The small business community is creating big benefits, and it’s vital we protect it.
In the last 15 years, the UK small business community has increased by over one million – that’s a rise of almost a quarter (23%). The vast majority of these homegrown organisations are smaller, local companies and they are crucial to upholding the UK economy.
We’re going to take a closer look at why setting up your own startup isn’t just to help you achieve your business goals – it’s also playing a crucial role in both a local and national level. Your community will likely benefit just as much as you from your business, so let’s explore why small businesses are so essential to the UK economy.
The economic contribution of the small business community
Of the 5.5 million businesses registered in the UK, 5.45 million of them are small (with 49 employees or fewer), according to UK Government figures. In other words, small businesses make up over 99% of the UK business population.
So of course, small businesses contribute significantly to both GDP and employment. According to Startups, in 2024 alone SMEs accounted for a huge £2.8 trillion in revenue, playing a significant role in upholding the UK’s economic standing.
Job creation
With so many small businesses in the UK, it’s no surprise that SMEs are major employers, creating opportunities both locally and nationally. In fact, in 2024, SMEs accounted for 60% of UK employment and 48% of business turnover. Without small businesses, there would be far fewer job opportunities on offer for local people.
Innovation and diversity
Small businesses are known for driving fresh ideas, niche products and services, and flexible business models. This is clear when you look at figures such as the 2024 study by the Department of Business and Trade, which found that 28% of UK SMEs have implemented flexible working as standard. This is significantly higher than larger corporations.
This more personal and flexible culture can help foster both inclusion and diversity among the workforce, welcoming a broader range of backgrounds into the staff structure than more standardised working environments.
Community impact
According to Power to Change, over a third (37%) of staff within local businesses were previously unemployed, and more than three quarters of customers visiting community businesses live within the local area.
This is testament to the way local businesses support high streets, communities, and regional economies, bringing countless benefits to their local area and often establishing themselves as a well-known name among local people.
Resilience and adaptability
Because of their smaller size and increased flexibility, SMEs are often quicker and more adaptable when it comes to innovating quickly, supporting supply chains, and responding to economic challenges.
For example, COVID-19 presented possibly the biggest challenge to businesses of all sizes in recent memory. However, small businesses were quick to adapt to the fluctuating circumstances. In fact, Sky Group reports that two thirds (66%) of SMEs believe themselves to have been more resilient and adaptable during the pandemic than larger organisations. And the likes of Sky Connect agree, with Managing Director Kevin O’Toole stating that “many of our smallest businesses are among the most adaptable”.
Why support matters
While their contribution to the UK economy is huge, small businesses face multiple barriers in the form of funding, skills, regulation, and competition. Both local and national support is necessary in order to keep small businesses alive and continue their colossal benefits to the country’s financial standing.
With the right support, such as that provided by TEDCO, UK small businesses can scale up and make an even greater impact.
At TEDCO we offer a range of services to help new business owners start, grow and fund their enterprises, from loans to learning. Check out the business start up workshops or get in touch using the TEDCO Initial Enquiry Form.