What this means for the overall economy

Running your own business or being a company director are two of the toughest roles there are. 

As well as overseeing the management of the business and its overall direction, strategy and tactical decisions, self-employed directors probably have a day job to do as well. 

One of the most overlooked sectors during the pandemic has been the self employed and new statistics released by the Office of National Statistics have underlined how much it has been affected by Covid-19.

The initial news isn’t good

The number of self employed workers in the UK has fallen for the third successive year from 5 million in 2019 to just over 4 million in 2021 – a loss of 841,000 self employed positions.

The figures went into further detail by the industrial sector and showed declines in all sectors since 2019 although some have recovered more ground than others.

The construction industry alone has fallen to under 800,000 self employed operatives in the past two years which is its lowest level in nearly 18 years. 

There are nearly 100,000 less self employed health and social workers since the start of the pandemic, 30,000 less in the education sector and 51,000 less in the critical transport sector. 

If these trends continue than an IVA will become more common

Chris Horner, Insolvency Director with BusinessRescueExpert, thinks the reductions are instructive of the search for greater security during the pandemic and subsequent lockdowns. 

He said: “The massive uncertainty caused by Covid-19 on the economy and the economic prospects of many sole traders and self employed business owners and directors has caused many to reappraise their options. 

“The figures show that while the total of self employed workers has dropped, many will have looked for the additional security of working for a bigger company at least until they considered trading conditions were closer to what they assume as normal.

“For those that have moved careers, they might still have kept their previous company open and might want to close it to avoid additional bureaucracy. Dissolution or striking off a dormant company could be the best solution for them if they decide not to return to their previous occupation or status. 

“There’s also no guarantee that trading conditions will recover sufficiently well in 2022 to repair the damage the pandemic did to businesses all over the country. 

“Some sole traders might be facing an existential battle to remain trading while having to deal with rising energy charges, tax changes and other increasing bills in the next few months. 

“An individual voluntary arrangement (IVA) might be the ideal solution for them to consolidate their debt into a more manageable and repayable monthly amount allowing them to gradually repay their creditors over a longer period while continuing to trade and eventually return to profitability. 

“No matter what issues are facing a self employed business owner, I’m sure we’ll be able to help them.”

We offer a free consultation for any company director or business owners whether they’re self employed or not.

Once they get in touch and arrange a virtual meeting with an experienced advisor, they will be able to see what options are available to them – often more or more advantageous than they would have initially thought they had. 

And when they choose what they’d like to do then we’ll also be able to help them with their action plan – but only if they take the first step and get in touch with us first.