Brean Horne
Small businesses account for the largest proportion of private sector companies in the UK. Here, we round up the latest essential small business statistics in the UK, including employment, turnover and regional location.
How many small businesses are there in the UK?
There are just over 5.5 million UK small businesses recorded in the latest government statistics from October 2021. The same report found small businesses account for 99.2% of the total business population in the UK. It defines small businesses as companies that have 0 to 49 employees.
Small business employment in the UK
According to the above report, small businesses in the UK employ 12.9 million people. This accounts for almost half (48%) of the total employment by private sector businesses. The number of small businesses employing staff in the UK has grown by 27% since 2000.
Small business turnover in the UK
The total turnover for UK small businesses is £1.6 trillion, according to research by the government in 2021. This is just over a third (36%) of the total turnover for UK private sector companies.
Small business debt in the UK
A summary from The Bank of England (BoE) in October 2021, found the number of small and medium-sized businesses borrowing money rose 25% from 2019 to 2021. This was largely due to the impact of the coronavirus pandemic on businesses in the UK.
How many SMEs are led by ethnic minorities in the UK?
The House of Commons, found that Minority ethnic groups led 6% of employing UK SMEs in 2020. Similarly, 6% of SMEs with no employees were also led by minority ethnic groups.
According to the most recent Parker Review Report on improving the diversity of boardrooms, commissioned by Ernst and Young, 89 FTSE 100 companies had a director from an ethnic minority group in December 2021. This is up from 74 in November 2020.
How many SMEs are led by women in the UK?
A report by the the House of Commons detailed the following statistics on businesses led by women:
- Women-led businesses accounted for 16% of employing UK SMEs in 2020 while 21% of SMEs with no employees were led by women.
- In June 2021 37.7% of FTSE100 directorships were held by women and 34.9% of FTSE250 directorships were occupied by women.
- Women-led businesses contribute an estimated £85 billion to economic output. This is around 16% of the Gross Value Added contributed by SMEs across the UK.
Issues affecting SMEs in the UK
In a government survey, UK SMEs reported Covid-19 as one of the biggest issues affecting their growth in 2020. The main challenges that SMEs in the UK reported include:
- 71% – Covid-19
- 37% – Competition
- 35% – Regulation
- 27% – Taxation
- 26% – Skills and recruitment
- 25% – Late payments
- 23% – Brexit
» MORE: Business challenges SMEs are facing in 2022/23
How has Covid-19 affected SMEs in the UK?
Covid-19 created very challenging trading conditions for SMEs in the UK. According to the gov.uk research in August 2021, the majority of SMEs were negatively affected by the pandemic with 47% reducing their operations and 31% closing down temporarily.
The same research found that over half (56%) of SME employers reported a fall in an annual turnover during the pandemic. Despite this, business owners remain optimistic about the future, with 41% of SME employers expecting an increase in sales within the following year. And 77% of SME employers expect sales to increase over the next three years.
How many small businesses fail in the UK?
According to Fundsquire, around 20% of UK small businesses fail within the first year. This increases to 60% within the first three years.
» MORE: How many businesses fail in the first year?
SMEs using technology in the UK
Government research in August 2021 found that over half (56%) of SMEs in the UK used technology or web-based software to either sell to customers or manage business operations in 2020, up 7 percentage points from the previous year.
UK business growth by region
Most regions in the UK saw an increase in the number of registered businesses between 2019 and 2021, according to the latest figures from the Office for National Statistics (ONS).
During this period, the East Midlands recorded the largest increase in the number of registered businesses in proportion to other regions. In 2019 it accounted for 6.6% of businesses in the UK, while in 2021 this rose to 6.8%.. Scotland and the East of England were the regions with the largest decrease in share, both down 0.2 percentage points.
The table below shows the percentage of registered businesses each region accounts for in the UK.
Percentage share of UK businesses by region
| 2019 % | 2020 % | 2021 % | |
|---|---|---|---|
| North East | 2.6% | 2.6% | 2.6% |
| North West | 9.8% | 9.7% | 9.8% |
| Yorkshire and The Humber | 6.8% | 6.9% | 6.9% |
| East Midlands | 6.6% | 6.7% | 6.8% |
| West Midlands | 7.9% | 8.1% | 7.9% |
| East | 10.0% | 9.9% | 9.8% |
| London | 19.2% | 19.3% | 19.3% |
| South East | 15.3% | 15.2% | 15.2% |
| South West | 8.6% | 8.6% | 8.6% |
| Wales | 3.9% | 3.8% | 3.9% |
| Scotland | 6.5% | 6.5% | 6.3% |
| Northern Ireland | 2.7% | 2.7% | 2.8% |
Source: ONS (2021)
» MORE: Top cities in the UK to start a business
UK businesses by industry group
In 2021, the professional, scientific and technical industry made up the largest proportion of all registered businesses in the UK, with 16.4% falling into that sector, according to ONS data. It remains the largest industry group for UK businesses since 2013.
Businesses by industry group (as a percentage of all UK registered businesses)
| 2019 % | 2020 % | 2021 % | |
|---|---|---|---|
| Agriculture, forestry and fishing | 5.5% | 5.4% | 5.1% |
| Production (Mining, quarrying and utilities; Manufacturing) | 5.6% | 5.6% | 5.6% |
| Construction | 12.6% | 12.8% | 13.0% |
| Wholesale and retail; repair of motor vehicles | 14.3% | 14.1% | 14.7% |
| Transport and storage (inc. postal) | 4.1% | 4.5% | 5.0% |
| Accommodation and food services | 5.8% | 5.9% | 6.0% |
| Information and communication | 8.3% | 8.2% | 7.7% |
| Finance and insurance | 2.2% | 2.3% | 2.2% |
| Property | 3.7% | 3.7% | 3.8% |
| Professional, scientific and technical | 17.4% | 17.0% | 16.4% |
| Business administration and support services | 8.4% | 8.6% | 8.3% |
| Public administration and defence | 0.3% | 0.3% | 0.3% |
| Education | 1.6% | 1.6% | 1.6% |
| Health | 3.8% | 3.8% | 3.8% |
| Arts, entertainment, recreation and other services | 6.4% | 6.4% | 6.4% |
Source: ONS (2021)
Business birth rate vs business death rate
In 2020, the House of Commons found that the UK business birth rate was 12% while the business death rate was 10.6%. Overall the business birth rate was higher in all regions in the UK except for Scotland, where the business birth rate was 9.7% compared to a death rate of 10.2%.
The business birth and death rates are defined as the proportion of active businesses that were founded/stopped trading in a particular year.
London accounted for the largest number of business births 14.1% (89,270) and the largest number of business deaths 12.2% (77,045).
Image Source: Getty Images
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