‘Super SMEs’ driving unprecedented job growth
High-growth small businesses (HSGBs) hired around 5,000 staff every week in 2013 despite making up just 1% of the business community, a new report has revealed.
Around 30,000 HGSBs exist in the UK and the figures from Octopus Investments suggest that they account for 68% of the new jobs created between 2012 and 2013.
This increase in employment – 256,000 new jobs means the HGSB workforce totals 667,000 – is driving the UK economy, the recently released report states.
Providing an economic boost
The report says HGSBs account for 3.4% of gross value added (GVA) to the UK economy but are responsible for 36.2% of GVA growth in 2013.
This suggests they are contributing a great deal to the economy as estimated annual turnover of £114.4bn in 2013 generated an approximate GVA of £55bn.
Just 3% of these firms reported making a loss while turnover has increased by more than 40% year-on-year, highlighting their overall significance to the economy.
Growth of 18% was recorded among these so-called ‘super SMEs’ between 2011 and 2013 compared to growth of 8% among regular SMEs.
The importance of location
A North-South divide exists where these firms are located too, with a third of them found in London and the South East – around 11,000 in total.
That compares to only 1,000 that are headquartered in Northern Ireland, the North East or Wales.
Around one in 25 people that currently work in London is employed by an HGSB while this figure is much greater in other parts of the UK – suggesting location is all important.
For smaller firms, consideration of competitors is an area which could be of vital importance to the long term success of a company; especially if a competitor is an HGSB with the capability of rapid growth.
Possible barriers to further growth
Even among HGSBs, 48% of bosses claimed that competition is inhibiting growth – a factor which could place pressure on finances and increase the risk of business insolvency.
Other barriers included the perceived skills shortage among qualified staff, a drop in customer demand and difficulties in securing finance.
In order to be classified as an HGSB a business must turnover between £1m and £20m, and grow by more than 20% per annum for a three year period.
By Phil Smith