Small firms in profit bounce back to pre-2008 levels
Small Business Survey shows small businesses have increased their turnover, expanded workforces and reported profits over the last 12 months.
A greater number of small businesses have increased their turnover, expanded workforces and reported profits over the last 12 months, according to new research published today (3 March 2015). These businesses forecast this positive trend will continue over the next year.
The Small Business Survey 2014 from the Department for Business, Innovation and Skills (BIS) is the nation’s most reliable source of evidence on enterprise.
The research of 4,355 small and medium-sized firms that employ at least one person, found that:
- 78% reported they have made a profit or surplus in the last 12 months, back to 2007 and 2008 levels and up 6% on 2012
- 40% reported their turnover is greater now than 12 months ago, compared with 29% in 2012. Only 18% report declining turnover, down from 31% in 2012
- over half (51%) expect to grow their turnover over the next year, up from 37% in 2012
- employers are recruiting more staff, with 22% of the firms taking on more staff over the last 12 months, compared with 19% in 2012
- one third of employers expect to increase their staff over the next 12 months (was only one fifth in 2012) and only 4% (1 in 25) expect to reduce staff (was one fifth in 2012)
Business Minister Matthew Hancock said:
After the biggest recession in peacetime history, it’s now clear to see that our long-term plan is turning the economy around. Our aim is to make Britain the best place in the world to start and grow a business and this is now within reach.
Small businesses are leading our economic recovery and we have thrown our weight behind them, like never before. Over 850,000 small businesses have benefitted from the government’s Employment Allowance. We’ve cut back £10 billion of burdensome red tape and last year UKTI helped nearly 48,000 businesses export more than £49 billion of goods overseas.
There really has never been a better time to start a business.
Fewer firms are seeking finance now compared with 2012. In 2014, 19% sought finance in the previous 12 months, down from 24% in 2012.
The fall is driven mostly by a fall in demand for overdrafts indicating a drop in businesses looking for external finance for working capital or cash flow. However, in 2014 there was a clear increase in the proportion of businesses applying for finance to support growth and purchase equipment, vehicles, land or buildings.
The Small Business Survey 2014 provides a snapshot of the health of the nation’s businesses. This year BIS will expand the research to track a large sample of businesses over time to better understand how government can support small firms.
Today the government also published a study into management and leadership skills. Its findings show that many small businesses could benefit from improved entrepreneurial skills. While many of the 2,500 small business leaders questioned said their businesses assessed their skills highly, some said they have weaknesses and can do more to improve their management skills.
The 2014 Global Entrepreneurship Monitor out today also underlines the strength of enterprise in the UK. There has been a significant increase in the number of people who are thinking about starting a business, have recently set one up or have one that’s less than 42 months old. The total early-stage entrepreneurial activity (TEA) now stands at 8.6% in the UK in 2014, up from the 2013 figure of 7.3%. The UK has pulled ahead of France and Germany in the entrepreneurship stakes.
The UK is performing particularly well in terms of new businesses with high growth expectations – 1 in 6 (17.6%) UK early stage entrepreneurs had high job growth expectations for their businesses.
Entrepreneurial activity among the over-50s age group has also continued to increase to reach its highest ever level of 7.1% in 2014.