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Small Business Statistics UK 2023
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.
- How many small businesses are in the UK?
- Most popular small businesses in the UK
- Small business turnover
- Employee costs
- Births and deaths
Over 5.4 million small businesses in the UK employed 13,157,000 people and brought in £1,416,908,000,000 (over £1.4 trillion) in turnover last year. Here's how that breaks down.
Number of Businesses in the UK
In 2022 there were 5,508,935 businesses in the UK, of which 5,465,320 are considered "small businesses". Small businesses account for 99.2% of the total business population. Of small businesses, 4,061,035 businesses (or 74.3% 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 1,404,285 small businesses had at least one employee.
| Number of Small Businesses in the UK, 2022 | |
|---|---|
| With no employees (not registered for VAT or PAYE) | 2,833,340 |
| With no employees (registered for VAT or PAYE) | 1,227,695 |
| 1 employee | 135,820 |
| 2-4 employees | 780,385 |
| 5-9 employees | 270,840 |
| 10-19 employees | 141,655 |
| 20-49 employees | 75,585 |
| Total number of small businesses | 5,465,320 |
| Number of larger businesses (50+ employees) | 43,615 |
| Number of all businesses (small, medium and large) | 5,508,935 |
Small Business Growth Statistics
The number of small businesses in the UK grew 55% in the past 20 years from 3,535,500 in 2002 to 5,465,300 at the end of 2022; but dropped 8% from 2020 to 2022 due to effects of the pandemic (-6.5% in 2021 and another -1.5% in 2022). On average over the past 20 years, annual growth in the small business population has averaged 2.2%. The year with the highest increase was 2014, when the number of small businesses grew 6.8%.
| Small Business Growth Statistics | Businesses with no employees | Businesses with 1 - 49 employees | Total Number of Small Businesses | Year-on-Year Growth |
|---|---|---|---|---|
| 2002 | 2,411,400 | 1,124,100 | 3,535,500 | 2.0% |
| 2003 | 2,497,600 | 1,144,000 | 3,641,600 | 3.0% |
| 2004 | 2,763,000 | 1,127,700 | 3,890,700 | 6.8% |
| 2005 | 2,752,000 | 1,140,200 | 3,892,200 | 0.0% |
| 2006 | 2,930,500 | 1,159,500 | 4,090,000 | 5.1% |
| 2007 | 3,047,200 | 1,188,800 | 4,236,000 | 3.6% |
| 2008 | 3,045,500 | 1,202,400 | 4,247,900 | 0.3% |
| 2009 | 3,137,800 | 1,201,200 | 4,339,000 | 2.1% |
| 2010 | 3,258,600 | 1,188,900 | 4,447,500 | 2.5% |
| 2011 | 3,377,400 | 1,174,300 | 4,551,700 | 2.3% |
| 2012 | 3,581,100 | 1,200,700 | 4,781,800 | 5.1% |
| 2013 | 3,703,600 | 1,173,700 | 4,877,300 | 2.0% |
| 2014 | 3,969,600 | 1,239,100 | 5,208,700 | 6.8% |
| 2015 | 4,089,300 | 1,272,400 | 5,361,700 | 2.9% |
| 2016 | 4,172,500 | 1,284,900 | 5,457,400 | 1.8% |
| 2017 | 4,327,700 | 1,325,700 | 5,653,400 | 3.6% |
| 2018 | 4,278,200 | 1,346,900 | 5,625,100 | -0.5% |
| 2019 | 4,457,900 | 1,366,600 | 5,824,500 | 3.5% |
| 2020 | 4,567,800 | 1,368,700 | 5,936,500 | 1.9% |
| 2021 | 4,175,000 | 1,372,800 | 5,547,800 | -6.5% |
| 2022 | 4,061,000 | 1,404,300 | 5,465,300 | -1.5% |
The growth in the UK small business population was driven by an 68% increase in very small businesses that have no employees, as you can see in the chart below. But, you can also see that it's the small businesses with no employees that were hit hardest by the pandemic.
