, storage and communication (33%), and health and social work (11%);
  • Notable decrease in hospitality (-13%) and construction (-6%) start-ups
  • Amongst large urban populations, Galway (17%), Cork (16%), Dublin (9%), and Limerick (8%) all saw YoY start-up growth
  • CRIFVision-Net MD: “Despite the continued economic adversity felt across many sectors, the fundamentals of the Irish economy remain strong and business owners appear quietly confident of strong growth in 2021.”

The first three months of the year have seen a significant increase in ‘necessity-led entrepreneurship’ across the retail and wholesale sectors, according to the latest figures from credit risk analyst CRIFVision-Net.

The increase in startup activity is a welcome change from a report last year.

Who are necessity-led entrepreneurs?

Necessity-led entrepreneurs are those who may be faced with a job loss, dissatisfaction with their current positions, or a lack of career opportunities. The incentives to start a new business are usually unrelated to their entrepreneurial characteristics.

Churn in retail offers opportunity?

The quarterly figures published today reveal an 88% (+438) year-on-year increase in retail trade and wholesale start-ups, suggesting that the continued Covid-19 public health restrictions and resulting job losses, may have compelled more individuals to start their own businesses in response to the last 12 months of adversity.
According to the data, a total of 6,353 new company start-ups were registered in Q1 2021, marking an 8% increase when compared to the same period last year. During this period, company insolvencies were also up by 7% (Q1 2021 vs Q1 2020).

Manufacturing and motoring experienced double-digit growth in new company registrations in the first quarter of 2021, growing 87% and 41% on the same period last year #CRIFVisionNetQ1.

For full sectoral insights, visit: https://t.co/4NyMDFcFME pic.twitter.com/Ooa2DuD2P6

— CRIFVision-net.ie (@VisionNetLtd) April 26, 2021

Sectorial analysis

Other sectors to see double-digit year-on-year start-up growth include manufacturing (87%), motoring (41%), transport, storage and communications (33%) and health and social work (11%). Meanwhile real estate (+9%), finance (+8%) and IT (+8%) also demonstrated YoY growth.
The quarterly data suggests the hospitality and construction sectors continue to feel the impact of Government Covid restrictions. According to the data:
• The hospitality sector saw a 13% decrease in company start-ups compared to 2020.
• Construction recorded a six per cent decrease in start-ups and experienced a 25% increase in insolvencies during the same period.

The next wave of start-ups

One small business commentator explained, “I am not surprised at the increase in start-up activity. Arising out of their experience in the pandemic, many individuals share a pent up energy for doing their own thing. Tired of their current roles they wish to express themselves by becoming self-employed and seize opportunities in this new year of COVID Plus One. So far this year I have advised new companies in circular economy, e-commerce, pet care (dogs!), cafés and social enterprises.

Regional overview: Q1 2021 vs Q1 2020

A total of 16 counties in the Republic of Ireland experienced a YoY improvement in new company registrations for Q1 this year. Amongst these counties, Sligo (+68%), Carlow (+51%) and Westmeath (+38%) recorded the highest percentage growth.

Dublin start-ups

Dublin accounted for the largest number of new start-ups in Q1, recording a total of 2,918 registrations. This marks a 9% YoY increase for the county. Cork saw a total of 644 new start-ups (+16%), Galway recorded 249 (+17%) and Limerick recorded 192 new start-ups (+8%).

Christine Cullen, MD of CRIFVision-net, comments: “Twelve months on from the first Covid lockdown and the Irish economy continues to demonstrate its resilience, despite the ongoing Covid-19 public health restrictions and uncertainty. The eight per cent growth in new company start-ups suggests an underlying confidence in the fundamentals of the Irish economy. Last week’s Department of Finance forecast of a 4.5 per cent growth in GDP this year, and a five per cent rise next year, further supports this.”

And Christine continues
“What is evident from our latest data, is that industries such as the hospitality and construction sectors, continue to bear the brunt of the Covid-19 public health restrictions. However, recent economic and operational challenges in other sectors, combined with a ‘nothing to lose’ mentality may have given rise to a new wave of necessity-led entrepreneurship. The growth across many sectors in the first quarter of the year, gives plenty of reason for optimism in the year ahead. However, economic prospects for Q2 and beyond continue to hinge on the successful roll out of the vaccine programme and the assumption of an easing of Covid restrictions in parallel.”

Additional comments

Local Enterprise Offices provide the foundation for business growth of necessity entrepreneurs

Public sector managed Local Enterprise Offices are county based enterprise agencies with a focus on supporting start-ups and micro-businesses. Embedded in local authorities, they are funded by, and are under the direction of, the national enterprise agency, Enterprise Ireland. They have proved an effective agent in delivering new Government supports to small businesses  – as part of a range of stimulus packages in 2020.

Port of call for start-ups

Being the port of call for most start-ups the LEOs continue to assist new companies in 2021. Currently over 7,500 companies employing over 35,000 people are now supported by the LEOs.

Last year, assistance included
• 13,000 small firms supported with grants to trade online
• 5,585 new jobs created in 2020, companies receiving grant support. This number does not include several thousand more companies supported by business mentoring.
• A record €22million approved for businesses in financial assistance

Padraic McElwee, chair of the network of Local Enterprise Offices, explained; “The LEOs were to the fore in trying to help companies pivot or adapt their businesses to sustain through the issues caused by Covid and Brexit. The figures show the level of support that was given, both financially and through training, mentoring and the work done in getting small companies online to ensure they could continue to reach their customers.

By Billy Linehan, contributor for Irish Tech News & business mentor at Celtar Business Consultants