Small firms loom large in UK businesses

Small businesses make up 99.3 per cent of the 4.3 million business enterprises in the UK according to figures released by the Small Business Service (SBS). However, a small business pressure group claims that not enough is being done to help entrepreneurs and start-ups.

While there was an overall increase of 59,000 business enterprises (1.4 per cent) from 2004 to 2005, the figures show that the number of small enterprises - with 0–49 employees - has remained stagnant.

Victoria Carson, Campaigns Manager for the FPB, believes that it shows a reluctance on behalf of budding entrepreneurs to test the water. She said: "Not enough is being done to encourage those fledgling business people looking to take the first step on the road of owning their own firm. Meanwhile red tape remains one of the major factors in stunting the growth of young and smaller businesses."

The figures from the SBS, an executive agency of the Department of Trade and Industry, show almost all businesses (99.3 per cent) were small (0 to 49 employees). Only 27,000 (0.6 per cent) were medium-sized (50 to 249 employees) and 6,000 (0.1 per cent) were large (250 or more employees).

At the start of 2005, UK enterprises employed an estimated 22 million people, and had an estimated combined annual turnover of £2,400 billion.

Employment and turnover

Small and medium-sized enterprises (SMEs) together accounted for more than half of the employment (58.7 per cent) and turnover (51.1 per cent) in the UK.

Small enterprises alone (0 to 49 employees) accounted for 46.8 per cent of employment.

At the start of 2005, 46.8 per cent of business employment was in small enterprises, but this varied between industries. In agriculture, fishing and forestry, 93.8 per cent of employment was in small enterprises, while in financial intermediation the figure was only 14.7 per cent.

The share of turnover in small enterprises also varies between industries. Overall, 36.4 per cent of turnover was in small enterprises. Again, there are variations by industry, ranging from 18.0 per cent in manufacturing to 89.0 per cent in agriculture and related sectors.

No employees

The smallest of companies - often freelancers or contractors - accounts for an estimated combined turnover of £190 billion.

At the start of 2005, the number of enterprises with no employees was 3.2 million, equivalent to 72.8 per cent of all enterprises.

Enterprises with no employees are described as sole proprietorships and partnerships comprising only the self-employed owner-manager(s), and companies comprising only an employee director.

Legal status

There are an estimated 2.7 million sole proprietors in the UK, and 320,000 (11.7 per cent) of them have employees.

There are an estimated 520,000 partnerships and 190,000 of them (37.3 per cent) have employees.

There are 1,080,000 companies and 670,000 of them (61.4 per cent) have employees.