Small Business Statistics UK 2021

According to the Department for Business, Energy and Industrial Strategy (BEIS) Business Population Estimates, small businesses make up more than 99% of the business population. How many small businesses are there in the UK, how long do they survive, what's their turnover and which industries are most popular? Answers to these questions and more in our analysis of business demographic statistics from the Office for National Statistics.

Over 5.8 million small businesses in the UK employed 13,157,000 people and brought in £1,528,684,000,000 (over £1.5 trillion) in turnover last year. Here's how that breaks down.

Number of Small Businesses in the UK

In 2019, there were 5,824,500 small businesses in the UK, accounting for 99.3% of the total business population. Of these, 4,457,820 businesses (or 76.5% of small businesses) had no employees—these are sole proprietorships and partnerships with only the self-employed owner-manager(s) and companies with a single employee who is also a director. The other 1,366,600 small businesses had at least one employee.

Number of Small Businesses in the UK, 2019
With no employees (not registered for VAT or PAYE)3,244,700
With no employees (registered for VAT or PAYE)1,213,200
1 employee143,100
2-4 employees751,200
5-9 employees261,000
10-19 employees138,300
20-49 employees73,000
Total number of small businesses5,824,500
Total number of businesses (all sizes)5,867,800

Small Business Growth Statistics

The number of small businesses in the UK grew 70% from 3,467,300 in 2000 to 5,824,500 at the end of 2019; year-on-year growth from 2018 to 2019 was 3.5%. On average over the past 20 years, annual growth in the small business population has averaged 2.8%, ranging from a loss of 0.5% in 2018 to an increase of 6.8% in both 2004 and 2014.

Small Business Growth StatisticsBusinesses with no employeesBusinesses with 1 - 49 employeesTotal Number of Small BusinessesYear-on-Year Growth
20002,355,9001,077,2003,433,100
20012,353,7001,113,6003,467,3001.0%
20022,411,4001,124,1003,535,5002.0%
20032,497,6001,144,0003,641,6003.0%
20042,763,0001,127,7003,890,7006.8%
20052,752,0001,140,2003,892,2000.0%
20062,930,5001,159,5004,090,0005.1%
20073,047,2001,188,8004,236,0003.6%
20083,045,5001,202,4004,247,9000.3%
20093,137,8001,201,2004,339,0002.1%
20103,258,6001,188,9004,447,5002.5%
20113,377,4001,174,3004,551,7002.3%
20123,581,1001,200,7004,781,8005.1%
20133,703,6001,173,7004,877,3002.0%
20143,969,6001,239,1005,208,7006.8%
20154,089,3001,272,4005,361,7002.9%
20164,172,5001,284,9005,457,4001.8%
20174,327,7001,325,7005,653,4003.6%
20184,278,2001,346,9005,625,100-0.5%
20194,457,9001,366,6005,824,5003.5%

The growth in the UK small business population was driven by an 89% increase in very small businesses that have no employees, as you can see in the chart below.

Chart showing the number of small businesses in the UK

Small Businesses by UK Region

Not surprisingly, London has more small businesses than any other area of the UK—1,083,900 in 2019, which is 52% higher than the figure from 2010. The South East came in 2nd with 934,100 small businesses, representing growth of 28% from 2010. The area with the second best growth in small businesses behind London was the South West, which created 36% more businesses over the 2010 to 2019 time period.

Number of Small Businesses by UK Region20102019Change
North East122,600150,20023%
North West432,700574,10033%
Yorkshire and the Humber329,100425,30029%
East Midlands300,200353,40018%
West Midlands354,600476,00034%
East of England465,700594,80028%
London712,7001,083,90052%
South East728,000934,10028%
South West411,700558,20036%
England3,857,3005,150,00034%
Wales189,500220,60016%
Scotland282,300330,90017%
Northern Ireland118,400123,0004%

If we consider very small businesses that are essentially run by the business owner(s) and no one else—e.g., a sole trader, partnership or limited company with only the director(s) working for the businesses)—then education-based businesses are the most popular. This category can include private tutors, music teachers and more.

