Number of high-growth SMEs increasing

Wednesday 24 February 2016

With research suggesting that the economic climate is ideal for small businesses, it may be no surprise that the number of small and medium-sized enterprises (SMEs) that are growing rapidly is increasing.

New analysis from the Enterprise Research Centre (ERC) has found that the number of "high-growth" small and medium-sized businesses has risen to 11,855 across the UK. This is the largest number since the so-called "dotcom boom" of the early 2000s.

High-growth firms (HGFs) are defined as companies with at least ten employees who experienced an annual growth in employment of 20 per cent between 2012 and 2015.

However, one of the most surprising findings of the report was that a greater number of these HGFs are now outside London.

Excluding the capital, England saw a 36 per cent rise in the number of HGFs between 2009 and 2012. This took the figure from just over 5,750 to more than 7,850. Throughout the same period, the amount of HGFs in London also rose, but by a significantly smaller amount - just 15 per cent.

Speaking about the analysis, Professor Mark Hart, deputy director of the ERC, said the number of HGFs in the UK is now at its highest level for more than a decade, and both urban and rural parts of England are seeing much more rapid rises in these kinds of firms than London.

“These are exactly the sort of firms we need more of in our economy, because they create a huge proportion of overall jobs relative to their small size in the business population," Professor Hart said.

He said it was important to learn the lessons of what’s helping these fast-growing businesses to replicate it across the UK.

Regionally, Liverpool saw the biggest increase in HGFs across the country, with an incredible 56 per cent rise between 2009 and 2015. However, other areas experienced much smaller growth in the number of these firms.

As with all businesses, it's important that the right support is in place to allow your company to grow if you are self-employed. One of the biggest headaches for many small business owners is the company finances, which can be a significant obstacle to growth, especially if you are thinking of going limited.

Seeking professional advice on these matters can help you make the most of your income, and take the best direction for your company.

By Victoria McDonnell

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