The FINANCIAL — The UK’s SMEs are finally recovering from recession, with growth and startup rates returning to pre-crisis levels, according to new research by the Enterprise Research Centre (ERC).
The Enterprise Research Centre, which involves Aston University and other leading university business schools (Birmingham, Imperial College London, Strathclyde and Warwick) was set up to develop understanding of the factors affecting small and medium-sized enterprise, business investment, performance and growth.
The Centre unveiled a raft of new findings at its annual State of Small Business Britain conference held in Birmingham this week, (June 16th).
The Conference highlighted that the dynamism of ‘small business Britain’ is now at the highest level since before the start of the economic crisis in 2008. There are 5.2 million businesses in the UK, 99 per cent of which are classified as SMEs [fewer than 250 employees] (Source: BIS, November 2014).
The conference showcased a number of indicators of SME recovery, including:
Overall, the private sector in the UK shed a staggering 5.7 million jobs between 2008 and 2014 from almost one million SMEs that folded over this period.
A further 7.3 million jobs were cut at firms that survived – a total of 13 million jobs lost overall.
Only now has this loss been made up, with new start-up companies creating 4 million jobs and existing firms’ expansion adding a further 9.4 million – a total of 13.4 million jobs over the period.
This gives a figure for net private sector job creation between 2008 and 2014 of 400,000 when taking full account of the ongoing job ‘churn’ in the economy.
While start-up rates have been rising since 2011, it was only in 2014 that the number of firms being established got back to pre-crisis levels, with 294,300 firms being ‘born’ (in 2008 the number was 279,400 but this fell by 27% in 2009 and didn’t start to recover until 2012).
The number of fast-growing companies reached its highest level over the three years to 2014 since 2007-2010 – 10,929 compared to 10,387 [Note: fast-growing firms are defined using 20%+ growth measured year-on-year over 3-year periods].
The conference featured contributions from invited guests including Sergio Arzeni, Director of the Centre for Entrepreneurship, SMEs and Local Development at the OECD; Sherry Coutu, Chair of Founders4Schools and the author of ‘The Scale-up Report’ on UK economic growth; and Baroness Wheatcroft, ex-editor in chief of the Wall Street Journal Europe and a life peer in the House of Lords.
Professor Mark Hart, Deputy Director of ERC and Professor of Small Business and Entrepreneurship at Aston Business School, said:
“This year’s State of Small Business Britain conference will highlight that SME Britain is finally back to where it was before the Great Recession in terms of jobs, growth and startup activity.
“For many SMEs, it’s been a long, hard road over the last few years but our research is showing that entrepreneurs and small to medium-sized businesses right across the UK have the wind back in their sails.
“With SMEs forming the backbone of the UK economy, it’s essential that we learn the lessons from those firms and regions that are thriving and use this knowledge to inform how we create a business-friendly environment nationwide.”
Further research unveiled at the conference included:
ERC’s Growth Dashboard – showing where SME growth is happening across the whole of the UK
A study on the ‘Millennial 2000’ – a remarkable cohort of ‘teenage’ companies founded around 1998 which ERC has tracked in the data. These firms have gone on to create many thousands of new jobs and massively expand their turnover in spite of the recession.
An examination of the relationship between entrepreneurship and household wealth looking at which factor drives the other.
Qualitative research on a group of small businesses in Birmingham and Glasgow looking at how they have weathered the tough times of recent years.
Research on the impact of mobility on growth aspiration – including the effect of graduates, internal migration and immigrants on entrepreneurial ambition.