Small and Medium Enterprises in the UK: A Comprehensive Report

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REPORT
SMALL AND MEDIUM ENTERPRISES
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EXECUTIVE SUMMARY
This assignment is totally based on small businesses that are practicing in the UK. The UK is
filled with these small and medium-sized enterprises. These small sized enterprises cover
99% of the total businesses in the UK; covering every type of industry thus they have a great
influence on the UK market and its economy. This report is based on studying the impact of
SME’s on the UK market and how they contribute to the UK economy. This report will be
covering the concept of SME’s, the various drivers that influence the growth and survival of
SME’s in the UK market. The comparison between micro, small and medium-sized
enterprises of the UK on the basis of their respective growth and financial contribution in
the total UK economy will be discussed in this report. The second part will be covering the
comparison between the two regions of the UK about the impact of SME's, comparison
between two different industries that are affected by the small and medium enterprises and
finally the study will conclude with the comparison of two different countries of EU about
the impact of SME’s (Cowling et al., 2015).
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Table of Contents
EXECUTIVE SUMMARY............................................................................................................. 2
SECTION- 1............................................................................................................................... 4
CONCLUSION........................................................................................................................6
SECTION -2............................................................................................................................... 7
CONCLUSION...................................................................................................................... 13
RECOMMENDATIONS.............................................................................................................14
REFERENCES........................................................................................................................... 15
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SECTION- 1
Small and medium-sized enterprises are the enterprises that don't have the turnover more
than £ 50 million as defined by the Companies' act 2006 of UK (Collis, 2012). These
companies are the privately owned business that is mostly small in size and these small
enterprises are mostly not listed in the share market and these can have maximum
employee limit of 250 employees. These businesses mainly include sole proprietorships,
partnership firms, limited liability partnerships and small companies etc.
Comparison between micro, small and medium-sized enterprises on the basis of growth,
financial contribution, turnover and number of employees-
Micro Small Medium sized
Meaning Micro-sized
enterprises are the
smallest enterprises
that are run only by
the owner. Examples
of these enterprises
are the sole
proprietorship shops
or retail shops etc.
(Hillary, 2017).
Small scale
enterprises are the
once that are
between the micro
and medium-sized
enterprises here the
more than 2
branches of the
same stores are
opened in the region
and here the
partnerships firms
are most common
(Hillary, 2017).
This is significant
sized enterprises
that are companies
which have a
maximum limit of
250 employees
(Hillary, 2017).
Turnover Micro organizations
have the capacity to
increase their
turnover up to the
limit of £ 2 million
Small scale
enterprises have the
limit of maximum
turnover of £ 10
million, mostly these
The medium-sized
enterprises of the UK
have the capacity of
maximum turnover
of £ 50 million, and
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(Hillary, 2017). range between the £
2-10 million of the
turnover (Hillary,
2017).
thus the turnover
ranges from £10 to
50 million each year
(Hillary, 2017).
Financial
contribution
These are the
enterprises that
contribute to the UK
economy in the
amount of £ 655
billion (Hillary, 2017).
These mall scale
enterprises
contribute to the
national economy as
£ 515 billion in total
(Hillary, 2017).
£ 477 billion are
being contributed by
the medium-sized
enterprises in the
UK's total economy
(Hillary, 2017).
Number of
employees
0-9 employees,
mostly the owner
and his family run
the business (Hillary,
2017).
10-49 employees,
these types of
enterprises have
more than one
branches and the
worker's size range
to the maximum
limit of 49 (Hillary,
2017).
Here the company or
the medium-sized
enterprises have the
range of working
employees from 50-
250 in totals not
more than that
otherwise it will be
considered as large
scale company
(Hillary, 2017).
Growth The growth in the
micro business is
expected to be very
good but the rate of
growth is less than
the small scale
enterprises. The past
year growth rate is
2%(Hillary, 2017).
Here the forecasting
is of tremendous
growth as the
startups and the
innovative
entrepreneurship
enterprises are in
very much trend
(Hillary, 2017).
The growth rate is
negative from the
past year that is -2%.
And there are no
chances of
tremendous growth
in future (Hillary,
2017).
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FIGURE 1- SHARE OF BUSINESS ENTERPRISES IN THE UK
Source-(BIS, 2014)
Political and economic factors that influence the development of SME’s
The political change in the UK, (BREXIT) affects the functioning and operational capacity of
these small scale companies. The BREXIT will have a positive effect on the sole
proprietorship firms but the medium-sized enterprises that are engaged in import and
export activities are negatively affecting their growth and making halted for their growth
(Brown et al., 2018).
The small and medium-sized enterprises are directly influenced by the economic changes in
the country and the increase in the interests rate, inflation rate and the increase in SDLR
ratio will directly halt the growth of these companies and if the interests and SLR rates will
reduce than the SME's will be stimulated with growth opportunities (Danis et al., 2010).
