small business update matthew james thursday, 19 th may 2005
TRANSCRIPT
![Page 1: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/1.jpg)
SMALL BUSINESSUPDATE
Matthew James
Thursday, 19th May 2005
![Page 2: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/2.jpg)
Objectives for the Presentation
> Small Business Trends
> Small Business Performance
> Entrepreneurship in the UK
> Spotlight on Female Entrepreneurs
> Population Growth & Ethnic Groups
![Page 3: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/3.jpg)
SMALL BUSINESS
TRENDS
![Page 4: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/4.jpg)
Recent Trends: Starts
During 2004, London & South East continue
to lead the way in business starts
Source: Barclays ‘Starts & Closures’, 2004(000’s - estimates based on business accounts)
2004 Per 1,000 of working age
London 92.8 19
South East 71.4 15
North West 52.8 13
South West 49.0 17
East 44.0 13
West Midlands 36.8 11
Yorkshire 35.6 12
East Midlands 33.8 13
Wales 21.1 12
North East 15.7 10
![Page 5: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/5.jpg)
Recent Trends: Starts (2)
Rise in starts across the Capital during 2004,
Though down slightly across the South East
Source: Barclays ‘Starts & Closures’, 2004(estimates based on business accounts)
2003 2004 % Change
London 79,700 92,800 +16%
South East 73,000 71,400 -2%
Total 400,000 453,000 +13%
![Page 6: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/6.jpg)
Recent Trends: Closures
Source: Barclays ‘Starts & Closures’, 2003/4(estimates based on business accounts)
Half Year 1 Half Year 2
2003 138,900 151,800
2004 162,000 163,600
Change +17% +8%
At a UK level, mainstream business closures are on the rise…
…BUT, still outnumbered by starts
![Page 7: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/7.jpg)
2004 Q1
2004 Q2
2004 Q3
2004 Q4
2005 Q1
Liquidations 3,131 3,151 2,969 2,938 2,900
Bankruptcies 10,343 11,214 12,032 13,020 13,229
Total 13,474 14,365 15,001 15,958 16,129
Bankruptcies form a small part of registered stock;
Typically less than 10% of all business closures
Source: Depart of Trade and Industry, 2005
Bankruptcies & Closures
![Page 8: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/8.jpg)
London has highest business start and closure rate in the UK
Source: LDA ‘Economic Development Strategy’
Starts & Closures in the UK
![Page 9: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/9.jpg)
Effect on UK Business Stock
2003 – APPROACHING 4.0m BUSINESS ENTERPRISES IN THE UK
First significant rise in business stock for some time
Source: SBS, ‘Small Business Statistics’ 2003
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
1980 1983 1986 1988 1990 1992 1994 1996 1998 2000 2002 2003
Business Population (m)
2003= 3.945m
![Page 10: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/10.jpg)
Employee Growth
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
1999 2000 2001 2002 2003
No employees
1-20 employees
Growth in business stock, BUT not in businesses with employees
No. with no employees up on previous year (240,000)
No. with employees down slightly on previous year (10,000)
![Page 11: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/11.jpg)
SMALL BUSINESSPERFORMANCE
![Page 12: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/12.jpg)
Business Survival Rates
London South East UK
1993 61.4 63.5 62.1
1994 60.8 64.3 62.5
1995 62.6 68.3 65.3
1996 63.3 69.5 66.0
1997 64.2 70.7 67.4
1998 62.5 69.6 66.3
1999 62.8 69.7 66.5
About two thirds still trading 3 years after registration
London lower than South East & UK average
BUT more starts and more closures = CHURNSource: SBS SME Statistics, 2003
![Page 13: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/13.jpg)
SME Performance: Current
Change Q4 03/Q4 04 Up Down Same Balance
