Uncertainty over general election delaying Scots' ambitious plans to become entrepreneurs, FreeAgent report finds

Now, the appetite for would-be entrepreneurs to set up their own venture has been put under the microscope in a new study by the financial technology (fintech) firm. It has found a strong desire among people to become entrepreneurs – with a fifth of Scots looking to set up their own business in the next six months, for example.

However, budding business-owners have also reported several potential pitfalls that they see could hamper their journey along the entrepreneurial path, with major concerns over the upcoming general election, possible resulting weak government policies to support smaller firms and entrepreneurship, and troubled economic backdrop.

FreeAgent said the poll of working Brits has shown that, while the overwhelming majority of respondents have had thoughts of starting their own business at some point, 54 per cent said their decision had been “significantly” or “somewhat” affected by the prospect of a general election this year. Prime Minister Rishi Sunak needs to call such an event by December 17 of this year, and the latest date for the general election is January 28, 2025.

In addition, 55 per cent said they had been deterred from starting a business due to economic instability caused by uncertainty around the next election. “With no date yet set for the upcoming general election, the uncertainty caused by potential political and legislative changes is making aspiring entrepreneurs nervous,” FreeAgent said.

Its poll found that more than a third of Scots said they have been put off from starting their own business due to uncertainty around changes in tax, with the same proportion worried about adjustments to small businesses funding, and 23 per cent more generally concerned around changes in legislation and regulation with the potential entrance of a new government.

FreeAgent said the ongoing cost-of-living crisis has meant 75 per cent of respondents have put off plans to start a business. “Furthermore, many business-owners appear to have been affected by the financial burdens of setting up a business, with 31 per cent of those surveyed noting that they were concerned with the potential budgets needed to set up a business, while 15 per cent said a lack of personal savings was a particular worry,” it said.

The latest economic indicator from the Scottish Chambers of Commerce found that firms north of the Border had seen a downturn in their fortunes during 2024 in the face of “extreme” cost pressures and new taxes. That was followed by the most recent Addleshaw Goddard Scottish business monitor, published earlier this month, which said 83 per cent of firms in Scotland saw their costs increase over the first quarter of 2024, although the sector was also praised for being “resilient and optimistic”.

Further evidence of the latter is FreeAgent’s study uncovering how a third of Scots said they still hoped to set up a business within the next 12 months, with cited advantages including achieving a better work/life balance (48 per cent), being able to choose the work done (39 per cent), the belief that they could earn more as their own boss (35 per cent), and having a greater sense of achievement at work (33 per cent). “Autonomy is clearly of great importance to today’s entrepreneurs, as many feel restricted by routine workday boundaries, but Scotland was the most passionate about being able to choose the types of work carried out,” the firm said. What’s more, nearly seven in ten survey respondents north of the Border said that although they have moderate concerns about the potential failure of their business, they believe they can overcome these challenges, with over a fifth believing they have the necessary industry experience to start their own business. That being said, Scotland ranked one of the lowest for feeling confident in its own abilities.

Roan Lavery, chief executive and co-founder of FreeAgent, said: “While it’s great to see that the overall appetite among the Scottish public to start their own businesses remains strong, it’s probably no surprise that political uncertainty is putting some people’s plans on hold.

“Many budding entrepreneurs are clearly considering the possibility that there may be big political and economic changes on the way, particularly if there is a change in government, and are waiting to make any concrete plans to start their own businesses. However, this uncertainty is only going to continue until we have some kind of clear indication over when the next election will actually be held – and what the various political parties’ priorities are for the small business sector.

“Although we may have to wait for the main parties to reveal their actual election manifesto pledges, I hope that they will start to give some indication over their plans for the small business sector. By having clarity over issues such as small business taxes, late payment, and access to support, SMEs will be able to better plan for the future, and would-be entrepreneurs will have more confidence in taking the plunge and setting up for themselves. It’s vital that everything possible is done to support this important part of the economy, so that it can lead the way to recovery in the coming years.”