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Small Enterprise Statistics in the UK for 2024: A Detailed Analysis

April 12, 2024

Have you ever contemplated starting a small business? Our compilation of statistics for small enterprises in the UK will grant you insight into the current SME landscape.

Small Enterprise Landscape in the UK

The perspective remains guardedly positive. Inflation persists as a point of concern, potentially influencing consumer expenditure and the cost of doing business. However, indications of strength in the employment market could herald good news for recruitment.

The latest figures from the government indicate a total of 5.58 million SMEs actively operating within the UK.

In the UK, 5,547,000 businesses are classified as either small or medium-sized enterprises, which accounts for 99.05% of all businesses in the country, according to UK government data. A small business is defined as having between 0 and 49 employees, while a medium-sized business employs between 50 and 249 people. Since 2010, the number of SMEs in the UK has increased by 1 070 000.

Breakdown of UK Business Types and Sizes

Micro Enterprises (1-9 employees):

Encompassing a vast majority of all business entities (95.5%), these enterprises boast a turnover of £592,131,000,000. They are the backbone of the UK business landscape, underscoring the vibrancy of small-scale entrepreneurship.

Small Enterprises (10-49 employees):

These businesses contribute 3.9% to the total business population, achieving a turnover of £669,553,000,000. They play a critical role in diversifying the UK’s economic fabric and employment landscape.

Medium-Sized Enterprises (50-249 employees):

Though they constitute only 0.6% of businesses, their economic impact is significant, with a turnover of £762,947,000. This segment illustrates the transition from small-scale ventures to larger operations with substantial market influence.

Large Enterprises (250+ employees):

While representing just 0.1% of businesses, large enterprises command an impressive turnover of £2,139,334 million. They are pivotal in shaping industry standards and driving economic activity.

In total, SMEs in the UK generate a combined turnover of approximately £2 trillion, accounting for 52% of the private sector’s total turnover of £4.47 trillion. This highlights the indispensable contribution of SMEs to the UK economy, fostering growth, innovation, and employment across various sectors.

Since records commenced in 2000, there has been a 77% augmentation in SMEs over the past 23 years, starting from 3.5 million.

New Business Ventures

The year 2023 witnessed a 19.5% surge in new business launches, indicating a 6.5% increase compared to the preceding year. This momentum suggests a potential continuous rise in business creation into 2024, pending further data from Companies House for the latter half of 2023.

Additional points:

An upsurge of 1.2% in non-employing businesses, propelled by a 2.9% increase in unregistered businesses.
Small businesses employ 12.9 million people, accounting for 48% of the total workforce, with a turnover of £1.6 trillion (36%).
A slight 0.2% dip in businesses with employees.

Challenges Ahead

Approximately 316,310 UK enterprises ceased operations in 2023, a nearly 11% business death rate. Despite a slight decrease from 324,000 in 2022, this figure remains substantial.

Conversely, 65.3% of small businesses were profitable in 2022, with early 2023 showing signs of recovery in external finance usage by small enterprises, possibly enhancing profitability.

Composition of the UK Business Landscape

The construction sector led with 914,000 businesses in 2022, as reported by the Office for National Statistics (ONS). Following closely, the administrative and support services sector housed 865,000 businesses, with expectations of further growth.

Key Sectors: The professional, scientific, and technical activities sector boasts the largest number of businesses. Health and Social Care likely employs the most individuals.
Regional Distribution: London leads in the number of small businesses, followed by the South East and the North West.

COVID-19 has had a profound impact on UK small businesses, with some sectors more affected than others. The hospitality, arts, entertainment, and non-essential retail sectors have faced substantial difficulties.

According to Forbes, the number of businesses that qualify as SMEs per UK economy sector is as follows:

Agriculture, Forestry, and Fishing: 51,140
Mining, Electricity, Gas, Water Supply, Sewerage, and Waste Management: 8,995
Manufacturing: 88,200
Retail and Repair of Motor Vehicles: 247,560
Transportation and Storage: 51,735
Accommodation and Food Service Activities: 145,650
Information and Communication: 75,795
Financial and Insurance Activities: 24,180
Real Estate Activities: 50,740
Professional Services: 188,590
Education: 21,570
Human and Health and Social Work: 60,905
Arts, Entertainment, and Recreation: 27,805
Other Service Activities: 69,275

Emerging Trends and Future Projections

Emerging sectors such as non-alcoholic beer production, corporate travel services, and language learning software have shown remarkable growth. Additionally, the rise of artificial intelligence and immersive technologies points towards future industry disruptions.

Finance in the Small Business Sector

The post-COVID era saw around 45% of SMEs experiencing a turnover reduction of at least 20%. External financing became a strategic move for many, with 56% of SMEs seeking financial support in the last three years, as per the British Business Bank 2021 survey.

The first half of 2023 noted a significant downturn in capital raised, amounting to £4.6 billion, a sharp decline from £15.3 billion in the previous year, signalling a cautious investment climate.

Venture Capital and Private Debt

Private debt deals in the UK saw a decrease, from 2,706 in 2022 to 1,823 in 2023. The venture capital scene, typically skewed towards larger enterprises, also witnessed changes, with the total funds raised by Venture Capital Trusts (VCTs) showing a rising trend in recent years despite a decrease in the number of VCTs.

Alternative Financing and Brexit’s Impact

Various alternative financing methods, such as crowdfunding, asset finance, and peer-to-peer lending, offer SMEs diversified funding options. Brexit, however, introduced uncertainties and challenges, affecting investment and operational costs for many small businesses.

Overcoming Barriers

Economic instability and the challenges of employee retention remain top concerns for UK businesses. Brexit has further complicated the landscape with increased trade barriers and skills shortages, necessitating adaptability and resilience among small enterprises.

Inclusivity in Business Leadership

Despite efforts towards diversity, challenges persist, particularly in venture capital funding for female and minority-led enterprises. The gender funding gap and racial bias remain significant barriers, alongside new challenges posed by AI automation and evolving investment thresholds.

In 2021, 21% of all SMEs in the UK were led by women (UK GOV)

14% of medium businesses were owned by women
20% of small businesses were owned by women
14% of micro-businesses (0-9 employees) were owned by women
24% of SMEs in the UK are defined as “equally-led”, with an equal amount of men and women in the management team

In 2021, 6% of UK SMEs were minority ethnic group-led (MEG-led)

MEG-led businesses as a percentage of the business population by top sector:

Health: 10%
Administration: 9%
Information and communication: 8%
Accommodation and food transportation: 8%

Payrow and Technological Advances

The UK’s SME ecosystem remains robust and dynamic despite economic uncertainties. With significant investment, technological advancements, and a focus on sustainability, the future for UK SMEs looks promising despite challenges in funding, talent acquisition, and regulatory complexities.

Payrow is proud to be a UK FinTech company dedicated to driving the growth of UK businesses. Our company specialises in providing services and innovative solutions that enable small and medium-sized enterprises and online firms to integrate up-to-date financial products into their business processes.

We want to increase the adoption of FinTech by introducing the latest technologies that make finance more accessible. You can improve your business strategy, reduce costs, and automate routine processes. If you want to free up your time and focus on the core of your business, Payrow’s services are just for you. We offer professional customer support at every stage of the business cycle. Start your business with Payrow.

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