March 20th, 2015
A new report from the Government’s Enterprise Adviser, Lord Young, says this is a “Golden Age” for small businesses. He is hailing major growth in the sector, with a record number of small companies now operating, and employing a larger number of people than in the past.
The report also points to reasons for the rise in SMEs – and says there has never been a better time to start out in business. So, if you have recently launched a business or are thinking of doing so, how can you benefit from the boom identified in this report?
Big Increase in Small Firms
According to Lord Young’s report, there are now 5.2 million small businesses now operating in the UK, representing a rise of more than three-quarters of a million since 2010. They are now providing 48% of employment in the private sector. Many of the new companies are micro-businesses and sole traders.
But why has this happened? One reason is the growth of new technology – and the tech sector is showing the way forward in terms of jobs and profit. Another recent survey showed that technology firms are growing faster than the rest of the economy. There has been a trend for small technology firms with fewer than 50 employees to recruit staff over the last quarter of 2014, with more expansion in this field expected over the coming year.
However, it isn’t just IT firms which are benefiting from new ways of working. Other SMEs can also use technology to reach new markets and clients, and to create trading relationships with customers around the world. The roll-out of super-fast broadband and the growth in use of smartphones are both helping to make online working more accessible to a greater number of companies than ever before.
As well as developments in technology, another reason for the growth in small companies is said to be culture change. Greater enthusiasm for entrepreneurship is identified in Lord Young’s report as a key factor, with TV shows like The Apprentice and Dragons’ Den getting a mention.
The new report claims ‘there has never been a better time to start a business’, citing the enthusiasm of many young people in particular for setting up on their own. According to Lord Young, 18 to 24-year-olds are the age group most likely to be considering setting up a new business in the next three years.
It is recognised in the report that new businesses have faced problems with getting funding over recent years, as banks cut back in this area during the recession, but it is said that now efforts are being made to improve this, including the establishment of the new British Business Bank.
The report looks at moves which have been made to encourage start-ups, including changes in taxation and the establishment of various business support and mentoring networks. Funding initiatives such as Start Up Loans have also played a key role, with more than £130 million handed out in loans between 2012 and 2014.
Training for business within the education system is said to be another important factor helping to create another generation of budding entrepreneurs, with plans for Enterprise Advisers to go into schools.
How Can the Situation Be Improved Further?
Despite the positive tone of the report overall, it does identify some problems facing small firms, including the skills shortage. It is said that SMEs will need to find ways of recruiting people with the right skills, especially in technology and digital areas. New digital qualifications are being developed to help to fill this gap. The survey also identifies the need for small companies to work ‘smarter’ by being more prepared to consider outsourcing.
Another problem is that it is often hard to know where to go for support, including funding and mentoring. The report says that “the landscape of business support schemes is too confusing to understand and navigate”. It also admits that small business owners currently often have to make multiple applications for support to different providers, which can prove to be prohibitively time-consuming. However, the Government is working on this, to amalgamate different services so that SMEs can find support more quickly and simply.
As this report shows, it is an exciting time for small businesses and many people are starting up new initiatives. Basepoint is an ideal place for start-ups, because of the flexibility of its premises, meaning you do not have to be tied down to a long rental and can easily move to a larger unit as you grow. Another big advantage is the availability of small business support, mentoring and networking opportunities, so that you are not on your own and are part of a larger business community right from the start.