What is it about?

This paper evaluates critically whether small businesses start-up in the informal economy and whether they do so to test-trade the viability of their business.

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Why is it important?

Reporting a 2012 survey of 595 small business owners in the UK, 20 per cent report trading informally when starting their business, 64 per cent of whom asserted a main reason was to test its viability. Some 13 per cent of all small businesses therefore start-up test-trading in the informal economy, although multivariate analysis shows that businesses started by men, with low current annual turnovers in particular sectors are significantly more likely to do so.

Perspectives

The outcome is a call for further studies in other countries and a discussion of the implications of these findings for targeting particular types of business start-up when seeking to enable the formalisation of nascent enterprises.

Professor Colin C Williams
University of Sheffield

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This page is a summary of: Do small business start-ups test-trade in the informal economy? Evidence from a UK survey, International Journal of Entrepreneurship and Small Business, January 2014, Inderscience Publishers, DOI: 10.1504/ijesb.2014.062127.
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