Entrepreneurs Index: UK should give more support to small businesses
According to a report from Barclays Bank and the Business Growth Fund (BGF), small businesses require more government support to realise their full potential.
The latest Entrepreneurs Index from Barclays Bank and BGF highlights the need for the UK to do as much as it can to encourage SMEs, as it shows evidence that the desire to start a business is becoming more widespread across the nation.
Number of self-employed people reaches 40-year high
The Entrepreneurs Index highlights a shift in attitude which made self-employment seem more attractive, with a 3.9 per cent rise in the number of active companies and more than 350,000 new UK companies starting up in 2014.
“Starting your own business has become a cultural phenomenon, particularly for younger people,” said Guy Rigby, partner and head of entrepreneurial services at accountancy firm Smith & Williamson. “It’s being encouraged massively by both government and privately sponsored initiatives.”
Medium-sized enterprises have become engines of growth
Data from The Centre for Economics and Business Research (CEBR) has found that medium-sized businesses accounted for over a third of growth last year, despite making up only 3.4 per cent of the economy.
They were also responsible for over two thirds of all new jobs in 2013, which is over 250,000 new roles available. The Confederation of British Industry (CBI) believes these businesses have the ability to inject as much as £20 billion by 2020.
“Firms with a turnover of between £10 million and £100 million represent less than two per cent of businesses but generate 23 per cent of economic revenue and 16 per cent of all jobs,” says their website.
Number of high growth companies plateau
Despite the impressive number of new start-ups, the report also showed that many of them failed to move past the initial stage to become high-growth companies. Figures in the report also showed a slight dip of 0.3 per cent in the number of businesses with sales of between £2.5 million and £100 million.
An earlier study from CEBR also gave cause for concern, as it showed the proportion of high-growth companies fell by more than 20 per cent since 2005.
David Swigciski, SME trading director at RSA, said that the success of small businesses could be helped by encouraging investment in growth and ensuring SMEs reach their full growth potential.