20 Facts About Small and Medium-Sized Businesses in the United Kingdom
Small businesses, also known as SMEs (Small and Medium-sized Enterprises), aren’t just part of the UK economy; they’re its beating heart.
In 2024, with over 5.45 million small businesses accounting for 99.2% of all businesses, their impact is undeniable. From creating jobs to driving innovation, SMEs are shaping the UK's future.
If you're a small or medium-sized business owner, this fact-packed blog post is for you. We’re exploring 20 facts about UK SMEs in 2024.
SMEs Dominate the UK Business Landscape
At the start of 2024, the UK had a staggering 5.45 million small businesses, making up 99.2% of the total business population. Whether you're running a one-person operation or employing a team of 40, you're in good company!
Employment and Turnover Powerhouses
SMEs contribute to three-fifths of all UK employment and around 50% of private sector turnover. In other words, small businesses are the lifeblood of the workforce and economic growth.
Professional Services Lead the Way
The professional, scientific, and technical sector is booming, accounting for 15.3% of all registered businesses in the UK. If you’re in this industry, your peers are driving innovation and shaping the professional landscape.
The North is Rising
While London and the South East dominate in SME numbers, Northern Ireland saw the highest percentage increase in businesses in 2024, with a 1% rise, adding approximately 760 new businesses.
Decline in Sole Proprietors
Interestingly, the number of sole proprietors fell by 4% from 2023 to 2024. This trend could reflect more businesses transitioning to limited companies or partnerships for financial and operational benefits.
Pro Tip: Considering incorporating? Ensure you have the right legal agreements in place, especially if you have employees.
Business Closures Hit a Record High
Unfortunately, the UK saw 198,046 business closures in the last quarter of 2024—a 20-year high. This stark reminder underlines the importance of robust planning and compliance with legal requirements to avoid pitfalls.
The UK Attracts Global Investment
Despite challenges, the UK remains resilient, ranking as the second most attractive market for investment globally, just behind the USA. Investors recognize the UK’s innovation and entrepreneurial spirit.
AI Integration on the Rise
An impressive 93% of UK businesses have adopted artificial intelligence in some capacity. From chatbots to advanced analytics, technology is transforming how small businesses operate.
Medium-Sized Businesses Are Investing Big
Medium-sized firms are gearing up for growth, with 50% planning investments of over £3 million in the next five years. Even if you’re not investing at that level, prioritizing strategic planning is crucial.
Professional Services Drive Economic Growth
Professional services like law, architecture, and R&D have fueled 30% of GDP growth in recent quarters. Legal compliance is more important than ever as these sectors grow.
Survival Rates Are High
The good news? About 90% of businesses launched in 2022 survived their first year, showing a supportive environment for startups.
Boost your chances: Startups often overlook the importance of well-drafted contracts. From employment terms to client agreements, having templates tailored to UK law can make all the difference.
London and the South East Lead in SME Concentration
A third of SMEs are based in London and the South East, emphasising the region's economic dominance.
Digital Growth in the Information Sector
The information and communication sector grew by 0.5% between 2023 and 2024, driven by increasing digital adoption.
British Business Bank’s Impact
Celebrating its tenth anniversary, the British Business Bank has supported over 206,000 businesses, creating 250,000 jobs.
Are you taking advantage of government and financial support for your SME?
SMEs and Private Sector Turnover
SMEs generate over 53% of private sector turnover, proving they’re not just participants but key drivers of the UK economy.
High Pay Growth Despite Challenges
In late 2024, UK pay growth rose to 5.6%, even as businesses adjusted to tax increases.
Average SME Turnover
The average UK SME turnover stands at £424,617, highlighting the financial weight small businesses carry.
Post-Pandemic Recovery
Since 2020, the UK has lost half a million small businesses, reflecting ongoing recovery challenges. Legal compliance and adaptability remain critical for sustainability.
Service Sector Resilience
The service sector fueled 0.1% economic growth in late 2024, reinforcing its role in the UK’s recovery.
Decline in UK R&D Leaders
The number of UK firms among top R&D spenders has dropped, from 118 in 2013 to 63 in 2023. This highlights the need for SMEs to prioritise innovation and seize funding opportunities.
So, Why Do Legal Templates Matter for UK SMEs?
With SMEs playing such a vital role in the UK economy, it’s important to protect your business with solid legal documents tailored to your needs. From employment contracts to terms of service, having the right templates can:
- save time and costs on legal fees;
- minimise risks with airtight agreements; and
- help you stay compliant with UK laws.
As the stats show, SMEs face unique challenges, which can include closures to shifting structures. Our business legal templates are designed to help you navigate these hurdles with ease.
The future of UK SMEs is bright, but success requires planning, adaptability, and compliance. With over 5.45 million small businesses, it’s clear that every entrepreneur plays a part in shaping the economy.
If you’re ready to empower your business with reliable legal templates, we’re here to help.
Browse our collection of bespoke templates designed specifically for UK SMEs!