‘Micro’ Firms Transforming The UK’s Business Landscape

Proportion of micro businesses rises 43% as amount of high growth firms drops by over 20%

The number of ‘micro’ businesses has grown by 43% since 2000, with the UK now boasting 1.4 million companies with less than 10 employees.

In contrast, the number of high growth firms has fallen by 20%, with zero-employee companies the fastest growing segment since the recession.

The research, conducted by the RSA and titled Growing Pains, considers business owners’ views and public economic data. It found that as micro businesses have been the more dominant form of business, whereas high-growth companies – those achieving on average 20% annual growth in employment for three years – have been struggling.

The research found that most mid-sized businesses fail to grow (79.9%) with more becoming small businesses (16.5%) than large (3.6%). Furthermore the fastest growing business size was zero employment firms (increasing by 21.4%).

While the report revealed diminished growth amongst UK businesses, it forecasts a promising future as the number of high-growth businesses is predicted to rise as a result of improving economic conditions. Additionally the majority of entrepreneurs appear optimistic about the future, with 64% describing themselves as ambitious.

Though the study forecasted improvement, it emphasised a need for assistance from the government. 73% of business owners say that the government needs to make growth support and information more accessible to small and mid-sized businesses; 66% stress that more needs to be done to de-risk business growth and 34% state that uncertainty about tax rates is affecting their ability to grow.

SME Trading Director at RSA David Swigciski commented on the findings:

“Our research shows that the number of high growth businesses is expected to recover, yet the proportion will remain below pre-crisis levels. This suggests that the government’s business growth package is focused on the right kinds of support, but this needs to be sustained and built upon further.

“Despite the Government’s recent efforts, small businesses are still crying out for more support and better access to information. For instance, clear direction on where to turn to for advice and extending the current apprenticeship scheme could both have a significant impact.”

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