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How many small businesses are there in the UK?

Following recent news that a record number of people set up on their own in 2013, we decided to delve further into the official business population statistics to find out how many businesses are currently operating in the UK.

Earlier this month, Startup Britain reported that over 500,000 new enterprises had been started over the course of 2013 – an impressive figure.

The latest Government business population figures were last published by the Department of BIS in October 2013. These official figures, which take into account the number of businesses which are dissolved each year, also show that private enterprise is alive and well in the UK, despite the recent economic downturn.

Number of businesses rises by 40% since 2000

The most striking statistic is that the total number of live businesses has increased by over 40% since 2000. Total business numbers have grown from 3.5 to almost 4.9 million over the past 13 years. The total number of businesses even grew during each year of the 2008-2010 recession, which shows how the traditional ’employment’ model continues to evolve towards more flexible ways of working.

Between them, these 4.9m business employed over 24m people and turned over £3.3 trillion between early 2012 and early 2013.

Perhaps the other surprising statistic is that over three-quarters (75.3%) of all businesses have no employees. Another 127,000 individuals started businesses without employees during the year.

How many ‘small’ businesses are there?

According to the Department of BIS data, a ‘small’ business is one which has between 0 and 49 employees. ‘Medium’-sized firms employ between 50 and 249 employees, and ‘large’ firms employ 250 or more.

99.2% of all businesses are ‘small’, 0.6% are ‘medium’, and a mere 7,000 firms are ‘large’ according to the official definitions.

Between them, these small and medium-sized enterprises (SMEs) employ 14.4m people and turnover around £1.6bn per year.

This also means that the 7,000 ‘large’ firms generate £1.7bn between them, and employ almost 10 million people between them.

The legal status of the UK’s businesses

Around 63% of businesses are sole traderships, 8.9% are partnerships, and 28.5% trade via limited companies.

Of the combined number of sole traders and partnerships, a mere 9% have employees, and of the 1.4 million limited companies currently listed as ‘live’ at Companies House, just over 56% had employees.

During 2012, the number of registered companies rose by 54,000 (4.1%), compared to a 2% rise in sole trader numbers and a 3% fall in partnerships.

Which industries are most popular with SMEs?

It will probably come as no surprise that the industry sector with the most small traders is construction, followed by ‘professional, scientific and technical’ (which will include many freelancers). The third most popular industry is ‘wholesale and retail trade, and repair’.

The total share of different industries taken up by smaller firms shows that SMEs are far less prominent in industries such as finance, insurance, transportation in storage (historically the preserve of larger companies), but they are dominant in areas where personal services are provided (including technology, education, and ‘real estate’ to name just a few).

The share of small enterprise by UK regions

Private enterprise, as a share of the economy, also varies significantly across the UK’s regions. Unsurprisingly, London and the South-East account for over one third of all SMEs due to the highest concentration of the UK’s population living in these areas. However, the number of private sector businesses per 10,000 adults is also highest in London, the South-East and South-West (1,266, 1,119 and 1,061 respectively).

The ratio of private businesses to total population is far lower in other regions – 633 in the North-East, 753 in Wales and 740 in Scotland.

Further Information

You can download the full Department of BIS Business Populations report (PDF document) here.

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