According to the Financial Times, the number of new businesses  in the UK will reach  a new record by year end.

Does this mean people are expecting good times ahead?  Is now a good time to start a new business?

David Storey, adviser to the government on enterprise trends and director of the Centre for Small and Medium-Sized Enterprises at Warwick Business School said waves of redundancies were swelling the ranks of "necessity entrepreneurs", who set up businesses because they have few other economic options.

His forecast was triggered by publication yesterday of a detailed demography of UK business by National Statistics. This showed that the number of active businesses with turnover above the value added tax threshold reached 2.3m at the end of 2008, the most this decade.  The total number of UK businesses is estimated at 4.8m, but this includes many tiny enterprises which have sales less than £68,000 a year.

Figures from the British Bankers' Association show that an average of 47,500 small businesses set up new bank accounts every month of this year up to October. 

The monthly average during 2008 was about 43,800.  Business creation rates were climbing steeply, he said, in response to unemployment. However, many people setting up small companies or embracing self-employment would fail because "there is less customer demand and fewer resources at the disposal [of entrepreneurs] because of falling house prices and limited bank lending."

Is this thinking too gloomy? I guess you don’t have to be a professor to work out that if there are a lot of people forced to start businesses, a proportion of them are not going to be very good at it.  Lots of these people may set up in something “easy” that they know nothing about, little thinking that lots of others may have the same idea.That said, a quick straw poll of friends, neighbors and colleagues, confirms my suspicion that you still can’t get hold a of half decent tradesman when you need one. This shows there is demand for these services, just that many people don’t have  the skills to fill them.National Statistics provides comfort for struggling start-ups by revealing that closure rates are better than urban myth suggests. It is often claimed that 80 per cent of new businesses fail in five years.  
According to Business Demography 2008 , the real rate is about 53 per cent. The reason many of these close, is they find it just too hard or they find they can earn better money by going back to salaried employment.  That’s not the same as failing.The ones who “survive” are those who like what they are doing and are making money.
So, back to my original question.  Is this a good time to start a new business?   The answer is, the more skilled you are, the better financed you are, the more chance you have of succeeding. Don’t forget of course, that the harder you work, the better service you give, the “luckier” you will become!