Small Businesses by UK Region
Not surprisingly, London has more small businesses than any other area of the UK—1,029,700 in 2022, which is 26% higher than the figure from 2012. The South East came in 2nd with 837,800 small businesses, representing growth of 9% from 2012. The areas with the best growth in small businesses behind London were the North East, North West and West Midlands, which all created 17% more businesses over the 2012 to 2022 time period.
| Number of Small Businesses by UK Region | 2012 | 2022 | 10-Year Change |
|---|---|---|---|
| North East | 131,100 | 153,800 | 17% |
| North West | 433,800 | 508,500 | 17% |
| Yorkshire and the Humber | 340,000 | 382,200 | 12% |
| East Midlands | 322,300 | 364,900 | 13% |
| West Midlands | 370,600 | 433,700 | 17% |
| East of England | 504,000 | 538,800 | 7% |
| London | 814,600 | 1,029,700 | 26% |
| South East | 766,300 | 837,800 | 9% |
| South West | 475,500 | 534,000 | 12% |
| England | 4,158,000 | 4,783,300 | 15% |
| Wales | 193,700 | 217,100 | 12% |
| Scotland | 316,400 | 337,900 | 7% |
| Northern Ireland | 113,600 | 127,000 | 12% |
Most Popular Small Business Industries
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.
Small Business Turnover
The average small business in the UK reported turnover of £259,254 a year in 2012, but results varied significantly by size of the business. Businesses with no employees reported an average turnover of £68,357 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 £446,872 per year, while small businesses with 10 or more employees raked in an average of £2,802,670 in 2022.
How much do small businesses earn a year?
| Business size | Number of Businesses | Total turnover excl VAT (millions) | Average turnover per business |
|---|---|---|---|
| With no employees | 4,061,035 | £277,599 | £68,357 |
| 1-9 employees | 1,187,045 | £530,457 | £446,872 |
| 10-49 employees | 217,240 | £608,852 | £2,802,670 |
| All small businesses | 5,465,320 | £1,416,908 | £259,254 |
Small Business Employee Costs
How much do small businesses spend on employment costs? The average employment cost for a small business was £127,256 at the beginning of 2022. Micro businesses with 1-9 employees spent an average of £64,415 annually on staff, while small businesses with 10-49 employees spent an average of £470,636 per year on employment costs.
How much do small businesses spend on employees a year?
| Business size | Number of businesses | Total employment costs (thousands) | Average employment costs per business |
|---|---|---|---|
| With no employees | 4,061,035 | n/a | n/a |
| 1-9 employees | 1,187,045 | £76,463,010 | £64,415 |
| 10-49 employees | 217,240 | £102,240,928 | £470,636 |
| Average across small businesses that employ staff | 1,404,285 | £178,703,939 | £127,256 |
Small Business Birth and Death Rates
How many small businesses open each year?
Just over 357,000 businesses opened in the UK in 2020. Over 97.8% of these were births of micro businesses with between 0 and 9 employees. Close to 7,400 businesses opened in 2020 that employed between 10 and 49 people.
How many small businesses open each year?
| Business size | Number of small business births |
|---|---|
| 0-9 employees | 349,925 |
| 10-49 employees | 7,420 |
| Total | 357,345 |
How many small businesses close each year?
Nearly 11.6% of active small businesses closed in 2020. In total, 315,525 small business deaths were recorded that year. Micro businesses with under 9 employees closed at the highest rate—11.3%. Larger small businesses have better survival, with just 3.4% closing annually.
How many small businesses close each year?
| Business size | Number of deaths | Small business death rate |
|---|---|---|
| 0-9 employees | 307,570 | 11.3% |
| 10-49 employees | 7,955 | 3.4% |
| Total | 315,525 | 10.7% |
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 5,465,320 small businesses in the UK at the beginning of 2022, 74.3% of which had no employees.
Around 360,000 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, over 7,000 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 5,248,080 micro businesses in the UK in 2022, 77.4% 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.