Small British businesses leave larger rivals riding their coattails

Small British businesses are leaving their larger listed rivals behind by growing rapidly over the last half a decade, reveals new research released today.

Revenue at privately owned and medium-sized UK companies jumped around a quarter over the last five years, compared to just four per cent growth at all FTSE 350 firms, according to consultancy BDO.

A quicker expansion in revenue compared to larger firms illustrates small British businesses have continued have held up well amid the damage inflicted on the UK economy by the Covid-19 crisis.

Ed Dwan, partner at BDO, said: “The shock of the pandemic and subsequent lockdowns have left no business completely unscathed, but mid-sized businesses have continued to show their resilience and manage the impact of incredibly difficult economic conditions.”

Small and medium sized businesses generate a large share of the UK’s output, meaning they are integral to ensuring Britain’s economy is healthy, BDO said.

Smaller firms are also a crucial source of work and income for many households across the UK, employing eight million Brits.

SMEs are a crucial engine for job creation, boosting worker numbers by a third over the last five years. In comparison, FTSE 350 businesses cut employee numbers by 16 per cent over the same period.

Intention to build on robust income growth is high among SMEs, with almost a quarter of them planning to acquire other businesses to lift revenue over the next year, according to BDO.

Strong appetite for deal making among small firms builds on figures released by Refinitiv yesterday showing M&A activity in the UK reached its highest level in 14 years this year, driven higher by private equity firms deploying dry powder amassed before the pandemic.