The last few years have been among the most turbulant on record for small businesses.
From the pandemic through to Russia’s invasion of Ukraine, the impact has been felt across the globe.
And that has led to some interesting UK small business statistics. There have been changes in both new company formations and the number going under. Yet, the overall makeup of the UK business world still has many familiar stats.
Here’s our UK small business statistics roundup, including:
- UK Business Population Statistics
- Birth & Death Rates Of UK Companies
- Types of UK Company Stats
- UK Business Growth Rates
- VAT & Tax Statistics
- International Trade Statistics
- Small Business Data & Security
So, let’s get started…
UK Small Business Statistics (Editors Picks)
- Number of UK businesses: There are 5.5 million UK private sector businesses
- Employees: 75% of businesses do not employ anyone aside from the owner(s)
- New company formations: 801,006 new businesses were formed in 2022/23
- Company age: The average UK company at the end of March 2023 was 8.6 years old
- Company size: 99.21% of the total business population are small businesses (0 to 49 employees)
- Most popular type of company: Since 2004, private LTD companies have consistently accounted for over 95% of all corporate body types
- Failure rate: Almost 1 in 5 new businesses fail in the UK each year
- VAT registration: The number of Value Added Tax (VAT) and/or Pay As You Earn (PAYE) businesses in the UK as of March 2022 was 2.77 million
- Average turnover: The average turnover of a small business (0-49 employees) in the UK is £286,482, though this drops to £72,461 when looking only at businesses without any employees.
- Growth Rate: Businesses with a business plan grow an average of 30% faster than those without
UK Business Population Statistics
When looking at the overall make-up of UK businesses, there are some interesting statistics that stand out…
How many businesses are there in the UK?
There were estimated to be 5.5 million private sector businesses in the UK in 2022 (down 1.5% from 2021). This is almost entirely (99.9%) comprised of small and medium-sized businesses and 75% do not employ any staff other than the owners.
Between 2020 and 2021, the overall business population decreased by £390,000 (6.5%). This potentially reflects the high cost that businesses have paid in dealing with the impact of COVID-19.
In contrast, the highest increase occured between 2013 and 2014 when there was a 6.8% increase in the business population.
How many micro businesses are there in the UK?
There are 5.3 million micro businesses (0-9 employees) in the UK, accounting for 95% of all businesses.
The average turnover of a micro business in the UK is £176,016.
How many small businesses are there in the UK?
There are 5.47 million small businesses (with 0 to 49 employees) in the UK, 99.21% of the total business population. This makes small businesses by far the most common type of business in the country.
The average turnover of a small business in the UK is £286,482, though this drops to £72,461 when looking only at businesses without any employees.
How many medium businesses are there in the UK?
There are 35,900 medium-sized businesses (with 50 to 249 employees), 0.65% of the total business population. This means medium-sized business still only make up a very small amount of the total UK business population.
The average turnover of a medium-sized business in the UK is £20,228,523.
How many large businesses are there in the UK?
7,700 businesses were large businesses (with 250 or more employees), 0.14% of the total business population. This makes large businesses by far the least common size of business in the country.
The average turnover of a large-sized business in the UK is £279,468,844.
How many black-owned businesses are there in the UK?
There are approximately 250,000 companies in the UK that are ethnic-minority led. This accounts for around 4.5% of the total number of registered businesses. However, it should be noted that this includes all non-white ethnic groups.
Given that ethnic minorities make up around 14% of the overall UK population, this highlights there is still work to be done to increase the number of ethnic-minority entrepreneurs in the country.
UK Company Birth & Death Rates
When looking at how many companies are formed, and how many are dissolved each year there are some very surprising facts.
In fact, the business annual business birth rate is around 13% and the death rate is around 11%.
How many new businesses are started in the UK?
There were 801,806 company incorporations in 2022/23. This is an increase of 6.4% when compared with 2021 to 2021 after previously seeing a post-pandemic drop-off in new business formations.
This figure remains significantly higher the years immediately preceding the Covid-19 Pandemic.
Year by year new company incorporations:
| Year | New Incorporations | Y/Y % Change |
|---|---|---|
| 2022/23 | 801,806 | +6.4% |
| 2021/22 | 753,168 | -7.1% |
| 2020/21 | 810,316 | +21.8% |
| 2019/20 | 665,495 | -1.1% |
| 2018/19 | 672,890 | +8.5% |
| 2017/18 | 620,285 | -3.8% |
| 2016/17 | 644,750 | +5.9% |
How many new businesses fail in the UK?
Almost 1 in 5 (20%) of new businesses fail in the UK each year. 60% of new businesses will fail in the first 3 years and only around 33% will make it to being a decade old. This reflects the challenging nature of starting, growing and maintaining a successful business.
In 2022 to 2023, there were 585,807 dissolutions in the UK, a year on year increase of 0.7%.
