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Enterprise Directorate Analytical Unit Frequently Asked Questions

What is the definition of a small business?

There is no single definition, but in the Enterprise Directorate we define businesses according to the number of employees they have. Micro-businesses are those with 0-9 employees, small businesses have 0-49 employees, medium-sized businesses have 50-249 employees, and large businesses 250+ employees.

There are other definitions, for example, that of The Companies Act 1985 or the European Definition of an SME.

Thresholds for small and Medium-sized Companies and Groups

European Definition of an SME 

What is an SME?

SME stands for small or medium-sized enterprise - in other words a business with fewer than 250 employees.

How many businesses are there in the UK?

There were an estimated 4.7 million businesses in the UK at the start of 2007. The vast majority of these (99.3 per cent) were small businesses (with fewer than 50 employees) and they provided 47.5 per cent of the UK private sector employment and 37.4 per cent of turnover. Large businesses are in the minority; there are only around 6,000 firms that have 250+ employees. Even so, they account for 40.8 per cent of private sector employment and 48.5 per cent of turnover. All of these statistics can be found on the BERR Statistics website.

How many businesses have staff?

At the start of 2007 there were 1.2 million businesses with employees.  More information can be found on the BERR Statistics website.

What is the difference between employment and employees?

Employment figures include every person employed by the business, including the business owner-manager(s). Employee figures do not count the owner-manager(s).

In our annual SME statistics publication a part-time employee is counted as one whole employee.

In the SME Statistics, are turnover and employment measured in thousands or millions?

Employment is in thousands. So, for example, Table 1 of the UK SME Statistics for the UK 2007 shows total private sector employment as 22,734 but the column heading shows that all numbers in this column are in thousands. Therefore, total employment is 22,734,000. Similarly, the turnover of 2,794,684 has been divided by £1 million, so total turnover is £2,794,684,000,000.

Are the SME Statistics published for the regions?

Regional summaries of the SME statistics have been published for the years 1997, 1998, 1999, 2001, 2003, 2005 and 2007.  These can be accessed via the Excel tables and the archive file on the SME statistics webpage.

Can I get SME Statistics for foreign / European / other countries?

The EU Statistics team at the Office for National Statistics can help you navigate European data, including the SME statistics available from the Eurostat website. Other countries' data can be found in the OECD Structural and Demographic Business Statistics 2006.

How many businesses start each year?

One way to estimate this is to count the number of businesses who register for VAT. Enterprise Directorate publishes annual estimates of the number of VAT registrations in each district, parliamentary constituency and industry sector. However, these do not include many of the smallest businesses whose turnovers fall below the compulsory VAT registration threshold (which rose to £67,000 on 1 April 2008). Barclays Bank also produces estimates of the numbers of firms starting up and closing down in England and Wales, based on their record of business bank accounts opened and closed.

VAT Statistics Data 

How many businesses close each year?

One way to estimate this is to count the number of businesses that de-register for VAT. Enterprise Directorate publishes annual estimates of the number of VAT de-registrations alongside VAT registration figures. However, these are not perfect as businesses which de-register may not necessarily have closed - for example, their turnover may have fallen below the VAT threshold. Barclays Bank also provides estimates of the numbers of firms starting up and closing down in England and Wales, based on their record of business bank accounts opened and closed.

VAT Statistics Data 

I get an error message, "Internet Explorer blocked this site…" when I try to download the Excel Tables.

Try right clicking the file, left clicking "Save Target As", saving the file to a suitable place on your computer and opening the file from there.

Can I get the SME or VAT statistics at a local level / by different size bands / for more detailed industry sectors?

The SME Statistics are the only estimates we have made of the total number of businesses.  Figures are not available at a more detailed level. Neither do we produce forecasts of the number of businesses in the UK.

The data that form the basis of our VAT statistics are held on the Inter Departmental Business Register (IDBR) at the Office for National Statistics (ONS).  We do not receive IDBR data at a more detailed level than we publish.

Ward level VAT data by business size can be downloaded from the Neighbourhood Statistics website (under the topic "Work Deprivation").

Detailed breakdowns (including by turnover, and 1,000 or more employees) of all businesses currently registered for VAT can be found in the ONS publication UK Businesses - Activity, Size and Location.

If you need more detailed information than this you can contact the ONS directly, using the details given on the IDBR webpage. They are able to produce tailored analyses for customers, at a small charge, if the data you need is not in any existing publications.

Inter-Departmental Business Register 

How many new businesses survive?

Overall, 92% of businesses that registered for VAT in 2004 were still registered 12 months later. 71% of businesses registered in 2002 were still registered after three years. The most up to date survival rate figures can be found in our annual survival rates publication.

 

Why do businesses fail?

As we only collect data on businesses while they are still trading we do not publish any data on why businesses fail. The Association of Business Recovery Professionals has information on its website about what causes businesses to fail.

What are the main obstacles to business success?

The Annual Small Business Survey 2006/07 results contain figures on what small business owners consider to be the main obstacles to the success of their business.

How many SMEs are exporting, growing, innovating or in deprived areas?

The Annual Small Business Survey 2006 results contain figures on the proportion of SMEs that sell outside the UK, that aim to grow, that innovate, and on many other topics.

How many businesses are owned by ethnic minorities?

The Annual Small Business Survey 2006 results contain figures on the proportion of SMEs with at least half of their directors from minority ethnic groups, and other related questions.

How many businesses are owned by women?

The Annual Small Business Survey 2006 results contain figures on the proportion of SMEs for which a majority of the directors are women, and other related questions.

How many businesses use the Internet?

For information on businesses using the Internet and ICT we recommend you look at the Office for National Statistics E-commerce survey.

Where do the BERR statistics come from?

The main source we use is the Inter Departmental Business Register - a database of UK firms maintained by the Office for National Statistics (ONS). It holds records of all businesses that are registered for VAT and all businesses operating a PAYE scheme. Careful monitoring of the Register is used to minimise double counting. For each business the IDBR has a record of employment, turnover and type/sector.

Inter-Departmental Business Register 

The SME Statistics also use information from the ONS' Labour Force Survey and HM Revenue and Customs' Survey of Personal Incomes.  A methodology note explaining how the SME statistics are produced is available on the SME Statistics webpage.

A methodology note explaining how the VAT statistics are produced is available on the VAT statistics webpage.

Can you provide names, addresses and telephone numbers of small businesses?

No. We do not hold a database of businesses in the UK. However, a number of business databases exist and, if you need to, you can buy lists of firms from them or search for businesses on them. For further advice on how to make use of business databases please see the Business Link web site, which contains sections on how to use market research and market reports.

Do you have any information on…?

We receive frequent enquiries regarding specific financial aspects of small businesses - for example, what they spend on various items, their sales, assets and liabilities, profits, etc.

We do not collect any financial data on SMEs other than their turnover.  If you have a question relating to these topics you may find that interested parties, such as trade associations, have carried out surveys of their members and are able to help you.

Some examples of business organisations which commission their own research are the British Chambers of Commerce (BCC), the Confederation of British Industry (CBI), the Forum of Private Business (FPB), and the Federation of Small Businesses (FSB).

Where can I find more Enterprise Directorate statistics on Small and Medium Enterprises?

You can find links to all of the statistics published by the Enterprise Directorate on the BERR Statistics website.