UK SMEs

Small and Medium Sized Enterprises

Some Facts and Figures

C W Mobbs June 2011

Introduction

•For the purposes of this analysis, small and medium sized enterprises are defined as those with less than 250 employees (large enterprises have 250+)

•Small enterprises have less than 50 employees; medium ones between 50 and 249

•An enterprise is defined as a profit, non-profit or government organisation

Data Source: Department for Business Innovation and Skills ‘Small and Medium sized Enterprise (SME) Statistics for the UK and Regions 2009’ Published October 2010, unless otherwise stated.

SMEs

•UK SMEs accounted for 99.9% of all private sector enterprises, 59.8% of private sector employment and 49.0% of private sector turnover

• Enterprises comprising one employee director and self employed owner-managers alone accounted for 74.8% of all enterprises, 17.3% of employment and 7.4% of turnover

• Small enterprises alone accounted for 99.2% of all enterprises, 48.2% of employment and 35.7% of turnover

• Turnover in SMEs is estimated at £1,589 bn, £88 bn (5.8%) higher than 2008

UK Enterprises (1)

• There are 4,923,320 enterprises in the UK economy

• Of these, 98.2% are private sector organisations, realising 93.7% of whole economy turnover. The number of such organisations increased by 1.1% since the start of 2008

• A further 0.1% are Central or Local Government, employing 17.8% of total employment

UK Enterprises (2)

Enterprises Employment Turnover

All enterprises

4,923,320 30 m £3,458 bn

Private sector

98.2% 75.9% 93.7%

Central and Local Government

0.1% 17.8% 4.4%

Non-profit Organisations

1.7% 6.3% 2.0%

Private Sector EnterprisesNumbers

• 74.8% of enterprises have no employees (ie, consist of sole director or self-employed owner-manager)

• 0.1% of organisations have more than 500 employees

• Small enterprises account for 99.2% of enterprises and medium enterprises for 0.7%

No of Employees

Enterprises

4,834,0450 74.8%1-9 17.3%10-49 3.5%50-249 0.6%250-499 0.1%500+ 0.1%

Employees by Enterprise (1)

17.3% of all employment is in enterprises comprising a sole director or self-employed

owner-manager

Employees by Enterprise (2)

• Total employment stands at 22.8 m

• 17.3% of total private sector employment is in enterprises comprising sole directors or self-employed owner-managers

• Small business with between 1 and 49 employees account for 28.2% of total turnover

• Medium sized enterprises account for a further 13.3%

• Large companies account for 40.3%

Enterprises and Turnover (1)

Turnover of large enterprises accounts for 50.9% of all private sector turnover

Enterprises and Turnover (2)

• Total private sector turnover amounts to £3,240 bn

• Despite having 74.8% of all private sector enterprises, organisations with a sole director or self-employed owner-manager only produced 7.4% of turnover

• Small business with between 1 and 49 employees account for 30.9% of total employment

• Medium sized enterprises account for a further 11.5%

• Large companies account for 50.9%

Enterprises and Legal Status

Of all private sector enterprises, 26.9% are companies, 9.2% are partnerships, and 63.9% are sole proprietorships (by number)

Of all private sector turnover, 90.6% is realised by companies, 3.7% by partnerships, and 5.7% by sole proprietorships (by turnover)

Enterprises and Industry (1)


Private sector enterprises

4,834,045 22.8 mn £3,240 bn

Agriculture, Hunting and Forestry; Fishing

4.0% 2.2% 1.1%

Mining and Quarrying; Electricity, Gas and Water Supply

0.3% 1.0% 5.5%

Manufacturing 6.3% 12.7% 17.4%

Construction 21.0% 9.6% 7.7%

Wholesale and Retail Trade; Repairs

11.6% 21.3% 36.9%

Hotels and Restaurants 3.2% 7.5% 2.3%



Transport, Storage and Communication

6.5% 7.5% 7.4

Financial Intermediation 1.7% 4.8% N/A

Real Estate, Renting and Business Activities

24.7% 19.6% 14.7%

Education 3.7% 1.7% 0.5%

Health and Social Work 5.8% 6.1% 1.9%

Other Community, Social and Personal Service Activities

10.9% 6.1% 4.6%


• In Financial Intermediation, only 18.0% of employment was in small enterprises, in Agriculture, Fishing and Forestry it was 92.6%

• Of the 35% of turnover in small enterprises, it also varies in sector - 5.8% in Mining, Quarrying and Utilities to 84.0% in Agriculture, Fishing and Forestry

Enterprises and CountryEnterprises Employment Turnover

Private sector enterprises

4,834,045 22.8 mn £3,240 bn

England 86.6% 87.2% 90.0%

Wales 4.1% 3.3% 2.4%

Scotland 6.7% 7.2% 6.0%

Northern Ireland 2.6% 2.3% 1.7%

Enterprises and Region (1)

Region Enterprises Employment Turnover

North East 2.9% 3.0% 2.1%

North West 10.0% 9.4% 7.5%

Yorkshire and Humberside 7.2% 8.2% 5.9%

East Midlands 6.4% 7.3% 5.9%

West Midlands 7.5% 8.1% 6.5%

East of England 10.4% 10.9% 10.4%

London 17.3% 18.1% 30.5%

South East 15.4% 14.7% 16.1%

South West 9.6% 7.7% 5.1%

Enterprises and Location (3)

