Almost 50,000 new side hustles created to cope with cost-of-living

One in four new businesses are now created as a side hustle, or second job, to supplement existing incomes, according to new research.

As the cost-of-living bites, a quarter (24%) of entrepreneurs said their new enterprise was created to supplement their existing earnings, in a study by The Accountancy Partnership, a leading provider of online accounting services.

This means that almost 50,000 new start-ups were set-up to supplement existing incomes in the past quarter alone, as 201,073 businesses were started in the UK between April – June.

The research into the expectations and realities of starting and running a business found that three in 10 (29%) start-ups became profitable more quickly than they expected – an encouraging sign for new business owners.

A fifth (22%) of SME-owners expected to make less money than they now do, making side-hustles a viable option for many. Although the same group reported an inconsistency of income streams.

Lee Murphy, managing director of The Accountancy Partnership, said: “The cost-of-living crisis is undoubtedly a catalyst for the increased rate of business creation. In fact, there are many examples of businesses being created during difficult economic times. This is evident in official figures which show that the number of new incorporations between April and June 2022 increased by 5.5% versus the same quarter in 2021. The number of new start-ups also increased by 18.3% when compared with the same three months in 2020, highlighting that entrepreneurialism doesn’t slow down during unpredictable conditions.

“Seeing this rise in side-hustles as a secondary income source is positive for those setting out to achieve long term goals, and it’s great to see new entrepreneurs building businesses based on personal interests, many of which are proving more profitable than expected. However, it is important to recognise that this is largely out of necessity. It is alarming to see just how many Brits need to supplement their primary income source to make ends meet, and as a result they are at risk of burnout.

“With the rising number of start-ups across the UK, support to help them succeed is more important than ever. These new entrepreneurs need guidance on how to grow and thrive in their businesses as the cost of living crisis continues.”