99.21 per cent of the total business population in the UK are 'small businesses', which are defined as having between 1 and 49 employees. The '1' is interesting, in that 75 per cent of businesses do not employ anyone aside from the owner(s). Adjusting the microscope to pick up more detail, there are 5.3 million 'micro' businesses (defined as having between 1 and 9 employees) in the UK, accounting for 95 per cent of all businesses. They are the lifeblood of the British economy, but yet the most unsung.
Yet there is a whiff of 'trouble' as you approach the above statistics. The average age of a company on the total register at the end of October 2022 was 8.6 years. Despite fluctuations in recent years, the average age of a company has gradually declined from 10.7 years at the end of March 2000. Put more bluntly; 51 per cent of small businesses are 10 years old or less, and 32 per cent of small businesses are 5 years old or less.
However, if they can hang on another year or so, the sky could become brighter according to a report published by the Centre for Economics and Business Research this week. Forecasters estimated that by 2025 the number of small and mid-sized businesses will have increased by 342,000 to 5.8 million, and would be generating 51.9 per cent of all business turnover, up from 51.1 per cent in 2022. It will happen too late for about 400,000 small businesses (most of them sole traders), whose owners have closed their doors and removed their boot laces during and after the pandemic, but the Centre said the growth would largely occur in 2024 and 2025, reversing several years of decline.
The buoyancy and resilience of the English shopkeeper and 'Lily's Petal Craftwork (Hull)' (pictured) are admirable, rarely allowing a matter such as a global financial crash get in the way of a good idea, and The Centre said the number of small firms operating in 2008, at the peak of the last recession, fell only 0.2 per cent across the five countries it studied in Europe, before growing again. Between 2010 and 2015, entrepreneurs in the UK set up an average of 184,000 businesses a year, and employed two million more people than those trading in 2010.
With experts scrapping about the potential and depth of the next recession mini-entrepreneurs are vital to an economic bounceback. It could be argued that this injection of innovation is even more important, as big commercial property deals have collapsed to their lowest level in more than a decade as investors reckon with higher interest rates, the prospect of a lengthy recession and the fallout from the Liz Truss “mini” Budget. The £7 billion of deals transacted in the final three months of 2022 was the lowest quarterly total since at least 2010, according to real estate analytics company CoStar, which started collecting data that year.
UK commercial real estate prices have fallen more than 15 per cent since June 2022, according to an index compiled by property agency CBRE, and most analysts expect them to keep falling in the near term. Hopes that post-Covid spending would be unleashed on the UK have been dashed since Russia’s invasion of Ukraine in February last year ...
... or is it just poor forecasting?
