The number of small businesses in the UK is growing; however, it's "one of the most challenging times to be a small business owner" according to retail expert Mary Portas.
The number of micro-businesses in the UK has grown every year in the past decade, according to new analysis by Mastercard and Opinium. It means that the UK's smallest firms are bucking a trend while the UK's medium and large business population has plateaued in recent years.
Growth in the number of medium and large businesses in the UK has yet to return to the highest levels seen in 2020. However, the number of micro-businesses (with 0-9 employees) and small firms (with 10-49 employees) in the UK grew to 1.4 million in 2022, up 31,000 on the previous year.
Tough times to start a business
Commenting on the data, retail expert Mary Portas said: "Small businesses really are the lifeblood of our economy. They're innovative, creative, resilient. And, despite the fact it's one of the most challenging times to be a small business owner, their numbers are growing. People's desire and appetite for what they do has also never been greater.
"We know it continues to be an unpredictable world right now. But when you're small and nimble it's an opportunity to out-manoeuvre the bigger players. Small business owners never fail to inspire me with their desire to do better, learn and flex themselves in the ever-evolving landscape of today's business."
SME confidence remains low
However, smaller firms are less optimistic about the outlook than larger businesses, it seems. Less than a quarter (24%) of businesses with ten or fewer employees expect their performance to increase in the next 12 months. Of those with ten to 49 employees, only 34% expect their performance to improve.
By comparison, 43% of businesses with between 100 and 249 employees are optimistic about their future and expect their performance to increase in the next 12 months.
Of all sectors, retailers are one of the least likely to have registered a strong performance last year, with only 15% saying they'd seen an increase in their performance in the year up to April 2023 - despite the fact that this sector employs the most people and has the largest turnover.
"There's no shortage of entrepreneurial ambition in the UK, but it's worrying that their optimism lags behind big businesses. If we're to boost growth, it's vital that big business and government support small companies with skills, funding and policy so they can reach their potential." Kelly Devine, UK&I president, Mastercard
Strive UK
Mastercard offers the Strive UK programme, which helps small businesses by providing free access to training and advice on issues such as setting up an online shop, managing cashflow and creating a social media strategy. Strive UK has supported more than half a million businesses to date and works with Enterprise Nation, Digital Boost and Be the Business to provide support.
Written by Rachel Miller.