There were 5.98 million private businesses in the UK at the start of 2020 and 99.8% were SMEs with less than 250 employees.

SME’s accounted for 52% of private sector turnover in 2020 and 60% of all private sector jobs in the UK (a total of 16.6 million).

Make no mistake about it, SMEs are crucial to the UK’s economy and their contribution is increasing every year.

In this article, we’ve collected all of the latest SME statistics to summarise the state of UK businesses in one easy read. We’ve also incorporated the latest data showing the impact of Covid-19 on UK businesses which may surprise many.

UK Business Demographics

0 Million
private businesses were estimated to be operating in the UK at the start of 2020 (up 1.9% from 2019)
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of businesses have fewer than 10 employees and 76.3% have no employees
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Average turnover of businesses in the UK in 2020

Number of UK businesses in the private sector and their associated employment, employees and turnover (2020)

 BusinessesEmployees
(thousands)
Turnover
(£ millions)
With no employees4,567,775935315,627
1 – 9 employees1,156,9253797615,252
10 – 49 employees211,8454,081645,662
50 – 249 employees36,1403,519693,689
250 + employees7,83510,8792,076,739
All businesses5,980,52023,2104,346,969

Growth of Private Sector Companies

The growth of micro and small companies flat lined in 2020 whilst single person companies continued to grow strongly

Self-employment has skyrocketed 93.9% since 2000, when there were 2.36 million companies without employees, as people have increasingly become self-employed when unable to find traditional employment.

In 2020 the number of companies with no employees, referring to sole proprietorships and partnerships or companies with only a working proprietor, has continued to increase faster than other business sizes and they now account for 4.57 million businesses in the UK – 109,900 more than 2019.

These single person enterprises now account for 76.3% of all businesses in the UK.

The growth of micro and small companies flatlined at the start of 2020. There were 1.16 million micro companies with 1-9 employees and more than 211,000 small companies with 10-49 employees, virtually unchanged from 2019.

 

% Growth in UK businesses in the private sector by number of employees (2000-2020)

The real estate sector was the fastest growing sector in 2020 in terms of new businesses started vs 2019

Change in number of business by sector 2019 v 2020

Average Business Turnover By Region

£ 0 Trillion
Total turnover UK Businesses in 2020
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Average turnover of businesses in the UK in 2020
£ 0
Average turnover per employee for UK businesses in 2020
Average turnover by employee increased most in Yorkshire & The Humber

Data from the Department for Business, Energy and Industrial Strategy (BEIS) shows that average turnover by employee rose by 7.78% between 2019-2020 in Yorkshire & The Humber, the largest growth rate of any region.

As London and the South East of England have more head office locations than any other region of the UK, accounting for 35% of all UK businesses, it is not surprising that London continued to have the highest average turnover per employee (£221,526). It also should be noted year-on-year growth was third lowest at just 1.86%.

The South East had the second highest turnover by employee at £192,456, and also exhibited the second highest growth at 6.18%.

The lowest average turnover by employee was £110,219 in Wales closely followed by the South West.

The lowest growth in turnover by employee was just 0.39% in the East Midlands.

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Small businesses (1-9 employees) generated 36% of the estimated total turnover of UK businesses in 2020.
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SMEs (0 -249 employees) generated 52% of the estimated total turnover of UK businesses in 2020.
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Businesses in London have an average turnover that is 51.2% higher than the UK average (£1,102,958 vs £726,855).
Average turnover by business has increased the most in Wales

Although Wales had the lowest average turnover by employee, it also racked up the largest increase in average business turnover.

Average turnover by business in Wales increased by an impressive 8.83% from 2019 to £452,847 in 2020, which was up from a low base as it was the second lowest after turnover in the South West at £412,941.

Average turnover by business dropped from the previous year in several regions. Northern Ireland saw a 9.61% decline – the largest drop of all regions, the East Midlands saw a drop of 8.8%, there was a 3.37% fall in the North East and a 2.9% decline in Scotland.

The average turnover per business in the UK as a whole was £726,855 in 2020, an annual increase of 2.77%.

The Impact Of Covid-19

COVID-19 has not impacted the rate of business creations

A surprising dataset from the ONS shows business starts were 24% higher in Q4 2020 compared to Q4 2019 (101,400 vs 81,795) and higher than any Q4 period in the past four years.

While new business creations dipped during Q2 2020 at the start of the COVID-19 pandemic, they quickly recovered. This was contrary to the typical seasonality that would see more new businesses created in the first half of the year — especially during Q1, in line with the start of the financial year in April.

The biggest increase in new businesses was in industries like business administration and support, retail, professional and scientific, and transportation and storage.

Covid is likely to have increased the rate we move to a cashless society. In 2019, 21% of all payments were done via contactless cards and this is likely to rise significantly during the pandemic with contactless card machines now becoming ubiquitous on the high street.  

Business creations in each quarter 2017-2020

Nearly 50% of business are reporting reduced turnover due to Covid-19

Around 49.5% of businesses surveyed across all industries said that their turnover has fallen during the pandemic, compared with 33% that said it has not been affected and just 8.7% that reported an increase.

As would be expected, the COVID-19 pandemic has had the biggest impact on turnover in the accommodation and food service industries. 79.2% of hospitality businesses said turnover has decreased during the lockdowns that have prevented travel, eating out and events. That was followed by 71.5% of businesses in arts, entertainment and recreation, which have also been severely disrupted by stay-at-home orders.

The real estate sector has seen the smallest impact, with only 26.4% of businesses reporting lower turnover and 49.3% reporting turnover has not been affected.

Unfortunately the ONS have bundled up online and offline retail together with motor vehicles so this data doesn’t show the significant growth of  ecommerce during the pandemic. Ecommerce is likely why 14.8% of respondents reported an increase of turnover in the category it was shoe horned into (‘wholesale and retail trade and the repair of motor vehicles and motorcycles’), the highest amongst all categories.

At the other end of the scale, less than 1% of businesses in the human health and social work sectors saw an increase in income.

Impact of Covid-19 on turnover by industry

The Business Impact of Coronavirus Survey (BICS) asked trading businesses how COVID-19 has affected their turnover and profits compared with normal expectations for this time of year.

SME Survival Rates

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The 5 survival rate of businesses started in the South West which is the highest in the UK
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The 5 survival rate of businesses started in the London which is the lowest in the UK
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The death rate of business administration and support services - the highest of all sectors

Survival rates of UK businesses started between 2014 and 2018

The transport and storage industry grew faster than any other sector in 2020

The continued increase in online retail has driven significant growth in small or single person courier companies. This sector tends to have higher than average business birth and death rates as many of the single employee limited companies tend not to be registered for long (the death rate is also high at 14.1%).

The business survival rate was worst for businesses performing admin and support services where 14.9% of companies didn’t survive in 2020.

As expected, the business birth rate in London was highest at 15.7% but 13.1% of businesses there also went under in London in 2020, the worst of all regions.

Birth and death rates by broad industry group 2020

May 2019 – First edition published

May 2020 – Second edition published

Sept 2020 – Updated some ONS data

April 2021 – Updated all data and remove business funding data to a separate report. 

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