If you are a business owner or are considering starting one, you are part of a thriving community.
Most businesses in the UK private sector are either non-employing or small employers.
Small and medium-sized enterprises (SMEs) make up a staggering 99.9% of the business population.
As of the beginning of 2022, there were an impressive 5.47 million small businesses.
Here, we have compiled a collection of small business statistics, including cash flow statistics, that will provide valuable insights to enhance your business operations or gain a deeper understanding of small businesses vital role in driving the economy.
Let's start!
There will be a staggering demand for 600 million jobs by 2030, and small businesses will create a sizable portion of these employment opportunities.
Small and medium-sized enterprises (SMEs) hold a prominent position in the global economy, constituting approximately 90% of businesses worldwide.
Not only that, but they also contribute to about 50% of total employment globally.
With an estimated 400 million small businesses operating internationally, we cannot underestimate their collective impact on job creation and economic growth.
About 50% of small businesses launch their operations from the comfort of their homes, according to research by the Small Business Administration (SBA).
This trend of home-based businesses is on the rise, with an increasing number of entrepreneurs choosing this option.
More specifically, about 60.1% of the companies that do not employ paid staff are home-based.
In comparison, approximately 23.3% of employers' firms also operate from home.
Among various industries, the information sector is most likely home-based, accounting for around 70% of businesses in this category.
Small businesses make up the following proportions of the US economy:
• 99.9% of all businesses
• 99.7% of businesses that have paid employees
• 97.6% of firms engaged in exporting (with 287,835 small exporters)
• 32.9% of the total export value (amounting to $440 billion out of $1.3 trillion)
• 47.5% of employees in the private sector (59 million out of 124 million employees)
• 40.8% of the private-sector payroll
By October 2022, the United Kingdom had a total of 5.5 million businesses operating in the private sector, indicating a slight decline of approximately 1.5% (equivalent to 82,000 businesses) compared to the previous year.
The majority of the private sector comprises self-employed individuals, sole traders, and small business employers.
Remarkably, small and medium-sized enterprises (SMEs) make up over 99% of all businesses in the UK.
Out of the 5.5 million private sector businesses, 1.4 million had employees, while 4.2 million were self-employed without any employees.
It implies that roughly 75% of companies operated without hiring any additional staff apart from the owner(s).
Approximately 29% of individuals surveyed regarding their decision to start a business expressed that their primary motivation was to become their own boss.
Other common reasons cited for embarking on entrepreneurial endeavors included discontent with traditional work environments and pursuing a specific passion.
In contrast, only 12% of respondents said they initiated their business because an opportunity occurred.
Over the past years, there has been a remarkable growth in the number of women-owned businesses, witnessing a significant 45 percent increase since 2007.
The overall increase among all businesses stood at a modest 9 percent.
Now, women are the majority owners in approximately 38 percent of small businesses across the United States.
This impressive figure translates to a total of 11.3 million women-owned businesses operating in the country.
The economic impact of these enterprises is substantial, as they collectively generate revenue exceeding $1.6 trillion annually.
Furthermore, women-owned businesses contribute to employment opportunities, employing nearly 9 million people throughout the United States.
Entrepreneurs place less emphasis on college degrees compared to regular employees. Guidant Financial reports that approximately 30% of entrepreneurs have only completed high school, 31% hold an associate degree, 17% possess a bachelor's degree, 18% have pursued a master's degree, and 4% have attained a Ph.D.
While formal education holds significance in various career paths, it is less important in entrepreneurship.
When it comes to securing financing, acquiring sufficient funds poses a challenge for a portion of businesses. According to an NSBA survey, 27% of the businesses surveyed said they could not secure the funding they needed for their operations.
Insufficient funding hindered growth prospects for this one-in-four group of businesses, particularly for women and minority-owned businesses.
In addition, a lack of funding occasionally resulted in difficulties financing sales and even necessitated employee layoffs.
As per the Small Business Administration (SBA), most small businesses that successfully secure funding typically request approximately $10,000 as initial capital.
However, high-tech firms may require significantly higher amounts, averaging around $80,000.
While obtaining startup funding is feasible in certain instances, it is worth noting that most small businesses primarily rely on self-funding for their financial needs.
While the desire to become one's own boss is a prevalent motivation for starting a new business, it is equally important to generate sufficient income.
According to PayScale, the median average income for individuals who own and operate small businesses is approximately $64,706, with income levels varying from around $30,000 to $148,000 for the majority.
It is worth noting that the geographical region in which a business operates significantly impacts its owner's income.
Higher cost-of-living areas may result in relatively lower earning potential.
According to a business report by Statista, SMEs in the UK recorded a median profit of around £11,000 in 2021. Among all industries in the country, the property and business services sector and wholesale and retail sectors emerged as the most profitable for SMEs, with an average profit of £13,000.
