UK small business statistics 2023

Our rundown of the latest small business statistics gives an overview of the landscape in the UK.

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By

Matthew Boyle

&

Sophie Barber

Updated

Fact checked

Small businesses are an essential part of the business landscape, but the recent economic turmoil has threatened their survival. So, what is the current outlook? We explore the latest small business statistics in the UK, including the number of SMEs and how this varies between industries and regions.

We also look at how many new businesses survive the first 5 years, and ways you might improve your chances of success with the best business banking options, among other things.

UK small business statistics: Highlights

  • 99.9% of UK businesses are small or medium-sized enterprises (SMEs).
  • There are 5.5 million SMEs in the UK.
  • The average turnover for a UK SME is £385,551.
  • More than three-fifths (62%) of new businesses will cease trading in the first 5 years.
  • A third (34%) of UK SMEs are based in London and the South East.
  • SMEs account for two-thirds of private sector employment in the UK.
  • SMEs account for half of private sector revenue in the UK.
  • The most popular sector for SMEs is construction.

How many SMEs are there in the UK?

The latest figures show there are 5.5 million small and medium-sized businesses (SMEs) operating in the UK. SMEs make up more than 99% of the total private sector business population, and the number of SMEs has increased over the last decade.

Over the last decade, the number of SMEs peaked at the start of 2020 and has declined slightly since then. This is likely due to increased challenges for UK businesses during the coronavirus pandemic and the cost of living crisis.

However, SMEs have consistently made up the majority of private sector businesses in terms of numbers over the past decade, making up more than 99% of the total every year since 2013.

Year Number of SMEs
2013 4,889,060
2014 5,236,390
2015 5,382,485
2016 5,490,470
2017 5,687,230
2018 5,660,000
2019 5,860,085
2020 5,972,685
2021 5,583,245
2022 5,501,260

What is the difference between SMEs, small businesses and micro businesses?

The term SME refers to any business that is small or medium-sized. This includes the sub-categories of micro-business, small business and medium-sized businesses.

Micro-businesses with 0-9 employees make up the majority of the SME population in the UK, with a total of 95.4%. Interestingly, 74% of SMEs are micro-businesses with no employees. This category includes sole traders and partnerships without any other employees.

Business type Percentage
Micro (No employees) 73.82%
Micro (1-9 employees) 21.58%
Small (10-49 employees) 3.94%
Medium (50-249 employees) 0.65%

How much do SMEs contribute to the UK economy?

SMEs contribute approximately half (51%) of turnover and account for three-fifths (61%) of employment in the private sector. The most recent figures show that UK SME turnover was £2.1 trillion, and they employ over 16 million people a year.

In the last decade, the turnover contributed by SMEs has increased every year except between 2021 and 2022. The number of SMEs also decreased in these years, likely due to the coronavirus pandemic, so it makes sense that the turnover would reduce along with this.

Year SME turnover (billions) Large business turnover (billions)
2013 1,578 1,702
2014 1,647 1,874
2015 1,754 1,956
2016 1,825 2,036
2017 1,905 1,834
2018 1,994 1,868
2019 2,168 1,981
2020 2,270 2,076
2021 2,310 2,139
2022 2,124 2,032

What is the average turnover for a small business?

The average turnover for each SME is estimated to be £385,551, considering there are 5.5 million SMEs in the UK, and they contribute a total of £2.1 trillion in turnover.

This is different from the average turnover for small businesses, which contribute £609 million in turnover but make up just 217,000 businesses in the UK. Therefore, the average yearly turnover for a small business with 10-49 employees is £2.8 million.

On the other hand, micro-businesses (0-9 employees) contribute £808 billion to the economy but make up the majority of the SME population at 5.2 million businesses. They make a much smaller average yearly turnover of £153,963.

As you would expect, the more employees a business has, the higher turnover it can generate!

What is the failure rate for small businesses in the UK?

More than three-fifths (62%) of new small businesses fail within the first 5 years, as the survival rate for UK businesses over this period is 38%. While most new businesses can survive the first year, it becomes increasingly harder for small businesses to continue trading.

These are the following survival rates for new UK businesses formed in 2016:

  • 1 year: 95.2%
  • 2 years: 77.1%
  • 3 years: 54.1%
  • 4 years: 44.9%
  • 5 years: 38.4%
Year Survival rate
Year 0 100%
Year 1 95.20%
Year 2 77.10%
Year 3 54.10%
Year 4 44.90%
Year 5 38.40%

A breakdown of UK SMEs by sector

The most popular sector for SMEs is construction, with almost 1 million businesses operating in this area. This is closely followed by professional, scientific and technical activities, with just over 760,000.

The sector with the lowest number of UK SMEs is production activities. The UK is not currently known to be a hub for production and is known to have a service-based economy, so it makes sense that a relatively low number of SMEs are operating in this area.

Sector Number of businesses
Construction 914,175
Professional, Scientific and Technical 761,735
Wholesale and Retail Trade 547,190
Administrative and Support Service 471,710
Other Service activities 354,770
Human Health and Social Work 340,505
Transportation and Storage 338,345
Information and Communication 334,245
Education 307,840
Arts, Entertainment and Recreation 274,430
Manufacturing 242,915
Accommodation and Food 220,340
Agriculture, Forestry and Fishing 148,250
Real estate 129,695
Financial and Insurance 83,155
Production 31,955

A breakdown of UK SMEs by region

Unsurprisingly, the majority of small businesses are based in London and the South East, and these 2 regions combined account for a third (34%) of all SMEs in the UK. Northern Ireland has the lowest number of SMEs at just 128,000, closely followed by Wales with 218,000.

Name Number of SMEs
North East 155,000
North West 512,000
Yorkshire and The Humber 385,000
East Midlands 368,000
West Midlands 437,000
East of England 542,000
London 1,036,000
South East 843,000
South West 537,000
Northern Ireland 128,000
Scotland 340,000
Wales 218,000

How many women-led SMEs are there?

In 2021, 19% of SMEs with employees were led by a woman or a majority-female management team, which is just over 1 million businesses. This is a much lower percentage than FTSE100 companies, where women occupied 39% of directorships as of February 2022.

The number of women-led SMEs also varies significantly depending on the sector in question. For example, in the construction sector, which has the largest number of SMEs in the UK, only 9% are led by women. The education sector has the highest percentage of women leaders of all the sectors at 44%.

How many minority ethnic group-led SMEs are there?

In 2021, just 6% of SMEs with employees were led by someone from a minority ethnic group (MEG), which equals around 335,000 businesses. The sector with the highest number of MEG leaders was health, while London is the region with the highest number of SME leaders from minority ethnic groups.

Sources used

Click here for more research. For all media enquiries, please contact

Matt Mckenna

UK Head of Communications

T: +44 20 8191 8806

matt.mckenna@finder.com@MichHutchison/in/matthewmckenna2

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