Business Population Increases To 4.9m

the business population of the UK was estimated to have increased by 102,000 to 4.9m at the start of 2013 according to statistics from the Business Department (BIS) and the ONS. It continues a steady growth since 2000 and 2013 is the highest estimate yet.

The rise is mainly due to the increase in the number of small, non-employing businesses, up 127,000. The growth is offset by a fall in the number of employing businesses of 26,000.

The 4.9m private sector businesses employed a total of 24.3m people and had a combined turnover of £3,300bn. Of these 99.9% are SMEs employing 14.4m people (59.3% of private sector employment) accounting for £1,600bn or 48.1% of private sector turnover.

The majority of private sector businesses were sole proprietorships, 28.5% were companies and 8.9% were partnerships and 75.3% did not employ anyone beside the business owner.

Confidence Low In Small Businesses

UK SME's are still not confident according to the most recent CBI SME survey. Output is still at the same levels as last quarter but new orders are falling. Concern about the political and economic uncertainty increased sharply the survey suggests.

Record Number Of Small Business In UK

The Office for National Statistics and the Department for Business, Innovation and Skills recently released statistics concerning small and medium sized enterprises for the UK and regions for 2009. It gives estimates of the numbers of SMEs in the UK the employment they provide and their turnover.

The release says that there were 4.8m enterprises in the private sector at the beginning of 2009, an increase of 1.1% or 51,000 on 2008 and the highest number since these records began in 1994. They employed 22.8m people and their combined turnover was an estimated £3,200bn. Although SMEs account for 99.9% of all enterprises, they accounted for 59.8% of private sector employment and only 49% of private sector turnover. The turnover increased in 2009 by an estimated 5.8% or £1,589bn on 2008.

Most, 99.3%, of the SMEs were small (0-49 employees) and only 27,000 were medium sized (50-249). There were only 6,000 large enterprises (over 250 employees) in the UK in 2008. The number of people employed by SMEs fell by 309,000 or -1.3% since 2008. The number of sole proprietorships increased for the seventh year in a row, by 65,000, to 3.1m. The total number of businesses without employees was 3.6m, up 68,000. They account for 74.8% of all private sector enterprises and a combined turnover of £240bn at the beginning of 2008. Partnerships decreased by 18,000 to 444,000.

Growth In SME Orders Expected To Fall

Smaller companies have seen production growth in the three months leading to the latest CBI SME survey due to stronger domestic and overseas demand and rebuilding stocks of goods. The total volume of new orders has grown over the quarter and exports were particularly strong. Weaker demand over the next quarter could cause it to stall as expected orders fall.

Internet Sales And Connectivity Still On The Up

Internet sales in 2008 went up by 36.6% to £222.9bn from £163.2bn in 2007. These were comprised of £104.7bn website sales and £118.2bn electronic data interchange (EDI) sales. The Internet sales represented 9.8% of all sales of UK non-financial sector businesses. The proportion of businesses using the Internet for selling purposes went up to 15.2% in 2008 from 14.4% in 2007. Website sales accounted for 12.8%.

Employees are increasingly using the Internet more from their workplaces. There were 7.8m workplace users or 45.5% of employees (within the scope of the survey) in 2008. Internet access was available to 80% of people who used computers at work. New technologies are also being used more. Wireless LANs (WLAN) are increasing in number as is the adoption of radio frequency identification (RFID). This year is the first time RFID has been measured with 1.4% of businesses using the technology. The bigger companies of over 1000 employees (12.5%) used the technology more than the small businesses (1%).

The wholesale, retail and catering sector had the biggest piece of the pie with £106.6bn. The majority of sales were to customers in the UK at £281.3bn, 83% of the total. Sales to the EU totalled £36.8bn or 11% and sales to the rest of the world were £20.1bn. The number of businesses with a website increased to 73.5% in 2008, but only 12.6% used them for sales. The biggest proportion of them were in the post and telecommunications sector with 23.5%.

Mobile Internet connections are continuing to increase. The number of businesses using that kind of connection has increased to 37.6% while digital subscription remained the most popular connection method. The majority of businesses adopting mobile access are large businesses at over 87% with small businesses on 32%.

Businesses are using the Internet to obtain information (62%) and forms (58%) from the public authorities (66%). Size of business is again linked to interaction with public authorities. In 2008, 62% of businesses with 10-49 staff interact online compared with 87% of companies with over 1000 employees.

Supply chain management systems are used by more and more businesses. Enterprise resource planning systems are used by 6% with bigger businesses 10 times more likely to use ERP software than SMEs. Customer relationship management (CRM) systems are used by 14% to share information about customers and by 12.4% for information analysis for marketing.

These statistics are from the Office for National Statistics (ONS).

Exports To Lead Growth Next Month

Medium sized firms are reporting an increase in confidence for the first time since April 2007. They are expecting a growth in orders despite a marked fall in the volume of total new orders in July. Export orders also continue to decline but again firms are increasingly optimistic about exports. As with orders, so output is also slowing, but the optimism about exports includes leading a return to growth in the next quarter.

The quarterly CBI report on SMEs says that business remains difficult but although the indications are that business is still falling it will improve over the next three months. The position of the pound has not made much difference to small and medium sized businesses and their exports but they are responding to improved credit conditions. Firms are still running down stocks and working below capacity.

Small Business Downward Trend Expected To Slow

The CBI's latest SME Trends Survey shows that output has gone down at the fastest pace of decline for more than 20 years. The factor most likely to limit output will be sales and orders. The report also shows a fall of 64% in total new orders, the steepest fall since CBI records began, with 13% reporting an increase. The volume of output reported shows a 57% decline. Employment figures were no better with 50% of respondents reporting record increase in job losses, only 6% taking on new staff.

The number of firms working below capacity has continued to rise for over a year with 74% now running below capacity and companies are also still running down stocks. Export orders are weak. Credit and financial worries are still a problem and may limit exports. Average domestic prices continued to decline and costs continued to rise as imports are becoming more expensive.

Investment intentions are low and uncertainty about demand is likely to be a factor limiting plans to invest. However, general business sentiment is up as the decline in orders, output and employment is expected to slow down over the next three months.