SMEs Making a Vital Contribution

If you are an employer running a small business, you can give yourself a pat on the back. According to a recent report by the Federation of Small Businesses (FSB), you are in a sector which is vitally important to the UK workforce which is making a significant contribution to the economy.

Lobbying Ammunition

Back to Work The role of small business in employment and enterprise was published in September 2012 as part of a FSB campaign to get the government to give more consideration to the effect of its policies on smaller businesses. It indicates that most of the current regulations are imposed across the board, but with mainly large private sector organisations in mind. Initiatives to assist small employers don’t go far enough. The report states the importance of the SME sector, backing this up with some persuasive statistics from the quarterly Labour Force Survey.

The Facts and Figures

Currently, SMEs make up 45% of the UK private sector turnover. Nearly three fifths of people working in the sector are employed by SMEs. Every year since 2005, smaller businesses have taken on more of the unemployed than organisations with 250 employees or more.

Looking at annual averages:

  • Each year 85,000 unemployed people set up a micro business, with many eventually becoming employers
  • 367,00 find work in SMEs
  • Only 65,000 are taken on by larger corporation

Clearly SMEs play the greatest role in getting people off benefits and into work. They are also more prepared to take risks with recruits, taking on young people entering the workforce, the unskilled, and people with family responsibilities. Those with disabilities or who have been off sick long term are often given an opportunity to work in SMEs. Of people with these and other barriers to finding work, 95% end up as employees in businesses with less than 250 employees.

Unfortunately small businesses also have a reputation for putting people out of work by going bust, but the FSB’s report puts this in proportion. ‘Recent evidence suggests that the highest rates of creation and destruction are among the youngest businesses, which for self-evident reasons also tend to be small. On average we can expect approximately 266,000 firms to be established in the UK in any one year, with slightly more starting up during recessions. After five years, just under half (44.4%) of these remain.’

As a successful entrepreneur then, you may be about to receive the recognition you deserve for your hard work, drive and initiative.

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