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Today, the RSA and Community Links publish a new report, Untapped Enterprise, which calls for a fresh perspective on the informal economy.

We suggest that many entrepreneurs trade off the books because it gives them the breathing space they need to test their ideas and get their business off the ground. While it is true that many take part in undeclared work for reasons of greed, it is also the case that there are tens of thousands who use it as an incubator and a first step along the journey towards becoming a fully fledged entrepreneur. As such, we should be careful about relying too heavily on punitive measures (sanctions and penalties) to address informal activity, some of which may serve to derail this journey completely. In the current climate, we can ill afford to lose the assets and growth potential that these hidden entrepreneurs harbour.

To coincide with the report launch, we commissioned YouGov to conduct a poll of nearly 600 small business owners and their attitudes and experiences of informal trading. The topline results include:

- 1 in 5 respondents said they had traded informally on at least one occasion when starting one of their businesses.

- Of the respondents who had traded informally, the two most popular reasons given for doing so was that they first wanted to see if their business would be viable (64 per cent) and that it gave them the breathing space before they had the capacity to register their business (40 per cent).

- Only 9 per cent of those who had traded informally said they did so because they wanted to earn extra income.

- Burdensome red tape and high business and personal taxes are still a clear issue, with 48 per cent and 34 per cent of all survey respondents citing these as some of the biggest individual factors that encourage or compel entrepreneurs to trade informally.

- 47 per cent of respondents agreed and 39 per cent disagreed with the statement, “Engaging in informal trading activity is often a necessary step as part of the journey towards becoming a successful entrepreneur.”

Click here to read the report in full.


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