Sales Turnover 47% 28% 23% +19
Average Employment 18% 12% 67% +6
Investment 23% 15% 59% +8
Selling Prices 37% 10% 50% +27
Sales performance of Britain’s small firms
= Performance of the Workspace Group market place
Source: SERT, ‘Quarterly Survey of Small Businesses in Britain’, Q1 2005
![Page 14: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/14.jpg)
SME Performance: London & SE
…BUT London only area in UK to where moresmall firms cut the numbers they employ
London and SE show good sales performance…
Sales
Turnover Average
Employment Investment
Selling Prices
London +12% -4% +4% +20%
South East +17% +7% +2% +13%
Source: SERT, ‘Quarterly Survey of Small Businesses in Britain’, Q1 2005
![Page 15: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/15.jpg)
SME Performance: Sectors
43
29
19
18
18
13
11
6
4
0 10 20 30 40 50
Hotels & Restaurants
Construction
Business Services
Personal Services
Manufacturing
Retail
Agriculture, Forestry & Fisheries
Wholesale
Transport, Travel
Sector
Balance reporting an increase in sales over last 12 months
Source: SERT, ‘Quarterly Survey of Small Businesses in Britain’, Q1 2005
![Page 16: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/16.jpg)
SME Performance: Prospects
Anticipated change over Q1 2005
Change Q4 04/Q1 05 Up Down Same Balance
Sales Turnover 42% 25% 32% +16
Average Employment 15% 8% 75% +7
Investment 18% 15% 65% +3
Selling Prices 29% 7% 60% +22
Confidence about sales translated into overallincreases in selling prices
Source: SERT, ‘Quarterly Survey of Small Businesses in Britain’, Q1 2005
![Page 17: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/17.jpg)
SME Problems & Issues
Government regulations & paperwork seen as biggest concern- as it has been for last 18 months
Source: SERT, ‘Quarterly Survey of Small Businesses in Britain’, Q1 2005
![Page 18: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/18.jpg)
ENTREPRENEURSHIP
IN THE UK
![Page 19: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/19.jpg)
How Entrepreneurial is the UK?
Based on ‘Total Entrepreneurial Activity’,
UK is ahead of Germany & France but behind the USA
0
2
4
6
8
10
12
14
UK US Germany France
2002 2003 2004
2004 GLOBALAVERAGE = 9.3
Source: GEM, 2004
![Page 20: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/20.jpg)
0
1
2
3
4
5
6
7
8
East M
idlands
East o
f Eng
Lond
on
North E
ast
North W
est
South
East
South
Wes
t
West
Mid
UK Ave
rage
2002
2004
TEA in the UK: A regional Picture
Source: GEM, 2004
London & SE lead the UK in TEA…… and both have seen significant increases over last 2 years
![Page 21: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/21.jpg)
Expect to start a business
0
2
4
6
8
10
12
14
16
18
US France Italy UK Germany Japan Canada
2003
2004
UK: 9.5% of working age population expect to start a business innext 3 years – US, Germany, Japan all down
Source: GEM, 2004
![Page 22: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/22.jpg)
SPOTLIGHT ON
FEMALE
ENTREPRENEURS
![Page 23: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/23.jpg)
Women: The Facts
25% of the UKs 3.2m self-employed workers are now women
30% of business owners are women
The highest number of female startups are based in London, where 8.4% of the female workforce are self-employed
Source: Labour Force Survey, 2003
BUT… Men are still twice as likely to start a business as women Source: GEM, 2004
![Page 24: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/24.jpg)
Characteristics of Female Entrepreneurship
Businesses started by women use less capital than those started by men
Women tend to have slower early growth trajectories – stronger ties and egalitarian coalitions
Women tend to start businesses with known technology and in established markets – less innovative?