• London had more than 840,000 private sector enterprises, more than any other UK region

• London and the South East together account for almost a third of all private sector enterprises in the UK

• For all regions, no more than 0.1% of enterprises are large, and at least 99.2% are small

• Half of the regions in the UK experienced growth in the number of enterprises between the start of 2008 and the start of 2009, and half experienced a decline. The biggest increases were in North West (6.3%) and London (4.7%), and the largest falls were in the East Midlands (-3.7%) and South East (-3.3%)

Enterprises and Location (4)

• Most regions and countries saw falls in levels of employment save for the South West (up 0.8%), the East of England and Scotland

• London had the lowest share of private sector employment in SMEs (50%). For Northern Ireland, Wales and the South West this figure exceeded 70%

• In the UK, there are approximately 969 businesses per 10,000 adults, ranging from 762 in Scotland to 1,352 in London

Enterprises - Further Analysis

The following slides utilise information from the UK Innovation Survey, 2009, Department for Business Innovation and Skills

The survey elicited responses from 179,616 enterprises, of which 83.5% were small, 14.0% were medium and the balance were large

Responses were from the UK as a whole

Businesses Objectives (1)

• Profit margin as an objective is particularly important for medium sized enterprises

• It is not applicable for 4.1% of small enterprises

• Growth in sales is particularly important to large and medium sized enterprises

Businesses Objectives (2)

• Growth in exports is not generally a principal business objective

• UK market share is more important for large enterprises than small ones

Enterprises and Innovation(1)

Respondents ‘Yes’

All Small Medium Large

Innovation Active

58.2% 57.3% 62.5% 61.2%

Product Innovator

23.9% 23.0% 28.5% 31.5%

Process Innovator

12.6% 12.0% 15.4% 18.9%

Product and Process

9.4% 8.9% 11.5% 14.5%

Product or Process

27.1% 26.0% 32.4% 35.9%

Wider Innovation

26.5% 24.5% 36.5% 39.0%

Enterprises and Innovation(2)

• 58.2% of all organisations report that they are innovation active

• Medium sized enterprises are the most active

• More businesses are product innovators than process ones (23.9% and 12.6% respectively)

• Only 9.4% of all organisations are both process and product innovators, but 14.5% of large organisations are

• 27.1% of organisations are either process or product innovators

Activities and Innovation(1)

Respondents ‘Yes’

All Small Medium Large

Internal R&D 27.9% 26.5^% 34.9% 36.6%

Acquisition of Advanced R&D

9.2% 8.2% 13.4% 17.0%

Acquisition of External Knowledge

10.2% 9.7% 12.5% 13.8%

Changes to Product or Service Design

19.1% 17.8% 24.7% 27.8%

Changes to Marketing Methods

18.3% 17.9% 20.6% 19.3%

Market Research 13.6% 12.5% 18.5% 23.2%


• Businesses engaged in a number of innovation related activities, including internal R&D (27.9%); acquisition of external R&D (9.2%); acquisition of external knowledge (10.2%); market research (13.6%); changes to marketing methods (18.3%); and changes to product or service design (19.1%)

• When asked whether the business introduced new or significantly improved goods, 14.4% of respondents answered ‘yes’. When the same question was asked regarding services, 17.6% answered ‘yes’


Top 8 Reasons to Innovate High Medium Low

Improve quality of goods and services 51.1% 22.7%% 3.5%

Increase range of goods and services 36.6% 28.0% 9.4%

Increase value added 36.1% 28.4% 8.2%

Increase market share 32.4% 26.1% 13.5%

Meet regulatory requirements 31.2% 22.1% 13.8%

Reducing costs per unit 28.8% 24.3% 14.5%

Entering new markets 28.4% 26.4% 14.2%

Improve flexibility for producing goods and services

25.8% 28.4% 14.5%


• Product innovation turnover split:

• When questioned as to reasons not to innovate (non-innovators only), the highest response was that there was no need due to market conditions (45.6%); followed by the absence of need due to previous innovations (30.0%); and the existence of other factors constraining innovation (27.4%)

Goods and services …. All Small Medium Large

New to Market 4.9% 6.3% 7.6% 2.9%

New to business 5.6% 7.7% 3.2% 6.4%

Significantly improved 10.2% 10.0% 12.3% 9.0%

Unchanged/marginally modified

48.7% 65.8% 70.2% 30.9%

About Innovation for Growth

Founded in 2010, Innovation for Growth is a business consultancy firm that specialises in the provision of advice to small and medium sized enterprises. We work with companies from all sectors undertaking innovation audits, and providing innovation advice so our clients can maximise their innovation capabilities and achieve their growth aspirations.

We also undertake desktop, business research and analysis, enabling our clients to concentrate on running their business.

For more on our services, please download our Corporate Services Document.

© 2011 Innovation for Growth

http://www.innovationforgrowth.co.uk/CorporateServicesJan11.pdf

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