New analysis reveals the importance of SMEs to the British economy

New research reveals how important small and medium enterprises are for the British economy, as businesses that employ between one and 249 employees contribute more than £2 trillion in turnover and employ 44% of the British workforce.

The study by marketing training hub School of Marketing analysed the latest ONS and government data on the number of small and medium enterprises in 2021 to see which regions and industries are powered the most by SMEs.

Analysis of the industries revealed that the Hospitality Industry has the highest proportion of SMEs out of any industry. Out of the 200,645 businesses operating in the industry, 140,050 are small or medium-sized, which equals roughly 69.8%. The Hospitality Industry is made up of accommodation and food services including hotels and restaurants.

The industry with the second-highest percentage of SMEs is Wholesale and Retail Trade. This industry, which also includes mechanic shops that repair motor vehicles and motorcycles, has more than 500,000 businesses, and more than four in ten (43%) are small or medium-sized.  

Real Estate Industry has the third-highest proportion of SMEs, with 35.4% of all enterprises having below 250 employees. The industry has 134,095 businesses operating in the UK, and 47,740 are small or medium-sized.

In fourth is the Agriculture, Forestry and Fishing Industry, which has more than 150,000 businesses running in the country, and roughly 50,000 (33%) are SMEs.

The industry counting the fifth-highest percentage of SMEs is Manufacturing, with 32% of the enterprises operating in this industry being small or medium-sized, which is 87,210 out of the 270,000 businesses.

The study also analysed each UK region and found that Northern Ireland has the highest proportion of SMEs in the UK. 123,705 businesses are operating in Northern Ireland, and 36,369 are small or medium enterprises, making up roughly 29.4% of all companies.

Scotland has the second-highest percentage of SMEs out of all the UK regions, with 27.7% of all businesses being SMEs. There are 342,045 companies in Scotland, and 94,746 have fewer than 250 employees.

The East Midlands is home to the third-highest proportion of SMEs, with 100,300 SMEs, making up 27.3% of the 367,400 businesses operating in the region.

North West England has the fourth-highest percentage of SMEs in the UK, with 26.7% of businesses operating in the area being small or medium-sized.

Wales is tied for fourth, as 26.7% of operating businesses in the country are SMEs. 55,373 out of the 207,390 enterprises in Wales have fewer than 250 employees.

The study also assessed the most in-demand skills for entry-level positions across a range of industries and found that Communication and Microsoft Office proficiency are the most commonly occurring skills on job adverts – both appear in 61% of the jobs that were analysed. The third most in-demand skill is a High Attention to Detail, appearing in 44% of ads for entry-level positions. Finishing off the top five is a tie for fourth between Time-Management and Self-Motivated, both showing up on 39% of job adverts.

Commenting on the findings, Ritchie Mehta, CEO of School of Marketing said: “There are more than 1.4 million British companies which employ between one and 249 people, and combined they turn over a massive £2 trillion every year, which is 45% of total turnover from UK businesses. It’s essential that they are not only given the support to grow and continue making such an important contribution, but also that there is a skilled workforce able to help them deliver and adapt to the demands of an evolving economy.

“This data shows that when it comes to skills, there are some common themes that employers are looking for across a range of jobs, however in the current climate, budgets for training are likely to be cut, and the skills gap could widen. SME owners can take advantage of the Apprenticeship Levy scheme to bring in new staff or train current ones in digital and data-led programmes, with the vast majority of the training cost covered by the levy.”

The study was conducted by the School of Marketing, which offers leading digital and data marketing apprenticeships.

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