More business-minded people are taking matters into their own hands. Figures from the Department for Business, Energy & Industrial Strategy indicate that there are now more than 5.5m companies in the UK, and 99 per cent of these businesses are small and medium sized enterprises. This figure is at a record high – jumping dramatically from 2010, when there were 4.5m smaller businesses, and from 2000 when there were 3.5m. It’s clear that small firms are now the engine of our economy.
Peter Alderson, managing director of business finance provider, LDF commented:
“The small business population is experiencing a period of seriously notable growth, this new wave of entrepreneurs is contributing at a level not previously seen and they’re refreshingly ambitious. We are certainly seeing more new and innovative funding requirements and it’s exciting to see.”
A large proportion of these small businesses fit into the “micro” category, meaning they have less than nine employees.
But why are we seeing such a rise in people opting for this route?
Well arguably it’s a sign of the state of a changing workforce, a workforce which demands more flexibility and freedom from jobs.
People no longer want to work in a job that they despise, commit to normal hours, or be forced to come into an office – they want to work for themselves. Opting for the self-employed route also means that workers can fit their career neatly around their personal lives, and ultimately take control of their own destinies. Of course, the internet has a huge part to play in the growth of this small business sector, because it means that we no longer need to be surrounded by paperwork – we can do everything online. In fact, working online means the cost of running a business can be tiny in comparison.
Peter Alderson says: “businesses are harnessing the benefits of online, and the efficiencies this creates, especially in respect of reduced overheads. Keeping ahead in the online space can be tough for smaller business however, software and technology investment becomes increasingly relevant, and this is evidenced in the type of loan requests we are seeing.”
Some might argue that this rise in micro businesses is a sign of a stagnant economy, but it doesn’t have to be seen in this light. The government has arguably realised how crucial this sector is to the economy – having backtracked on its decision to hike National Insurance tax for the self-employed earlier this year.
And while many might expect Brexit to prompt a decline the amount of small businesses in the UK, it seems to be doing the opposite, with data from LinkedIn pointing to a five per cent increase in the number of micro businesses since the Brexit vote.
This could be a sign of people being laid off by some of the larger businesses, who have shed staff over concerns about Brexit. But this is a positive outcome if more people are choosing to set up their own innovative companies.
Alderson says: “With the number of new businesses on the up, the subject of access to finance remains firmly on the agenda. Traditional, challenger and non-bank providers are having to evolve at pace to meet a changing set of needs from a broader set of industries. We have to ensure that smaller businesses have access to not only the finance options they need but that they understand what is available to them. The British Business Bank are a firm advocate of this, and this was a principle reason we got involved with them to deliver a £51m facility for asset finance in 2016.”
The impact of Brexit on these businesses is yet to be seen, but domestically focused firms are less affected by foreign trade agreements. So, while some might be holding off on capital expenditure until they get a clearer picture, the majority have said that they have been undeterred by the Brexit result, according to a report on small businesses from Opus Energy.
In fact, 29 per cent of small businesses said they feel more confident now about their business than they did before the EU referendum. So perhaps we should actually take pride in the entrepreneurial spirit of our nation – and nurture it.
Katherine Denham is a features writer at City A.M.