Small businesses are an essential part of the business landscape, but the recent economic turmoil has threatened their survival. So, what is the current outlook? We explore the latest small business statistics in the UK, including the number of SMEs and how this varies between industries and regions.
We also look at how many new businesses survive the first 5 years, and ways you might improve your chances of success with the best business banking options, among other things.
The latest figures show there are 5.5 million small and medium-sized businesses (SMEs) operating in the UK. SMEs make up more than 99% of the total private sector business population, and the number of SMEs has increased over the last decade.
Over the last decade, the number of SMEs peaked at the start of 2020 and has declined slightly since then. This is likely due to increased challenges for UK businesses during the coronavirus pandemic and then the cost of living crisis.
However, SMEs have consistently made up the majority of private sector businesses in terms of numbers over the past decade, making up more than 99% of the total every year since 2013.
| Year | Number of SMEs |
|---|---|
| 2014 | 5,236,390 |
| 2015 | 5,382,485 |
| 2016 | 5,490,470 |
| 2017 | 5,687,230 |
| 2018 | 5,660,000 |
| 2019 | 5,860,085 |
| 2020 | 5,972,685 |
| 2021 | 5,583,245 |
| 2022 | 5,501,260 |
| 2023 | 5,547,170 |
The average turnover for a UK small business (0-49 employees) is £289,000, considering there are 5.5 million small businesses contributing a turnover of £1.6 trillion.
The average turnover for an SME (0-249) is estimated to be £424,600, as there are 5.5 million SMEs in the UK, and they contribute a total of £2.4 trillion in turnover.
The term SME refers to any business that is small or medium-sized. This includes the sub-categories of micro-business, small business and medium-sized businesses. Small businesses have 0-49 employees, while medium businesses have 50-249 employees.
Micro-businesses with 0-9 employees make up the majority of the SME population in the UK, with a total of 95.3%. Interestingly, 74% of SMEs are businesses with no employees. This category includes sole traders and partnerships without any other employees.
| Business type | Percentage |
|---|---|
| Micro (No employees) | 73.82% |
| Micro (1-9 employees) | 21.58% |
| Small (10-49 employees) | 3.94% |
| Medium (50-249 employees) | 0.65% |
SMEs contribute over half (53%) of business turnover in the UK and account for three-fifths (61%) of employment in the private sector. UK SME turnover was £2.4 trillion in 2023, and SMEs employed 16.7 million people.
In the last decade, the turnover contributed by SMEs has increased every year except between 2021 and 2022. The number of SMEs also decreased in these years, likely due to the coronavirus pandemic, so it makes sense that the turnover would reduce along with this.
| Year | SME turnover (billions) | Large business turnover (billions) |
|---|---|---|
| 2014 | 1,647 | 1,874 |
| 2015 | 1,754 | 1,956 |
| 2016 | 1,825 | 2,036 |
| 2017 | 1,905 | 1,834 |
| 2018 | 1,994 | 1,868 |
| 2019 | 2,168 | 1,981 |
| 2020 | 2,270 | 2,076 |
| 2021 | 2,310 | 2,139 |
| 2022 | 2,124 | 2,032 |
| 2023 | 2,355 | 2,124 |
The most popular sector for SMEs is construction, with over 880,000 businesses operating in this area. This is closely followed by professional, scientific and technical activities, with just over 770,000.
The sector with the lowest number of UK SMEs is production activities. The UK is not currently known to be a hub for production and is known to have a service-based economy, so it makes sense that a relatively low number of SMEs are operating in this area.
| Sector | Number of businesses |
|---|---|
| Construction | 883,065 |
| Professional, Scientific and Technical | 771,285 |
| Wholesale and Retail Trade | 547,545 |
| Administrative and Support Service | 497,120 |
| Other Service activities | 364,280 |
| Human Health and Social Work | 342,750 |
| Transportation and Storage | 348,115 |
| Information and Communication | 318,550 |
| Education | 310,095 |
| Arts, Entertainment and Recreation | 280,525 |
| Manufacturing | 269,425 |
| Accommodation and Food | 225,550 |
| Agriculture, Forestry and Fishing | 146,420 |
| Real estate | 146,100 |
| Financial and Insurance | 80,130 |
| Production | 24,165 |
Unsurprisingly, the majority of small businesses are based in London and the South East, and these 2 regions combined account for a third (34%) of all SMEs in the UK – 1.9 million businesses. Northern Ireland has the lowest number of SMEs at just 122,000, closely followed by Wales with 219,000.
| Region | Number of SMEs 2023 |
|---|---|
| London | 1,049,000 |
| South East | 852,000 |
| East of England | 569,000 |
| North West | 545,000 |
| South West | 524,000 |
| West Midlands | 448,000 |
| Yorkshire and the Humber | 389,000 |
| East Midlands | 382,000 |
| North East | 156,000 |
| Scotland | 298,000 |
| Wales | 219,000 |
| Northern Ireland | 122,000 |
In 2022, 18% of SMEs with employees were led by a woman or a majority-female management team, which is just over 1 million businesses. This is a much lower percentage than FTSE100 companies, where women occupied 42.6% of directorships as of 2023.
In 2022, just 6% of SMEs with employees in England were led by someone from a minority ethnic group (MEG), which equals around 335,000 businesses. The sector with the highest percentage of MEG leaders was IT communications (9%), while London is the region with the highest number of SME leaders from minority ethnic groups.
Matt Mckenna
UK Head of Communications
T: +44 20 8191 8806
We explain everything from registering and funding your business to employment and business law.
Use our side hustle tax calculator to estimate how much income tax and National Insurance you might owe on your side hustle earnings.
We explain the benefits of opening multiple business bank accounts and what to watch out for.
By switching your business bank account, you may be able to reduce your monthly fees or take advantage of different features like smart bookkeeping tools.
Find out whether the Cashplus or Tide business account could be the better option for you.
Discover what a holding company is, how to set one up and whether it’s worth doing.
Learn more about the key differences between the Tide and Revolut business bank accounts and which is likely to suit you better.
Discover key the differences between Mettle and Starling business bank accounts and what is likely to be best for you.
In this guide, you’ll learn the key differences between the Tide and Starling business bank accounts and which one is most likely to suit you.
Considering a Revolut Business account? We take a closer look at the features and price plans available with these digital-only accounts.