SMALL INCREASE IN NUMBER OF NEW SME BUSINESSES
(31 August 2006)

The Small Business Service (SBS), an executive agency of the Department of Trade and Industry, today published Small and Medium-sized Enterprise (SME) Statistics for the UK 2005. There were an estimated 4.3 million business enterprises in the UK at the start of 2005, an increase of 59,000 (1.4 per cent) on the start of 2004.

Almost all of these enterprises (99.3 per cent) were small (0 to 49 employees). Only 27,000 (0.6 per cent) were medium-sized (50 to 249 employees) and 6,000 (0.1 per cent) were large (250 or more employees).This estimate, and figures in this release, comprises the private sector (including public corporations and nationalised bodies) and therefore excludes Government and non-profit organisations.

SME EMPLOYMENT

At the start of 2005, UK enterprises employed an estimated 22 million people, and had an estimated combined annual turnover of £2,400 billion. Small and medium-sized enterprises (SMEs) together accounted for more than half of the employment (58.7 per cent) and turnover (51.1 per cent) in the UK.

Small enterprises alone (0 to 49 employees) accounted for 46.8 per cent of employment and 36.4 per cent of turnover (see Figure 1).

INDUSTRY PATTERNS

At the start of 2005, 46.8 per cent of business employment was in small enterprises. But this varied between industries. In Standard Industrial Classification (SIC) 2003 sections AB (agriculture, fishing and forestry), 93.8 per cent of employment was in small enterprises. But in section J (Financial Intermediation) only 14.7 per cent of employment was in small enterprises.

The share of turnover in small enterprises also varies between industries.

Overall, 36.4 per cent of turnover was in small enterprises. Again, there are variations by industry, ranging from 18.0 per cent in SIC D (Manufacturing) to 89.0 per cent in SIC A and B (Agriculture etc.).

NUMBER OF BUSINESSES WITH EMPLOYEES

At the start of 2005, the number of enterprises with no employees was 3.2 million, equivalent to 72.8 per cent of all enterprises. However this proportion varies among different industries, from 87.5 per cent for SIC M (Education), to 25.3 per cent for SIC H (Hotels and Restaurants).

Enterprises with no employees are sole proprietorships and partnerships comprising only the self-employed owner-manager(s), and companies comprising only an employee director. They had an estimated combined turnover of £190 billion.

At the start of 2005, the number of enterprises with employees was 1.2 million. They had an estimated combined turnover of £2,250 billion.

HISTORICAL HIGH

The estimated number of enterprises at the start of 2005 is 59,000 (1.4 per cent) more than at the start of 2004, although both numbers round to 4.3 million. These levels are the highest since the time series began in 1994.

Figure 4 below shows that the number of companies has gone up by 61,000 (5.9 per cent) during 2004 to 1.1 million, with increases for both companies with and without employees. This is the eighth successive year that companies have increased in number.

The number of sole proprietorships has changed little, with an increase of 22,000, or 0.8 per cent, taking it up to 2.7 million, the third successive annual increase. Meanwhile, the number of partnerships has gone down by 24,000, or 4.4 per cent, to 520,000.

Registered businesses (VAT and / or PAYE) and unregistered businesses have both increased, and at a similar rate.