Small firms in profit bounce back to pre-2008 levels
Small Business Survey shows small businesses have increased their turnover, expanded workforces and reported profits over the last 12 months.
A greater number of small businesses have increased their turnover, expanded workforces and reported profits over the last 12 months, according to new research published today (3 March 2015). These businesses forecast this positive trend will continue over the next year.
The Small Business Survey 2014 from the Department for Business, Innovation and Skills (BIS) is the nation’s most reliable source of evidence on enterprise.
The research of 4,355 small and medium-sized firms that employ at least one person, found that:
- 78% reported they have made a profit or surplus in the last 12 months, back to 2007 and 2008 levels and up 6% on 2012
- 40% reported their turnover is greater now than 12 months ago, compared with 29% in 2012. Only 18% report declining turnover, down from 31% in 2012
- over half (51%) expect to grow their turnover over the next year, up from 37% in 2012
- employers are recruiting more staff, with 22% of the firms taking on more staff over the last 12 months, compared with 19% in 2012
- one third of employers expect to increase their staff over the next 12 months (was only one fifth in 2012) and only 4% (1 in 25) expect to reduce staff (was one fifth in 2012)
Business Minister Matthew Hancock said:
After the biggest recession in peacetime history, it’s now clear to see that our long-term plan is turning the economy around. Our aim is to make Britain the best place in the world to start and grow a business and this is now within reach.
Small businesses are leading our economic recovery and we have thrown our weight behind them, like never before. Over 850,000 small businesses have benefitted from the government’s Employment Allowance. We’ve cut back £10 billion of burdensome red tape and last year UKTI helped nearly 48,000 businesses export more than £49 billion of goods overseas.
There really has never been a better time to start a business.
Fewer firms are seeking finance now compared with 2012. In 2014, 19% sought finance in the previous 12 months, down from 24% in 2012.
The fall is driven mostly by a fall in demand for overdrafts indicating a drop in businesses looking for external finance for working capital or cash flow. However, in 2014 there was a clear increase in the proportion of businesses applying for finance to support growth and purchase equipment, vehicles, land or buildings.
The Small Business Survey 2014 provides a snapshot of the health of the nation’s businesses. This year BIS will expand the research to track a large sample of businesses over time to better understand how government can support small firms.
Today the government also published a study into management and leadership skills. Its findings show that many small businesses could benefit from improved entrepreneurial skills. While many of the 2,500 small business leaders questioned said their businesses assessed their skills highly, some said they have weaknesses and can do more to improve their management skills.
The 2014 Global Entrepreneurship Monitor out today also underlines the strength of enterprise in the UK. There has been a significant increase in the number of people who are thinking about starting a business, have recently set one up or have one that’s less than 42 months old. The total early-stage entrepreneurial activity (TEA) now stands at 8.6% in the UK in 2014, up from the 2013 figure of 7.3%. The UK has pulled ahead of France and Germany in the entrepreneurship stakes.
The UK is performing particularly well in terms of new businesses with high growth expectations - 1 in 6 (17.6%) UK early stage entrepreneurs had high job growth expectations for their businesses.
Entrepreneurial activity among the over-50s age group has also continued to increase to reach its highest ever level of 7.1% in 2014.
Notes to editors:
- The 2014 Small Business Survey is a large-scale, representative telephone survey of business owners and managers in the UK commissioned by the Department for Business, Innovation and Skills, the Scottish Government and Invest NI. Interviews were undertaken by BMG Research Ltd between July and October 2014.
- The survey interviewed 5,115 businesses, each employing no more than 249 people, across the UK. Some of these were enterprises operated by a single individual or by partners who did not employ anyone else in the business. Results for these ‘no-employee businesses’ will be published in a separate report. Today’s Small Business Survey covers the 4,355 businesses which employed at least one member of staff.
- The survey asked business managers and owners about a range of issues including recent growth in sales turnover and employment, obstacles to business success, the capabilities of owners and managers (in terms of their ability to innovate, export or train staff), access to finance and the use of business support.
- The 2014 survey is the latest of a series of similar surveys. In this report, results from 2014 are primarily compared with those from the Small Business Survey in 2012.
- The Management and Leadership skills in Small and Medium Enterprises (SMEs) research involved a survey of approximately 2,500 English small and medium-sized businesses with between 5 and 250 employees across all sectors of the economy. It examined the associations between leadership and management skills and the implementation of management best practices and how these factors are related to business performance and employment growth.
- The Global Entrepreneurship Monitor is compiled in the UK by Professor Mark Hart, Professor Jonathan Levie and supported by Karen Bonner and Cord-Christian Drews. A full copy of the GEM UK 2014 Monitoring Report can be found at www.aston.ac.uk/gem and www.gemconsortium.org.
- UK Trade and Investment (UKTI) is the government department that helps UK-based companies succeed in the global economy. It also helps overseas companies bring their high quality investment to the UK’s economy – acknowledged as Europe’s best place from which to succeed in global business. UKTI offers expertise and contacts through its extensive network of specialists in the UK, and in British embassies and other diplomatic offices around the world. It provides companies with the tools they require to be competitive on the world stage.