SMEs profits jump back to pre-2008 levels

The Small Business Survey has found that small businesses have increased their turnover, expanded their staff, and improved profits over the last year.

The Small Business Survey 2014 from the Department for Business, Innovation and Skills (BIS) has forecast that this positive trend will continue throughout 2015, in what has been called the “nation’s most reliable source of evidence on enterprise”.

The research of 4,355 small and medium-sized firms that employ at least one person, found that:

  • 78% reported they have made a profit or surplus in the last 12 months, back to 2007 and 2008 levels and up 6% on 2012
  • 40% reported their turnover is greater now than 12 months ago, compared with 29% in 2012. Only 18% report declining turnover, down from 31% in 2012
  • over half (51%) expect to grow their turnover over the next year, up from 37% in 2012
  • employers are recruiting more staff, with 22% of the firms taking on more staff over the last 12 months, compared with 19% in 2012
  • one third of employers expect to increase their staff over the next 12 months (was only one fifth in 2012) and only 4% (1 in 25) expect to reduce staff (was one fifth in 2012)

Business Minister Matthew Hancock said:

“After the biggest recession in peacetime history, it’s now clear to see that our long-term plan is turning the economy around. Our aim is to make Britain the best place in the world to start and grow a business and this is now within reach.

“Small businesses are leading our economic recovery and we have thrown our weight behind them, like never before. Over 850,000 small businesses have benefitted from the government’s Employment Allowance. We’ve cut back £10 billion of burdensome red tape and last year UKTI helped nearly 48,000 businesses export more than £49 billion of goods overseas.

“There really has never been a better time to start a business.”

Fewer firms are now seeking finance when compared with 2012: in 2014, only 19% of firms sought finance in the last year, down from almost a quarter in 2012.

This is attributed to a decline in demand for overdrafts, which indicates a decrease in businesses looking for external funding for working capital of for cash flow. However, 2014 also saw a sharp increase in the proportion of businesses that are applying for finance for the purposes of supporting growth, purchasing equipment, vehicles, land or buildings.

The UK Government has also published a study into management and leadership skills, which shows that small businesses could stand to benefit from improved entrepreneurial skills. Many of the 2,500 small business leaders who were questioned as part of the survey said their businesses rated their skills highly, but some said that they had weaknesses to do more to improve their management skills.

The 2014 Global Entrepreneurship Monitor  has also testified to the strength of the UK’s enterprise sector. There has been a notable increase in the number of people thinking about starting a business,or  have recently set one up, or who have one that’s less than 42 months old. The total early-stage entrepreneurial activity (TEA) now stands at 8.6% in the UK in 2014, up from the 2013 figure of 7.3%, putting the UK has ahead of France and Germany in terms of entrepreneurship.

The UK’s performance  has shown new businesses with high growth expectations – 1 in 6 UK early stage entrepreneurs had high job growth expectations for their businesses.

Entrepreneurial activity among the over-50s age group has also continued to increase to reach its highest ever level, posted at 7.1% in 2014.


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Words: Peter Cribley

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