It was the first of its kind, published by the Committee of Inquiry on Small Firms in Britain. But despite the findings suggesting that the health of the economy requires the birth of new enterprises in substantial numbers and that an economy totally dominated by large firms could not for long avoid ossification and decay , they didn’t think it was meant to be. Small businesses, it seemed, had a short fate.
The Bolton report stated that the small firms sector was in a state of decline in both number and in contribution to output and employment and in a few years would cease to exist. Economies of scale would make the remaining 800,000 small firms uncompetitive and doomed to extinction.
Back then it was suggested that one of the main problems of small firms was that of management. But by the 1990s, the Guardian reported that two out of five firms up from 35 per cent in the previous quarter report the effect of the recession on cashflow and profits. Problems surrounding payments and debtors have moved into second place, being quoted by one in eight. Late payment is another important factor .
The University of Westminster delved back into the report 20 years on in order to re-analyse the situation. But they found that the problems identified by small business owners remain relatively unchanged .
In a sense, these problems still remain today. However, in Lord Young’s words, Bolton’s conclusion seems scarcely credible today .
Even through years of struggling for survival, small businesses always seem to come out on top. Let’s face it, small business have come far, leaping from doomed to extinction to backbone of the economy .
The UK is now home to a staggering 5.2m small firms who are responsible for 48 per cent of employment 30.8m people.
Read more about small businesses:
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- House of Lords joins the debate on encouraging the growth of small businesses in the UK
- Impact of EU deflation on small businesses
This shift in the number and importance of small businesses has not been simply a linear trend over 40 years,” said Lord Young. But within this Parliament alone I have seen a transformation.
That’s certainly true. Although some may not have always agreed with policies or regulation that possibly made working life for the small business harder, there has been an undeniable focus on the growth and development of small firms.
Lord Young explained that the business population has increased by 17 per cent since 2010. In 2011 we saw a record number of start-ups, and the beginning of 2014 saw a record increase in the number of firms.
This, in part, could be due to the rising number of self-employed people in the UK. And due to a culture change, more Brits find themselves driven not by necessity but by desire .
A number of government initiatives has made it possible for more people to start a business, something that Lord Young suggested was because they now view it as an opportunity rather than feeling they have no other alternative .