According to the Bank of England, gross lending (excluding overdrafts) to small and medium-sized enterprises (SMEs) by all banks in the UK amounted to £65.1 billion in 2022.
It is a 12.8% increase from last year's figure of £57.7 billion.
It stands as the second-highest lending amount on record.
The only year that surpassed this lending level was 2020, when borrowing soared past £100 billion (£104.8 billion) during the pandemic's peak.
Although gross lending in 2022 marked a significant increase compared to 2021 and 2019, the difference becomes less pronounced when adjusted for inflation.
In real terms, gross lending in 2022 amounted to £62.3 billion, which reflects a £4.6 billion (8%) rise from 2021 but only a £2 billion (3.3%) increase from 2019.
This figure remained lower than the lending amount recorded in five out of the past seven years.
The wholesale and retail trade sector is the largest employer in the UK, accounting for nearly 18% of the country's workforce.
Recent facts about UK businesses indicate that 46% of the employees in this sector are affiliated with small or medium-sized enterprises.
According to the most recent statistics on UK businesses, approximately 50% of industries in the country experienced an increase in their business population in 2022.
However, it is worth noting that the information and communication sector saw a decline of 17,000 businesses, which accounted for an 8% decrease.
We can trace back this decrease in value to the effect of higher input costs and the rising cost of living.
Approximately 66% of businesses endure the initial two years of operation. In comparison, 50% of all enterprises persist for five years.
Furthermore, one-third of businesses continue to thrive even after a decade.
It becomes increasingly probable for a company to maintain its existence as it accumulates more years in business, as the initial few years are generally the most challenging.
According to a study by US Bank, cash flow issues are frequently the leading cause of small business failure. An overwhelming 82% of failed businesses cited cash flow problems as contributing to their demise.
It's important to note that cash flow encompasses the amount of money coming in and going out and the timing of those transactions.
For instance, if your business operates on an invoicing system and your invoices are paid after your loan payments are due, it can result in a cash flow problem.
This challenge can significantly impact seasonal businesses as their revenue is typically concentrated in specific seasons, leaving them financially vulnerable during other times of the year.
According to small business owners, the most significant challenges of running a small business include:
These factors are significant hurdles to the successful operation of small businesses. Interestingly, despite these challenges, a considerable majority of business owners, approximately 75%, express confidence in their ventures.
This optimistic outlook represents an improvement compared to the previous year, indicating a resilient entrepreneurial spirit among small business owners.
As per the Nsba Small Business Access to Capital Study, one-fifth (20%) of small business loan applications are explicitly rejected due to poor credit ratings.
Based on statistics, over 60% of businesses that go under are generating profits; their ultimate downfall stems from financial insufficiency.
The study indicates that 53% employ invoicing methods to bill customers and clients for services rendered on a specific date.
Conversely, 47% of small business owners utilize advanced payment systems, enabling them to charge customers and clients for services before or immediately upon delivery.
As for the processing time of funds for small businesses, it tends to be longer than anticipated.
A significant 66% of small business owners disclosed that the direct impact on their company's cash flow is the duration it takes for money to process after receiving payments.
Additionally, nearly one-third (31%) of small business owners reported waiting over 30 days to receive payments.
Among SME business owners facing delayed payments, 34% admit relying on overdrafts to fulfill their monthly responsibilities.
In addition, approximately 43% of SMEs collectively expend around £4.4 billion solely on administrative costs while pursuing overdue payments.
Furthermore, 11% of SMEs grappling with unpaid invoices find themselves compelled to hire individuals tasked explicitly with pursuing and collecting these outstanding payments.
Findings from Xero research indicate that a significant portion, precisely 37%, of small business owners have seriously contemplated shutting down their businesses in the past year alone due to complications arising from delayed payments.
Additional insights from the past year encompass the following:
Cash flow problems have severely impacted small business owners, with alarming consequences.
One out of every seven small business owners, accounting for a staggering 2.2 million individuals in the UK, has been unable to compensate their employees due to cash flow issues.
Moreover, 38% of these business owners, who have faced cash flow challenges, have been unable to fulfill their debt obligations.
On average, small business owners incur substantial losses of £26,000 by rejecting work opportunities solely because of inadequate cash flow.
Although being a small business owner may seem to have many challenges, let's finish it on a positive note.
Over 75 percent of business owners are optimistic about their future and business growth.
As happens in life, we all need an occasional push to overcome challenging moments.
Myos offers additional working capital that you can use for almost any purpose, from covering transportation costs to launching new products, stacking up for the high season, or advertising your store.
No matter your goal, you can achieve it with funding between €10.000 – 2.500.000, all without a credit check or personal guarantee.
Myos financing is especially beneficial to any ecommerce seller:
So, sign up today and grow your business without any worries!
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