Year by year company dissolutions:
| Year | Dissolutions | Y/Y % Change |
|---|---|---|
| 2022/23 | 585,807 | +0.7% |
| 2021/22 | 581,824 | +32.9% |
| 2020/21 | 437,790 | -18.5% |
| 2019/20 | 536,934 | +5.5% |
| 2018/19 | 508,865 | +3.7% |
| 2017/18 | 490,738 | +12.4% |
| 2016/17 | 436,526 | +9.2% |
What is the average age of a UK company?
The average age of a company on the total register at the end of March 2023 was 8.6 years. Despite fluctuations in recent years, the average age of a company has gradually declined from 10.7 years at the end of March 2000.
However, there was no change in the years 2021/22 to 2022/23, indicating a possible stabilisation in the statistic.
Statistics For The Types Of UK Company
The UK is home to a wide range of different types of company. Here we look at some of the most common and the stats around them.
How many hospitality businesses are there in the UK?
There were 223,045 hospitality businesses in the UK as of 1 January 2020, 3.7% of all UK businesses.
In 2019 the hospitality sector contributed £59.3 billion in Gross Value Added to the UK economy, around 3.0% of total UK economic output.
In the three months to September 2020, there were 2.38 million jobs in the hospitality sector in the UK, representing 6.9% of total UK employment.
How many retail businesses are there in the UK?
There are over 300,000 companies registered in the UK that are classed as retail businesses.
Retail businesses employ over 3 million people represent over 8% of all UK jobs. In 2019, retail sales in the UK were worth £439 billion.
How many ecommerce businesses are there in the UK?
The total number of e-commerce companies in the UK is 120,375. This accounts for around 2.2% of all UK businesses.
With the growing popularity of online shopping, accelerated partially by the COVID-19 pandemic, the share of ecommerce businesses in the UK has grown significantly over the last few years.
Online shopping as a percentage of all retail sales peaked at nearly 38% in January 2021, having stood at 8% at the start of 2011 and 19% in February 2020. It has since fallen back but remains around 28% in the latest period (February 2022).
UK Business Growth Rates
- Businesses with a business plan grew an average of 30% faster than those that didn’t
- Businesses with a business plan were also 2x more likely to get investments or secure loans than those without.
VAT & Tax Statistics
- Total VAT receipts in the tax year ending March 2021 decreased by 22% from the previous tax year.
- The Wholesale and Retail sector continued to be the largest contributor to net Home VAT liabilities.
- 68% of total net Home VAT declared was paid by traders with an annual turnover greater than £10 million.
- Out of the 2.77 million VAT and/or PAYE businesses, only 59,000 operate from more than one site.
How many VAT registered businesses are there in the UK?
The number of Value Added Tax (VAT) and/or Pay As You Earn (PAYE) registered businesses in the UK is 2.77 million. This has increased slightly year on year.
International Trade Statistics
Following the UK’s exit from the EU, there is an increased interest on the impact on businesses that trade with the EU.
How many UK businesses trade with the EU?
During the EU referendum debates, Vote Leave estimated that around 324,000 UK businesses traded with the EU. Meanwhile, Britain Stronger in Europe simply stated the figure was ‘over 200,000’.
Unfortunately, there are no official figures on the number of UK businesses that trade with the EU. Still, we can estimate that the true figure is somewhere around 5-6% of all UK businesses.
How many UK businesses export to the EU?
Around 82% of all SME’s who are engaged in exporting are said to export to the EU. From this, it can be estimated that around 8% of all UK SME businesses export to the EU. This figure drops slightly to 7% when all UK businesses, regardless of size, are factored in.
Small Business Data & Security Statistics
- 39% of UK businesses report having cyber security breaches or attacks in the last 12 months.
- Among the 39 per cent of businesses that identify breaches or attacks, the most common threat was phishing attempts (83%).
- Across all businesses, the average estimated loss reported from a cyber attack was £4,200. This rises to £19,400 when looking only at medium at large businesses.
- 85% of businesses say they handle digitised personal data, digitised non-personal data, or both, and use of data increases considerably as businesses become larger.
- 10% of all UK businesses send or receive digitised data, either personal or non-personal, to/from organisations or people outside the UK.
Conclusion
Despite the many challenges for UK business over the past few years, the overall performance and outlook is very encouraging.
Our review of the latest UK small business statistics has shown higher new business incorporations at the same time as seeing lower numbers of company dissolutions. This is leading to overall growth in the number of UK businesses.
Small business are easily still the most common type of company and a large proportion of them are being run by the owners without any employees.
However, the average age of registered businesses is falling, and only around a third make it to the 10-year mark. This is a slightly concerning statistic that indicates that many new businesses are being created without a solid long-term strategy.
This highlights the need for better education of entrepreneurs to help them succeed in realising their ambitions.
Sources: Business4Beginners, GOV.UK 1, GOV.UK 2, GOV.UK 3, GOV.UK 4, GOV.UK 5, GOV.UK 6, GOV.UK 7, GOV.UK 8, ONS 1, ONS 2, CREME, UK Parliament 1, BRC, BBC