The most popular type of small business with employees falls into the accommodation and food service category. This includes cafes, pubs, restaurants, B&Bs, holiday letting businesses and more.

Chart showing the most popular types of small businesses in the UK

Small Business Turnover

The average small business in the UK reported turnover of £262,458 a year in 2019, but results varied significantly by size of the business. Businesses with no employees reported an average turnover of £68,309 per year—this figure reflects revenues (aka sales) and does not reflect the business costs such as cost of materials, employment costs, small business insurance, marketing, rent and other costs required to run the company.

Micro companies with 1-9 employees reported an average turnover of £514,991 per year, while small businesses with 10 or more employees raked in an average of £2,977,652 in 2019.

How much do small businesses earn a year?

Business sizeNumber of businessesTotal turnover excl VAT (millions)Average turnover per business
With no employees4,457,820£304,508£68,309
1-9 employees1,155,385£595,013£514,991
10-49 employees211,295£629,163£2,977,652
All small businesses5,824,500£1,528,684£262,458

Small Business Employee Costs

How much do small businesses spend on employment costs? The average employment cost for a small business is £126,705. Micro businesses with 1-9 employees spent an average of £59,643 annually on staff, while small businesses with 10-49 employees spent an average of £493,407 per year on employment costs.

How much do small businesses spend on employees a year?

Business sizeNumber of businessesTotal employment costs (thousands)Average employment costs per business
With no employees4,457,820n/an/a
1-9 employees1,155,385£68,910,279£59,643
10-49 employees211,295£104,254,493£493,407
Across all small businesses that employ staff1,366,680£173,164,772£126,705

Small Business Birth and Death Rates

How many small businesses open each year?

Just over 380,000 businesses opened in the UK in 2018. Nearly 97.5% of these were births of micro businesses with between 0 and 9 employees. Close to 10,000 businesses opened in 2018 that employed between 10 and 49 people.

How many small businesses open each year?

Business sizeNumber of small business births
0-4 employees347,425
5-9 employees22,950
10-49 employees9,665
Total380,040

How many small businesses close each year?

Nearly 11.6% of active small businesses closed in 2018. In total, 334,855 small business deaths were recorded that year. Micro businesses with under 5 employees closed at the highest rate—13.0%. Larger small businesses have better survival, with just 4.2% closing annually.

How many small businesses close each year?

Business sizeNumber of deathsSmall business death rate
0-4 employees302,45013.0%
5-9 employees22,1857.0%
10-49 employees10,2204.2%
Total334,85511.6%

FAQs

According to the UK government, a small business is defined as a business with under 50 employees and turnover under €10 million. However, if we're talking about annual accounts for limited companies, the UK government defines a "small" limited company as meeting any two of the following three criteria:

  • a turnover of £10.2 million or less
  • £5.1 million or less on its balance sheet
  • 50 employees or less

There were 5,824,500 small businesses in the UK at the end of 2019, 76.5% of which had no employees.

Around 380,000 small businesses open each year in the UK. The vast majority (over 97%) of these were births of micro businesses with between 0 and 9 employees. That said, close to 10,000 businesses open that employ between 10 and 49 people.

Micro businesses are generally defined as having up to 9 employees. A micro-business is technically defined as having less than 10 employees and turnover under €2 million. However, if we're talking about annual accounts for limited companies, the UK government defines a "micro-entity" limited company as meeting any two of the following three criteria:

  • a turnover of £632,000 or less
  • £316,000 or less on its balance sheet
  • 10 employees or less

There were 5,613,205 micro businesses in the UK at the end of 2019, 79.4% of which had no employees.

Methodology

To arrive at the figures in this study, we analysed data from the Department for Business, Energy and Industrial Strategy (BEIS) Business Population Estimates publication, as well as other business demographic datasets sourced from the Office for National Statistics.

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