UK small business growth slows by 40%

A report from the Enterprise Research Centre has found the proportion of small firms expanding their workforce has fallen by 40% between 2021 and 2022.

The report also warned the support available for such businesses is currently insufficient and too fragmented. In particular, it flags that SMEs need more investment and support on exports, innovation, achieving net zero, and supporting employees with their mental health.

Among the findings outlined, the 10^th​ annual State of Small Business Britan report said there has been a surge in ‘presenteeism’, with 37% of firms reporting employees continuing to work while unwell or beyond contracted hours last year. This was accompanied by an increased rate of mental health-related sickness. The findings also cited the ERC’s Small Business Price Index (SBPI), which showed that costs rose faster during the first half of 2022 than they had since 2008.

“It is often stated that small businesses are the backbone of the UK economy, and rightly so. Small businesses make up more than 99% of the business population and account for around 50% of jobs,”​ commented Stephen Roper, director of the Enterprise Research Centre (ERC) and professor of enterprise at Warwick Business School. “Our research underlines the enormous changes these small businesses have had to deal with over the last decade.​

“We have seen rapid advances in technology and growing pressure for action on net zero alongside the substantial challenges posed by Brexit, the Covid-19 pandemic, and cost of living rises.​

“All of this has placed tremendous pressure on small businesses.​

“As we move into a General Election year, we need a coordinated effort from government and business organisations to help small businesses face the future with confidence.”​

While the report does show the remarkable resilience of SMEs throughout the many challenges they’ve faced, with a small number even seeing growth, it cautions that the UK Government should not concentrate on a small number of firms who have seen high growth or celebrate the number of new businesses entering the market. Instead, it recommends that the focus be on creating a framework that helps more small businesses achieve growth, sustainability and strengthen resilience.

Mark Hart, deputy director of the ERC and professor of small business and entrepreneurship at Aston University, added: “Amid all the challenges, we have seen plenty of evidence that small businesses can be adaptable in a crisis.​

“The UK government spends a significant amount of money on interventions to help small businesses each year.​

“It is vital that these funding decisions are based on solid evidence, such as those outlined in our report, to ensure policymakers provide small businesses with the tailored support they need.”​

In other news, Bakkavor has announced 86 new apprenticeship roles across its business​ ​ahead of National Apprenticeship Week (5-11 February 2024).