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A good time to start a business?

24 August 09 23:00 GMT

By Liz Barclay
BBC Radio 4 presenter

Is this the time to start a small business? Undoubtedly yes.

On Tuesday, Radio 4 starts a new series called A Small Business.

There's no better time to be hearing from people who have been there, done that, survived recession and all those other hurdles at which small businesses sometimes falter, and, in the case of Fran Cotton got the rugby shirt.

Fran, the former England and British Lions prop forward, set up Cotton Traders in 1987 just as the then boom was coming to an end, and recession was being whispered about behind hands.

He is on the panel of guests for Tuesday's programme, along with Francis Chittenden, professor of business finance at Manchester Business School, and accountant Allan Smith.

But it's the small businesses featured in the programme that underline just how important, vibrant and diverse the sector is.

One person bands

Charlotte Camfield-Walker is selling beautifully constructed corsets at parties. These aren't the Bridget Jones kind of thing you hide under your jumper to pull your stomach flat.

You wear these proudly on the outside, with an elegant black skirt, to a ball. They push up and pull in in all the right places, and they're selling well.

The business started on September 2008 with £250 of Charlotte's savings, an amount she felt she could afford to lose. She's got two other part time jobs, sells in a boudoir meets Tupperware sort of way, and plans to franchise out her business in the not too distant future.

According to the Federation of Small Businesses, Charlotte is fairly typical of the hundreds of thousands of start-ups expected this year.

We're losing 120 small to medium sized enterprises (SMEs) every day, but for each one of those around 11 are starting up. That's approaching half a million new SMEs in 2009.

The majority of them are like Charlottes - one person bands, risk averse, taking on little or no debt, and not employing anybody else any time soon.

As far as the UK's economic recovery goes, they point to long and slow because they'll do little to reduce the rising unemployment count.

Of the 4.7 million firms in the UK only 6,000 are big businesses.

The rest are SMEs which employ nearly 60% of the workforce.

They're the shopkeepers, taxi firms, hairdressers and plumbers we do business with everyday and can't get by without.

They've been more robust in the current recession that many analysts expected.

At the height of the recession in 1991, 1,000 SMEs a week were closing. This time round they seem to be carrying less debt and are better placed to make their repayments and keep their costs down.

Nobody's been too worried about profit over the past 18 months. Breaking even will do nicely thank you.

Redundancy money

So why are so many would be entrepreneurs choosing now to give it a try? People are looking for something to do with their redundancy money.

Savings are attracting such derisory levels of interest that people are more willing to take the risk. Like Charlotte they're able to finance the start-up themselves without borrowing, and they intend to stay small.

Something's happening to how people view their businesses and what they want from them. They don't want to work all hours for a lavish lifestyle.

They prefer to have a reasonable income to support a more modest lifestyle and time for the family. Accountant Allen Smith believes the sight of queues outside the Northern Rock has helped bring about the change.

People's aspirations are more modest because they don't want to take the risk of going there again. People are also aware that their pensions may not allow them much fun in retirement, so they're determined to carry on working.

Until employers change their ways older people will always find it difficult to get jobs - so why not create their own?

And there are always people who have long held a dream of working for themselves, for whom redundancy is just the push they need.

Also, owners of empty premises are doing good deals in order to attract businesses in. There are deals to be had from suppliers too.

Its always that bit cheaper to start up in recession. If you have an idea for how to improve on something already on the market you could find that a lot of your competition has already gone to the wall, leaving you the way clear to pick up the customers as the economy recovers.

A Small Business will be broadcast on Radio 4 on Tuesday, 25 August at 1600 BST.

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