Is the UK becoming a ‘challenging place’ to grow a business?
Despite a growing number of new businesses in the UK, new research suggests that it is becoming increasingly harder to grow and scale in the current economic climate.
According to a new report from Goldman Sachs’s 10,000 Small Businesses UK , the number of ‘high growth businesses’ — those actively growing both headcount and revenue — dropped from 39,000 in 2008 to 36,000 in 2022.
The drop comes despite the UK having welcomed some 400,000 new businesses in the past 15 years, with the correlation suggesting the nation is becoming a “challenging place” to scale and grow a business according to the report.
“These research findings paint a challenging picture of the economic conditions for high growth businesses in the UK, but they also point to reasons to be optimistic,” Charlotte Keenan, head of Goldman Sachs 10,000 Small Businesses UK Programme, said.
“Creating the right conditions for growth has the potential to add at least £100bn to the UK economy and create close to 90,000 jobs,” Keenan added.
The report outlines that more can be done to aid in small business growth, with some suggesting proitising access to talent, skills, financing, and late payments could be a good start.
“This is the toughest economic climate I’ve seen in more than ten years of working with new start-ups,” Andy Fishburn, managing director at Virgin StartUp, said.
“It’s harder to set-up a business now than it was during the pandemic because there are fewer schemes and incentives to support small businesses,” he continued.
Acknowledging the efforts that have been made, such as the Autumn Statement’s rates relief, Fishburn said it “stops way short of the innovative thinking” that he believes is needed.
Even still, it can be worth “persevering,” he added, as surviving a difficult economic climate paves the way for business survival in the “long term.”
A Government spokesperson said: “We’re firmly backing our small businesses and that’s why we announced in the Autumn Statement £4.3bn of business rates support over the next five years to help small businesses on the high street, plus an Energy Bills Discount Scheme to help with rising bills.
“We have supported over 100,000 entrepreneurs through £1bn of government-backed start-up loans and have launched a review to crack down on late payments preventing SMEs from growing.
“We’ve also removed around 500 barriers blocking British businesses from exporting abroad since 2020, to give all businesses sizes greater access to markets worth millions all across the world.”
Emma Jones, founder of Enterprise Nation, said: “What this research shows is that the economic context and the government championing the start-up and small business community really does make all the difference.”
With the newly-refreshed Help to Grow campaign, Jones said: “The UK already has the experience and the expertise to lead the world in building a digital one-stop-shop that can signpost good quality resources to shape and protect the future health of global business.”