CONCLUSION
The above part can be concluded by saying that there are majorly two drivers political and
economic that can stimulate and halt the growth of small and medium scale companies. The
difference between micro, small and medium-sized enterprises is done on the basis of
employees, turnover, financial growth and the small enterprises have the largest growth
opportunities are mostly the partnership companies that come up in most startups that
have innovative and creative ideas.
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SECTION -2
Role of SME’s is not only restricted to
a) Comparison of the impact of SME’s on London and
Impact of SME’s London South east
Number of SMEs’ At London, the total number
of small and medium-sized
enterprises has increased
from last year by 3% and this
is a very good ratio as
compared to the south-east
region of the UK. The growth
in number from last year is
positive but not very high,
this shows that the SME's in
London are provided worth
satisfactory support but still
there is a need to enhance
the support to these small
and medium-sized
enterprises. The London
region has provided an
economically healthy
environment for small and
medium enterprises. the
total number of SME’s in the
London market are 1095
which the highest among all
the other regions of the UK
(BEIS, 2018).
The third largest in the terms
of businesses of SME's in the
south-east region of UK
874000 in total but the
number of SME’s has fallen
by 6% from the last year.
This shows that the small
scale businesses are not
being supported by the
south-east regional culture,
not supported by the
residents or not supported
by the regional government.
The total number of SME's in
the south-east region is 873
which is good but are less
than those in London (BEIS,
2018).
Businesses per 10, 000 The number of businesses
per 10000 residents in
London is 11563 and that is
the highest in all the regions
of the UK (BEIS, 2018).
The number of businesses
per 1000 residents in the
south-east region is 1190,
this means that the number
is significant but is reduced
from the last year (BEIS,
2018).
Employment increase The percentage of
employment due to SME’s in
the London region is 239
which is very much higher
than that of the south-east
The employment generation
through the growth in SME's
in the south-east region of
the UK is 191 which is good
but less than the London
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region. This ration is highest
in all other regions of the UK
(BEIS, 2018).
region. This shows that the
employment generation in
the south-east is very good
as the employability laws are
good and the employees are
satisfied with their jobs in
this region (BEIS, 2018).
Figure 2- Total Business According to the Region in the UK
Source-(BEIS, Small business survey (employers), 2018)
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b) Comparison of the impact of SME’s on two industries
Impact of SME’s Retail Transportation
Employment SME’s have contributed to
an increase in the
employment opportunities in
the retail industry as the
employability contribution is
raised to 19%. This is much
better than the
transportation sector (BEIS,
2018).
The transportation sector
has gained the rate of 6%
from the increase in SME's in
the country and this is very
much lower than the retail
sector so SME's impact is not
that significant as it was in
the retail sector (BEIS, 2018).
Number of business In the year 2018 in the UK
market, the SME's of the
retail industry has gained to
10% of the total business in
this industry and are
accounting to 556000
enterprises in this sector,
which is very much
appreciable and is higher
than the transportation
industry (BEIS, 2018).
The transportation industry
has been contributed by the
small and medium-sized
enterprises with a
percentage of 6% in total
businesses of this industry.
The number of Small and
medium-sized enterprises
are contributing to 326000
businesses in this sector
(BEIS, 2018).
Turnover contribution The contribution of SME's in
the retail industry has been
contributing to 34% of the
total industry and which is
very much higher than the
transportation industry up to
1/7th part of the retail
industry (BEIS, 2018).
The transportation sector
has the contribution by
SME’s of only 5% that is very
less as compared to the
retail industry, this means
that the numbers of
businesses are more but the
monetary contribution is
very less (BEIS, 2018).
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Figure 3- Distribution according to Industry
Source – (BEIS, Small business survey (employers), 2018)
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c) Comparison of the impact of SME’s on EU countries
Impact of SME’s UK Austria (AT)
Value-added The value-added services
and the amount of value
added by the Small and
medium-sized enterprises in
the total value added of the
UK is 57.6%, this means that
the small and medium-sized
enterprises have the
significant role in the total
economic contribution the
SME’s are contributing well
individually but the ratio is
less than that of Austria
(BEIS, 2018).
In Austria, the value added
by the SME's in the total
value added is in the ratio of
69.2 %. This is very much
better than that of the UK.
this shows that small and
medium-sized enterprises
are good contributors and
play a significant role in the
economy of Austria (BEIS,
2018).
Employment The SME’s in the UK have
contributed to the total
employment by the ratio of
84.9% which shows the
dependency of the UK
market for employment on
the Small scale enterprises,
the majority of the total
employment depends on the
small scale enterprises (BEIS,
2018).
The contribution of small
and medium-sized
enterprises in total
employment in Austria is
83% , this is also a very high
ratio and this depicts that
the employment of UK is
solely dependent on the
SME’s and the ratio is less
than that of the UK but still
the ratio is very impressive
and influencing on the
employability ratio of Austria
(BEIS, 2018).
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Figure 4- Value added and Employment generation by SME's in different EU countries
Source- (Eurostat, National Statistical Offices, DIW Econ 2018)
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