Small and medium-size enterprises are feeling positive about growth, and have the potential to create a huge impact on the economy.
Things appear to be looking up for the UK’s small and medium-sized businesses. A study of small and medium British businesses, conducted by the Telegraph, YouGov and easyJet, has found that 56pc of small to medium-sized businesses are slightly or very optimistic about the next 12 months. In fact, 52pc of businesses expect to grow up to 10pc in the next year and 15pc expect to grow between 10pc and 20pc. The UK needs these growing companies. According to the Federation of Small Businesses, there are an estimated 5.4 million businesses in the UK. SMEs make up more than 99pc of those, and employ 15.6 million people producing a combined turnover of £1.75 trillion.
And it’s growth that it may be important to keep an eye on. “Competitive advantage doesn’t go to the nations that focus on creating companies; it goes to nations that focus on scaling companies,” says Sherry Coutu CBE, at the start of her independent Scale-Up Report, published last year.
A scale-up is a rapidly growing enterprise: a business with 10 or more staff that sees average annualised growth in employees or turnover greater than 20 pc per annum over a three-year period. These growing companies can have a huge impact on the economy. The Scale-Up Report suggests that a boost of just 1pc to the scale-up population would drive an additional 238,000 jobs and £38bn to gross value added within three years.
The growth doesn’t have to come at home. Plans to to double Britain’s exports to £1 trillion by 2020 may be ambitious and some industries are falling far short of export targets, but some figures have shown services exports hit £220 billion last year, up from £189 billion in 2011.
There is also evidence pointing to a UK “scale-up gap” compared with other international counterparts. Ms Coutu’s report also notes that while the UK has a slightly higher proportion of firms growing at more than 20pc per annum, it also has a significantly lower proportion growing at between one and 20pc. Closing this scale-up gap is likely to play a crucial role in driving productivity and, of course, raising the overall performance of the UK economy.
But there are barriers to this, which many experts say must be overcome for business growth to work properly. Many small business owners think that a lack of access to infrastructure makes it more difficult for them to scale their companies in the UK than it would do elsewhere. Planning laws can also make it hard to grow quickly, as do things such as inflexible leases. And there are the loops of red tape in which smaller businesses find themselves entwined. Despite this, hopes are high and if this optimism continues, and government plans to reduce the barriers see the light of day, the UK’s SMEs will continue leading the recovery.
Source: The Telegraph, 2015
Tags: Economy, Europe, Export, Finance and Funding, Policy and Government, Supporting Business