The future of SME Britain post general election
5 min read
18 November 2019
If there is one thing we’re good at in Britain, it’s starting businesses; the challenge is to make sure they can grow and become sustainable amongst all this political uncertainty.
I believe by our very nature we are an entrepreneurial island and our ability to come up with an idea and turn it into a business is as British as a nice cuppa or our proverbial stiff upper lip.
At the start of this year, there were 5.8 million SMEs in the UK with the private sector had given birth to more than 200,000 new firms, swelling the business population by 3.5% compared to the year before.
So, while Jeremy Corbyn looks to turn the country into Venezuela and nationalise everything around us, the private sector is actually continuing to prove its worth to the economy.
Businesses CAN emerge out of uncertainty
I’d hazard a guess, using a bit of common-sense plumber’s maths, that when the figures for 2019 are published the number will have grown further.
That said, many will throw in the argument that the dog’s dinner that is Brexit and the spectre of recession skulking in the shadows will hamper the number of start-ups, but I would counter that, as these are just the circumstances that lead to the founding of new enterprises.
A country of ‘accidental entrepreneurs’
This is often led by a mix of accidental entrepreneurs, those who turn an existing skill or market experience into a business idea, sometimes as a result of a change of circumstances, together with innovative, technology-inspired individuals and those sharp enough to spot gaps in markets that always appear when there is a major shift in the economy.
And if we can get these start-ups to survive the infant stage, noting that 60% of new businesses go under within three years, then they will join the core of the UK’s private sector engine room that has taken the initiative to drive the country forward.
What happens next?
No business can afford to rest on its laurels, whether its three or 30 years old. Once a company has come out of the start-up stage it needs to focus on scaling-up its operations, which will help it grow further and become a more secure and sustainable enterprise.
A scale-up business is one that is growing by more than 20% per year by employee or turnover growth or a mix of both.
And, as a business community, it appears we are getting better at scaling-up our companies, but there are many more that need to take this next major step forward.
We’re great at ‘scaling up’
The not-for-profit organisation The ScaleUp Academy says in its 2019 Annual Report that the number of British scale-ups has grown by nearly 4 %, but that has only taken the total to 36,510.
Out of the 5.8 million UK private firms that’s not a huge number, even if you take out the dominating presence of all of the sole traders.
This is so frustrating when you consider the potential impact an increased number of scale-ups can have on the economy. Especially when you look at the numbers the current crop of scale-ups is producing.
Of the £1.9 trillion turnover generated by UK SMEs, nearly 70% of it comes from scale-ups.
Space for SMEs to grow…
Just imagine if more of our SMEs could join the scale-up club! Through the right advice, mentorship, access to finance, together with anticipating market changes and pivoting with new products and services, there is more than a chance that an increased number can become scale-ups.
But we all know, whatever the subject we discuss in our businesses at the moment, it all leads back to the circus in Westminster and the giant pause button that’s been pressed until December 12th. And that includes helping SMEs grow.
Whatever happens after the country goes to the polls next month, helping transform start-ups into scale-ups has to be a major priority for the next Government.
Otherwise, without a growing private sector, we will find ourselves with a shrinking economy already under pressure from political upheaval and business uncertainty.