SME numbers reach six-year high

The number of active SMEs across the UK has reached a six-year high of 2.16 million in 2013, according to new data.


Nine out of ten industry sectors have seen an increase during the last two years, with SME growth outpacing that of large industries during the same time period.


The SME Growth Monitor from the National Association for Commercial Financial Brokers suggests that the economic recovery is boosting the number of start-up companies.


During the last two years, SME numbers have swelled by 4.2% – an increase of 86,435 companies compared with a 3.3% rise in the number of large employers.


In terms of individual countries, England fares best with 4.6% growth in SME numbers and ranks just marginally ahead of Scotland (4.5%).


In both cases, SME growth is significantly higher than that of large businesses with rates in both countries up by 3.3% and 3.9% respectively.


The knock-on effects of widespread growth


The post-2011 boom has been widespread across many industries, with the only exceptions to growth being in the construction and wholesale sectors.


Professional, scientific and technical industries saw the largest increase, with almost 36,000 new businesses set up in the past two years.


Information and communication also grew (by around 18,000), while health (6,535), property (5,580) and agriculture (4765) also increased.


The greatest shift in sector demographics is in public administration and defence, with nearly twice as many SMEs as in 2011 but with fewer large employers.


However, it is not all positive news as growth rates in the UK business population actually slowed between 2012 and 2013, impacting upon SMEs more than larger companies.


The yearly rate of SME expansion fell from 3.3% to 0.9%, while growth in larger companies remained relatively stable – falling from 1.7% in 2012 to 1.6% in 2013.


With growth rates being held back, the threat of insolvency or company administration for some companies will remain, as the funding is not there to guarantee survival. 


As a result, the use of corporate recovery services could be required to help save those businesses who are struggling as a result of being unable to expand.


By Phil Smith


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