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Entrepreneur Nation - Just over 4 million British workers will become self-employed

POSTED: 17th February 2017
IN: Newsroom
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  • One in seven British workers (15%) aim to become self-employed at some point in the future
  • One in 10 of these (12%) hope to make the transition in the next six months
  • But a quarter (25%) would need to be made redundant before they consider taking the plunge

Great Britain is a nation of aspiring entrepreneurs, according to a new report* from Aldermore, the specialist lender and savings bank. Just over one in seven, the equivalent of four million** British workers want to become self-employed at some point in the future, and more than one fifth (22%) saying it has always been an ambition.

One in 10 workers (12%) are looking to make the transition in the next six months. For many (25%) though, the goal is further away and could take over five years to reach. A further quarter (25%), say they would only consider becoming self-employed if they were made redundant from their current job, whilst for 20%, being unhappy in their current place of work would push them to take the plunge.

Reasons for becoming self-employed

Employees who have not yet taken the step, one of the most cited drivers is the opportunity to earn more money (37%). This is particularly prevalent among those aged 25–34, of whom almost half (48%) cited this as a motivation. Being able to improve work-life balance (35%) is also a top reason. The reality however is quite different. When asked, half (50%) of those who are already self-employed** say they have not been able to earn more money since becoming self-employed.

Perception vs reality of being self employed

Self-employment is no easy feat, and although for the vast majority (93%) of those currently self-employed enjoy being their own boss, and feel in control of their own destiny (82%), makes their role enjoyable, there are downsides, many of which are more prevalent than aspiring entrepreneurs would believe:

 

Issue

Concerns from aspiring entrepreneurs*

Reality experienced by the self-employed***

Irregular source of income

32%

55%

Difficulty paying bills

25%

18%

Inconsistent cash flow (i.e. money moving in and out of my business)

24%

41%

An irregular volume of work

18%

52%

Not being paid by clients on time

11%

44%

Difficulty securing a mortgage

11%

10%


In addition, there is also the fear of failure, with a quarter (25%) of Britain’s aspiring entrepreneurs stating they were worried about their business failing.

Following a review of its self-employed mortgage criteria, Aldermore has taken the decision to reduce the number of years accounts a self-employed borrower must provide when applying for a residential mortgage – from two years’ to one – taking into consideration profit retained within the business when assessing affordability. These changes will provide applicants with additional flexibility and support, assisting them to purchase a new home or remortgage their existing one.

Charles Haresnape, Aldermore’s Group Managing Director, Mortgages, says: “Taking the step to become self-employed is a brave and bold decision and we love the fact that in the UK more and more people are doing so. However, we know that whilst it can open the door to many amazing opportunities, it can be a risk, with uncertainty and financial instability from start up.

“We want to make things easier for aspiring entrepreneurs by trying to ensure some security when it comes to home-buying. Almost a third (30%) of self-employed home owners believe the mortgage application process was biased against them, while almost two thirds (63%) of those who have experienced difficulty securing a mortgage said it was because it was difficult to find a provider who understands individual business owners.

“All too often self-employed borrowers do not fit the ‘norm’ for many lenders and it can be a real challenge for self-employed to receive the financial support they need to buy a home. This is why we are working to simplify the process of applying for a mortgage. Aldermore has a human approach to lending, and out specialist advisers consider each case on an individual basis.”

There’s a growing demand for a tailored approach for self-employed applicants and their needs

New Requirements:

  • Applications should be accompanied by, one year of accounts prepared by a suitably qualified accountant; accountant’s certificate, or SA302 and accompanying tax overview documents obtained from HMRC.
  • Unlike other lenders Aldermore will usually use the latest years’ figures rather than an average of the last two years when making the assessment, if net profit is level or rising.

*Ends*

Notes to Editors:

*All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2088 adults (of which 1079 were employees). Fieldwork was undertaken between 24th - 25th January 2017.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

**2088 (The total sample of respondents on the Omnibus)  /1079 (The total base of respondents who are employees – either full or part time)  x 15.5%(those who want to be self-employed in the future)  = 4,111,663

 According to the latest ONS figures, there are 51,339,161 adults (18+) in the UK.

51.67% of 51,339,161 = 26,526,861

15.5% of 26,526,861 = 4,111,663

***All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 1003 self-employed adults. Fieldwork was undertaken between 26th - 29th January 2017.  The survey was carried out online.

For further information, journalists can contact:

Rachael Snelling, Aldermore
Phone:          0208 1853 102
Email:           Rachael.Snelling@aldermore.co.uk

Follow us on Twitter: @AldermoreNews

Rozie Green, Lansons
Phone:          0207 566 9724
Email:            rozieg@lansons.com

For further information about Aldermore, please review our Notes to Editors page

Follow us on Twitter: @AldermoreNews

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