SMEs in 2013: Reasons for small businesses to be cheerful?
13 January 2014
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January is usually the time that people start to reflect on the events of the last year, as well as look forward to what is coming in the next twelve months. So what better time to take a look back over the year for SMEs.
This year has not been without drawbacks for small and medium sized businesses, the . Some issues are lurking on the horizon, for example the risk of a pension crisis in the near future due to the failure of widespread adoption of auto-enrolment in small and medium sized businesses.
6 Year High for Small Businesses
The UK now has the most SMEs in business since before the downturn after two successive rise among years of growth. The number of active small and medium enterprises in the UK reached a six-year high of 2.16 million in 2013, according to the SME Growth Monitor from the National Association for Commercial Finance Brokers.
England leads the way with 4.6% SME population growth since 2011, with larger businesses growing just 3.3%. SMEs in Scotland grew by 4.5%, with larger companies lagging behind with 3.9% growth. SMEs in Wales on the over hand have not had the same boost in the last few years, has experienced just 0.3% SME growth in the last two years, compared to a massive 5.5% growth in bigger businesses.
Positive Changes for Small Businesses
The post-2011 boom has seen SME numbers grow in 18 out of 20 UK industries, with the only exceptions being construction (-2%) and wholesale (-1%). In contrast big business numbers have risen in just three quarters of UK industries.
Professional, scientific and technical industries have seen the biggest SME population growth of any sector (+35,905), followed by information and communication (+18,025), health (+6,535), property (+5,580), agriculture (+4,765), education (+3,540) and manufacturing (+3,435).
The greatest shift in sector demographics has been in public administration and defence which boasts nearly twice as many SMEs (+97%) as in 2011 but fewer large employers (-3%).
The most noticeable differences have been from the different nations within the United Kingdom.
England’s SMEs visibly outgrew big businesses in number during 2012 (3.5% vs. 2.2%) but were pegged back to 1.1% growth in 2013: the same rate achieved by large employers.
The yearly growth of Scotland’s SME population also slowed during 2013 and fell behind in Wales for the first time since 2011, while Northern Ireland saw a sixth year of SME decline.
In contrast, big business numbers in Scotland, Wales and Northern Ireland each bucked the overall UK trend for 2013 by growing at a faster annual rate than in 2012.
Cost Inflation Lowest in Four Years
The findings, compiled by the Centre for Economics and Business Research (CEBR), suggest that the UK's economic recovery is finally starting to filter down to small businesses as well.
Over the past three months interest rates have begun to fall back, even for the smaller SMEs. The average interest rates offered to smaller SMEs fell to 4.71% in August 2013, down from 4.78% in May and from 4.75% the previous year.
The annual rate of cost inflation for small and medium-sized enterprises fell from 1.2% to 0.7% in the third quarter of 2013, marking the lowest rate of inflation since 2009.
Scottish SMEs to bring 40,000 new jobs
Clydesdale Bank have predicted good things for Scotland in 2014 too, after speaking to 800 UK SMEs about their prospects for the year ahead.
This research discovered that 43% of Scottish SMEs planned to add to their workforce in 2014, with those in recruitment mode expecting to increase staffing by an average of 9% over the 12 month period.
Small businesses (businesses with less than 50 employees) are most likely to hire more staff in the coming year, with a massive 63% indicating they expected to add to their workforce. These jobs are set to be significantly in the accounting and manufacturing industries.
Growth in the next year
This news is a welcome boost for Britain's small businesses, especially with the prediction that the UK is expected to experience stronger growth than any other advanced economy in 2014.
This rise is expected to be around at around 2.7%, making things looks a little brighter for the future of the UK's vibrant community of small businesses.