Women’s businesses tend to be smaller and less expensive than those of men
Source: GEM, ‘Report on Women & Entrepreneurship’ 2004
![Page 25: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/25.jpg)
Attitudes to Entrepreneurship
Women showing improvement but still behind men
on key start-up indicators
Men Women
2003 2004 2003 2004
I expect to start a business in the next 3 years 10.3 11.8 5.1 7.2
Personally know an entrepreneur 33.6 35.5 23.9 26.0
There are good start-up opportunities where I live 44.0 44.1 33.1 35.9
I have the skills to start a business 63.2 65.0 42.9 46.6
Fear of failure would prevent start-up 29.8 28.7 33.9 34.5
Entrepreneurship is a good career choice 51.3 54.3 51.1 55.8
Entrepreneurs have a high status 71.2 71.0 70.7 72.0
Good media coverage of entrepreneurs 57.7 57.4 54.4 55.8
Source: GEM, ‘Report on Women & Entrepreneurship’ 2004
![Page 26: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/26.jpg)
Women: Trends
Lower expectations – expect growth of two-fifths over 3 year period compared to men who expect to double
Over 5 year period from start-up, women expect to create 2 new jobs; men expect to create at least 5
“Women have lower expectations of what they can achieve and this translates into lower expectations of job creation and turnover
growth”
Source: GEM, ‘Report on Women & Entrepreneurship’ 2004
![Page 27: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/27.jpg)
POPULATION GROWTH &
ETHNIC GROUPS
![Page 28: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/28.jpg)
Growth in London outpacing the UK…
Source: LDA ‘Economic Development Strategy’
UK Annual Population Growth
…GLA forecasts a rise of 711,000 by 2016
![Page 29: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/29.jpg)
Strong increase in London population growth between 1991-2001
Source: LDA ‘Economic Development Strategy’
Population Growth by UK Region
![Page 30: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/30.jpg)
Net international migration in London accountsfor growth of about 100,000 pa
Source: ONS ‘London: Region in Figures’
Accounting for Growth
![Page 31: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/31.jpg)
Source: Dept for Work & Pensions ‘Migrants in the UK’
Americas11%
East Europe3%
West Europe5%
Rest of Asia10%
Australasia4%
Middle East3%
Indian Sub-continent
20%
Africa19%
Other1%
EU24%
Stock of working age foreign-born population, by country of birth= c3.6m, about 10% of total working age population
Who are the Immigrants?
![Page 32: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/32.jpg)
• Of current UK working population, 3.6m are foreign born (10%) • Tend to be ‘…very heavily concentrated in London and the South East’
• And ‘…of working age, concentrated between 25 and 49’ (table below).
Source: Dept for Work & Pensions ‘Migrants in the UK’
Effect on Working Population
![Page 33: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/33.jpg)
Ethnic Groups
Source: GEM, ‘Report on Women & Entrepreneurship’ 2004
TEA by Ethnicity
Almost without exception, ethnic groups are moreentrepreneurial than the white population
![Page 34: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/34.jpg)
TEA Amongst Ethnic Groups
Expect
Start Up Know
Entrepren Good Opps
Have Skills
Fear of failure
White 8.1 30.6 40.3 56.3 31.2
Mixed 21.4 35.8 45.3 51.9 36.4
Indian 20.4 32.8 45.1 62.4 36.6
Pakistani 31.4 40.5 41.7 55.2 19.3
Bangladeshi 29.4 38.3 58.1 58.7 14.9
Other Asian 17.4 38.1 36.1 58.9 35.8
Black Caribbean 25.7 37.5 25.0 59.0 31.7
Black African 27.1 34.7 41.2 65.8 28.7
Black Other 27.6 33.3 55.6 69.6 37.5
Ethnic Groups are characterised by expectation of starting business and belief in their skills to do so
Source: GEM, ‘Report on Women & Entrepreneurship’ 2004
![Page 35: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/35.jpg)
“Ethnic minority people tend to have more positive attitudes towards entrepreneurship and better self perception of their
capacity to establish a business”
Types of business
Whites or mixed race are most likely to be involved in start-up activity involving a technology not available a year ago
Black Caribbean most likely to be starting up a business that provides a good or service that is new to all customers
Indian businesses are least likely of all ethnic groups to be export oriented – 87.5% said that they have no overseas
customers
Source: GEM, 2004
![Page 36: SMALL BUSINESS UPDATE Matthew James Thursday, 19 th May 2005](https://reader033.vdocuments.mx/reader033/viewer/2022051113/56649c755503460f94929586/html5/thumbnails/36.jpg)
Conclusions
> Starts outnumber closures = increase in population
> Improving performance & confident forecast
> Entrepreneurship in the UK at good level
> Impact of rising female starts & optimism?
> Impact of growth in population & net migration?