The most entrepreneurial companies turn recession to their advantage. A warm welcome to the new dawn of hyper-lean business models, anti-cyclical star products and cost-cutting revolutionaries storming the UK
The recession has cast a long shadow over London’s business community with businesses all over the capital struggling to keep their heads above murky administration-flavoured water.
But the credit crunch, and its ensuing age of austerity, has brought with it a swathe of business models and ideas inspired by the nation’s reduction in disposable income.
So what are the hot trends currently giving the gloom what for?
No trend has been more prevalent in the capital than the ubiquitous pop-up. Disused spaces, be it from business closures or otherwise, are being used for brief periods by retail hounds, restaurants, galleries, cinemas and more.
Cheap rents and short term leases require less investment from the pop-upper and therefore fit seamlessly into an economy struggling financially. While landlords benefit from a quick buck on buildings they might be struggling to find permanent residents for.
No space is too small or shabby for pop-ups, often the novelty of a pop-up will ensure customers turn a blind eye.
The innovation and creativity put into many pop-ups impress consumers even if for a short while making the concept a money-saving marketing tool.
With more pop-ups than you could possible keep up with, websites like londonpopups.com can keep you informed.
2. Crowd funding
Access to finance for businesses has been a huge casualty of the recession as bank lending has shrunk significantly.
One concept that has caught on, and flourished, since the credit crunch is crowd funding. This is the process whereby members of of the public fund projects collectively via the internet without the traditional brokerage fees.
Members of the public lending to small businesses and start-ups often provides companies with lower cost finance than they could get at a bank and gives the public returns that they would never see if their money was sitting in a bank.
The UK is awash with crowd funding sites. Crowdcube and Funding Circle are just two examples. Since it launched a year ago, 11 deals have been successfully funded through Crowdcube, the largest raising 1 million pounds. It now has nearly 9,000 members and attracts between 10,000 and 15,000 visits a month.
Funding Circle allows people to lend directly to small firms and has been giving members of the public an average gross yield of 8.3 per cent. The site has raised a total of £25, 668, 500 since its launching in August 2010.
Car-sharing (also called liftsharing, ridesharing and carpooling) is when two or more people share a car and travel together.
It allows individuals to benefit from the convenience of the car, whilst reducing the costs and alleviating the associated problems of congestion and pollution. Oh, and it does of course share the cost of travel between multiple people.
Car-sharing sites have popped up all over the internet. As we reported in December, Brent Hoberman is to team up with Sir Stelios Haji-Ioannou to create easyCar – a service which allows you to rent your own car out when you’re not using it.
According to the BBC, one car-sharing website said it had seen a 23 per cent increase in the number of people signing up to its scheme in the first few months of 2010. As the cost of fuel has continued to skyrocket, there’s no doubt this increase has continued in to 2012.
4. Crafty businesses
Knitting and baking and their associated paraphernalia have seen massive growth since the start of the crunch.
Peter Fitzgerald, a retail director at Google UK said of 2011, “our data shows that searches for knitting have increased over 150 per cent just this year.” The term “knitting for beginners” has increased by 250 per cent.
Sales of yarn in John Lewis haberdasheries have increased significantly higher since 2008, as has the sale of sewing machines.
Home cooking has taken off with gusto. The proliferation of cupcake shops, cupcake courses and cupcake decorating classes are just three examples of the baking revolution.
Back in 2009, The Telegraph reported that sales of Waitrose Cook’s range of essential herbs, oils and stocks went up 21 per cent, and the retailer stopped selling DVDs and CDs to increase shelf space for its pans, knives and baking trays.
TV shows like Channel 4’s Super Scrimpers and Kirstie [Allsop’s] Handmade Britain only serve to stoke the craft flames further.
5. Selling your services
Fivesquids is a new online community where people share their unique skills and expertise for £5. Services range from “I will plan your holiday to Las Vegas for £5” to “I will increase your Twitter followers by 10,000+ for £5” to “I will narrate your video / story / clip in my South African accent for £5”.
It’s a win-win, people get certain services they need for cheap and others make quick and easy cash using their er… talents.
“The site is full of super talented people and creative types who may have just graduated, are looking to start a new business, or those just simply using their free time more fruitfully,” explains Terry Koutsios, founder of fivesquids. “But fivesquids is also a perfect example that people will do very weird things to earn some extra money, especially in the recession.
“The whole concept of each service only costing £5 is the foundation of the site. I think the low fee has encouraged people to order and demand services. Anything more expensive and I don’t think we would have been as successful, especially not in the current climate.”
Heading down to your local chain sandwich store at 1pm every day starts to add up when you need to watch your money. During the boom times, many of London’s workers wouldn’t think twice about the cost of their chicken salad sandwich and triple shot skinny latte.
The recession has brought a change to that. Enter the humble lunchbox. Homeware and hardware chain Robert Dyas reported a 68 per cent year-on-year rise in sales of lunch-boxes at the start of the recession.
Product design company Black + Blum reported to us back in December that the sale of its lunchboxes was also on the rise.
“Our lunch box products are continuing to sell increasingly well,” explained owner Dan Black. “I really believe the they [the boxes]must have found a gap in the market or picked up on a new market trend, obviously ideal for people wanting to save money by taking lunch to work with them. Plus there are added health benefits.”
7. Rent your loft/ parking space
Space, particularly in London, is a rare commodity and people endeavouring to boost their recession battered incomes can find the answer at home. Renting out loft spaces and parking spaces has taken off with a posse of websites willing and ready to advertise your space.
One such site is Storemates.co.uk which allows the public to advertise their
free space, charging them an admin fee once they’ve secured an arrangement.
Websites like parkatmyhouse.com, parkonmydrive.com and parklet.co.uk, play the matchmaking game for people with spare parking and people in the need of a good parking spec. These clever sites bag a nifty 15 per cent of the rents secured.
8. Affordable art fair
When Will Ramsey set out on his mission to bring art to the masses by offering cheaper prices with a less stuffy gallery/ art fair environment, he might not have known the recession was around the corner but oh how “affordable” has been a good buzzword since 2007.
The fair has since gone on to expand globally and 2011 saw the introduction of a second London fair in Hampstead Heath to complement the Battersea event.
9. Secret supper clubs
The concept of dining in a stranger’s home might have seemed preposterous a few years ago, but secret supper clubs have taken the capital by storm. According to some reports there are around 70 supper clubs operating in London making it one of the strongest supper club scenes of any city.
Turning your home into a restaurant creates an opportunity for foodies to eat in intimate settings for a minimal fee.
Once a nation of cinema goers, Brits are turning to streaming services to get their fill of movies. The exorbitant price of popcorn and pix’n’mix has proven too much for many as they choose to sit on their own couches to enjoy the latest blockbusters. Back in 2009 LoveFilm noted a soar in subscriptions of 70 per cent and now boasts more than 1.9 million members in the UK.
Staying in really is the new going out.