The number of businesses in the UK has been flat since 2020. Could 2025 be the year that delivers real growth?
According to the UK government’s own figures, there are over 5.48 million SMEs (small and medium-sized enterprises) in the UK, compared to just 8,250 large businesses. Together, SMEs provide 16.6 million jobs (60 percent of all jobs in the UK), turning over £2.8 trillion – just over half of the total business turnover*.
There’s no doubt that the sector is innovative, resilient and optimistic: the last ten years have seen huge turmoil, from Covid to interest rate hikes, Brexit and transformational technologies. Any business to have survived all that may look indestructible.
But are governments in danger of taking SMEs for granted? The entrepreneurial spirit may be alive and well, but business owners are being caught between a challenging economic environment while being asked to provide the kind of growth and innovation the UK needs.
The good news is that while figures for the current year are still emerging, trends from the past year suggest a continued influx of new businesses. The challenge is for these new businesses to mature and stay in business: nearly four in ten** SMEs came close to shutting down last year and government figures show that the number of active businesses has flatlined at around 5.5 and 5.6 million businesses since 2020.
Key sectors driving growth
What is driving the influx of new businesses? The world has undergone big changes in the last half decade and many of new SMEs are reflecting this:
- E-commerce evolution: The digital retail sector continues to expand, driven by consumer preferences for online shopping. This trend reflects the ease of launching online businesses through platforms like Amazon, Etsy and Shopify, as well as the marketing opportunities offered by social media to reach customers directly. Entrepreneurs are able to operate from diverse locations – including, for the smallest of all, the kitchen table.
- Flexible living solutions: The property letting sector is experiencing sustained growth, fueled by the demand for flexible housing options. Remote work trends, increasing rental demands and the rise of short-term rental platforms such as Airbnb are key drivers.
- Culinary innovation: The UK’s vibrant food scene continues to flourish, with a notable rise in street food and takeaway businesses. Restaurants have traditionally been high-risk ventures; kitchens that are able to cater to delivery services, in which a number of recognisable branded fast food offerings are prepared on the same premises are booming. Restaurants that “resorted” to preparing takeaway meals during lockdown have found that delivery offers another income stream and a way to hedge against fewer customers on the premises.
Factors fueling entrepreneurship
Business is becoming more of a mainstream concern, with shows such as The Apprentice and Dragons Den proving enduringly popular. While these programmes may offer an unrealistic view of the business world, they do at least show that the world exists and that it is possible to be a part of it. And with enterprise software vendors such as Sage, peer-to-peer rentals such as Airbnb and marketplaces such as Etsy carrying out major marketing campaigns, the road to becoming a mcro-entrepreneur in your spare time has never been more clearly signposted.
Barriers to entry have arguably never been lower: it’s easy to imagine that a couple could go from renting out their spare room to become fully-fledged landlords, or an Etsy store could evolve into a popup store before opening a permanent shop.
There is a growing marketplace of support, including accounting software, CRMs and out-the-box web design as well as podcasts, educational content and online communities to provide aspiring entrepreneurs with valuable guidance and support – something we have invested in at Swoop from the very beginning. Curious minds have never been frightened of not knowing something, they have just lacked the resources to find the answers. Now, the answers are easier to come by than ever before.
In a world that is constantly hitting the refresh button, it can be less daunting to find a jumping-on point. Economic shifts and evolving employment landscapes are driving individuals to pursue self-employment and entrepreneurial ventures, even if these start out as “side hustles” to bring in extra pocket money.
Essentially, new SMEs are being fed by a conveyor belt of enthusiastic entrepreneurs who would have struggled to get going a decade ago. Today, they have the tools, education and opportunities, inspiration and impetus all around them.
Looking forward and advocating for SME support
The challenge is for these emerging microbusinesses to become viable SMEs and for mature businesses which may lack the agility of their younger counterparts to stay afloat in a changing world.
At Swoop, we recognize the vital role SMEs play in the UK’s economic future and believe it is crucial to provide ongoing support to ensure the sustainability of these businesses. Investing in SMEs not only stimulates economic growth but also creates jobs, drives innovation and enhances community prosperity. The lines between personal and business finances are increasingly blurred; we see ourselves a part of the ecosystem of support for SMEs, providing a vital link between the funding market and the well-being of the individuals and families who make their business personal.
Swoop requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
**https://londonlovesbusiness.com/four-in-ten-businesses-have-nearly-closed-in-2024/