Growth Dashboard takes the pulse of Small Business Britain
Small to medium-sized enterprises (SMEs) are growing at their fastest rate since the economic crisis in 2008 as private sector firms added over 600,000 net new jobs across the UK in 2014, new research shows.
The Growth Dashboard 2015 - a new study by the Enterprise Research Centre (ERC), which brings together academics from five of the country’s leading university business schools, and in partnership with the Business Growth Service - sheds new light on patterns of growth around the UK.
The surprising findings show that while London has the highest start-up rate in the country, it is Belfast's entrepreneurs who are the most likely to reach £1m turnover within three years.
Meanwhile, Lanarkshire in Scotland is hot on the heels of London in the proportion of fast-growing firms showing annual employment growth of 20% or more. And when individual cities are separated out from regions, Leicester is on a par with London for high growth companies.
The report shows that, overall, SMEs have finally regained the ground lost since the Great Recession – with jobs, start-up and growth rates returning to pre-crisis levels in 2014 for the first time since 2008. ERC research has revealed that, over the seven year period, a total of 13 million jobs were lost overall. Over the same period, 13.4 million jobs were created – giving net private sector job creation of 400,000 – a figure that only became positive again in 2014.
Examining data from Local Enterprise Partnership (LEP) areas and individual cities (Primary Urban Areas or PUAs) in England and local authorities in Scotland, Wales and Northern Ireland, the report looks at a range of start-up, survival and growth metrics to give an overview of the health of SMEs and entrepreneurship across the whole of the UK.
It paints a much more complex picture of growth in the ‘grassroots economy’ than the usual caricature of a booming London and trailing provinces – with growth hotspots found in every nation and region.
Key findings from the Dashboard, unveiled at ERC’s annual State of Small Business Britain conference in Birmingham today [Tuesday, 16th June 2015] include:
Job creation
• Overall, the private sector created a net figure of over 600,000 new jobs across the UK in 2014. England, Scotland and Wales all saw net growth, yet Northern Ireland saw a net loss of 400 jobs.
• Hertfordshire and Buckinghamshire have the highest ratios for net job creation, above London in third place and a broad swathe of regions in the Midlands and North of England.
• Interestingly, Thames Valley Berkshire and Tees Valley, two areas with high rates of £1- 2m businesses scaling to £3m+,both have net job creation ratios 50% less than the average in England.
Fast-Growing Firms (showing annualised average growth in employment of 20% or more over three-year period 2011-14):
• London has the highest proportion of fast-growing firms in the UK - 18.6% (English average is 16%).
• Scotland is close behind London – with North and South Lanarkshire having the highest proportions and the Orkney Islands, Glasgow and Edinburgh all having above average proportions of fast-growing firms.
• In England, other places with above average proportions of fast-growing firms include Oxfordshire and Thames Valley Berkshire, Leicester, Greater Birmingham and Solihull, Northampton and South East Midlands LEP areas as well as Greater Manchester, Liverpool and Leeds City Region.
Start-up growth – ‘initial scaling’
• Overall, Northern Ireland (NI) has the highest proportion of start-ups who survive and reach at least £1m turnover within 3 years - a much higher level than in Scotland, Wales and England. NI as a whole has proportionally more surviving start-ups making it to the ‘magic milestone’ of £1m turnover than London. In particular, Belfast, West NI and South NI and North NI have the highest rates of any area in the UK at around 10-11%.
Growth of existing businesses – ‘stepping up’
• Across the UK around 6% of existing firms with turnover of £1-2m per annum in 2011 grew to at least £3m turnover in 2014.
• Although Thames Valley Berkshire has the highest proportion of these businesses (8.7%) and London the second highest, this is not a simple north-south pattern. Tees Valley, Gloucestershire, Greater Birmingham and Solihull and Sheffield City Region are all above average for England. Of individual cities, Middlesbrough has the highest proportion of all (9%).
Barriers to growth
• Nearly 50% of businesses in Derby, London and Southampton described the ability to recruit skilled staff as a major barrier to growth. Sales and marketing, meanwhile, is a barrier to growth for 56% of Birmingham companies, while access to finance is a problem for 45-50% of firms in Sunderland, Southampton and Newcastle.
• In the Midlands, strategy and management is the main barrier to growth for around three-quarters of businesses, which is much higher than in any other part of England.
Start-up survival
• London has the highest start-up rate. However, despite this the capital occupies a position in the bottom 10 for survival rates of start-ups beyond three years, alongside Leeds City Region, Greater Manchester and Greater Birmingham and Solihull.
ERC is the UK’s leading independent research institute on the drivers behind the growth and success of small and medium-sized enterprises (SMEs). It brings together some of the most respected academics from five of the UK’s leading university business schools.
Professor Mark Hart, Deputy Director of ERC, said:
“The Growth Dashboard provides us with the most detailed picture of where entrepreneurial activity and business growth is occurring around the country.
“It shows us that small businesses in every corner of the UK are growing at their fastest rate since the Great Recession, while more and more entrepreneurs have the confidence to take the plunge. Overall, the UK now has the highest rate of entrepreneurship in Europe.
“Nevertheless, there remain big regional disparities in entrepreneurship and small business growth. Equipped with the up-to-the-minute information contained in the Dashboard, we can see that some areas appear better at breeding success. At a policy level, this insight can help us create an environment for business to thrive throughout the country.”
