The Rise of the ‘Redundant-Preneurs’: Four Million People Start Their Own Business After Layoff

Entrepreneurs / 12th September 2019
  • More than a third of workers who have been made redundant used the experience as an opportunity to start working for themselves
  • 13 million working adults have been made redundant at some point in their careers
  • Just two fifths (44 per cent) of those who have been made redundant want to go back to being an employee

New research from Direct Line for Business1 reveals Britain is home to millions of ‘redundant-preneurs’, people who took being laid off work as an opportunity to work independently rather than find another job working for someone else. 

After being made redundant, four million people (35 per cent) decided to use the opportunity to become their own boss. Of these, 2.2 million (57 per cent) started working for themselves as a freelancer or consultant, 1.8 million (48 per cent) started a business and 445,0002 (12 per cent) invested in another business and started working there. This entrepreneurial spirit helps contribute to the millions of micro businesses, those with fewer than 10 employees, operating in the UK, which account for 96 per cent of all businesses.3

Collectively, those who have chosen to set up their own business have spent £34 billion doing so, working out as £8,700 per person, which would be covered by the average £9,000 redundancy package received. The cost of set up can vary substantially depending on size and scale of the business, reflected by the 15 per cent who spent between £10,000 and £20,000, and the same proportion who spent over £20,000. Interestingly, younger redundant-preneurs (aged 18-34) spent the most of any age group setting up their business, shelling out £12,113 per person, which is 41 per cent more (£3,527) than those aged 35-54 (£8,586).

The leading reasons for people choosing to work for themselves after being made redundant are wanting to try something different (37 per cent) and liking the idea of being their own boss (34 per cent). Over a quarter (28 per cent) meanwhile thought they could earn more money while working for themselves. For others, redundancy provided the ideal opportunity to do something they had always wanted to but never had the required lump sum investment (25 per cent) or time (24 per cent).

Table one: Reasons people choose to work for themselves, post-redundancy


 Percentage of people   who gave this reason

 Number of people   who gave this reason

I wanted to try something different



I liked the idea of being my own boss



I thought I could earn more money by working for myself



It was something I always wanted to do but never had the money



It was something I always wanted to do but never had the time



I didn’t want to risk being made redundant again



Source: Direct Line for Business 2019

The majority (68 per cent) of entrepreneurs set up a business in something related to their previous job, whether it’s the same type of work (48 per cent) or in a similar role but a different industry (20 per cent). However, a third (32 per cent) used redundancy as an opportunity to change paths completely, setting up a business in a different industry and choosing a different role to their previous career.

The industries most choose following redundancy are education (18 per cent) and retail (17 per cent). One in nine (11 per cent) choose to start their own business or management consultancy, while similar numbers have set up their own IT/web design business (nine per cent) or engineering firm (eight per cent).

Nearly 13 million (38 per cent) working adults have been made redundant at some point in their careers, with men more likely to be made redundant than women (44 vs 34 per cent). Despite being a stressful situation, many workers have seen redundancy as an opportunity, choosing to study for academic or professional qualifications (23 per cent), take a career break (25 per cent), retrain for a different career (19 per cent) or do charity or volunteering work (16 per cent).

Again, whilst redundancy is stressful, many people retrospectively feel it was positive. Over half (56 per cent) were unhappy about being made redundant at the time but think it was for the best. Just 10 per cent are unhappy with their business’s performance since it was set up, with 39 per cent saying that their business has performed better than expected. Just two in five (44 per cent) would like to go back to being an employee in the future. 

Karneet Chowdhury, Business Manager for Office and Professional, Direct Line for Business, said: “Being made redundant can be one of the most stressful and unsettling periods of anyone’s working life. But it can also be a catalyst for change and force people to take a step back and think about what they want in their future career.

“It’s great to see so many people have turned redundancy into a positive experience by starting their own business and working for themselves. This entrepreneurial spirit is why there are so many small businesses across the UK providing numerous products and services. Anyone starting their own business should remember to take out business insurance which can protect everything from products and premises to revenue in case of emergency.”

For more information about small business insurance, click here!


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