For countless individuals across the UK, 2023 has been a year defined by the hustle and heart of small business ownership. From bustling city streets to quaint village squares, these ventures drive the local economy and enrich the fabric of communities. But as we turn the page towards 2024, it’s time to take a closer look at the numbers that paint a picture of their year just gone.

This article offers a neutral and data-driven exploration of the 2023 small business statistics in the UK. We’ll delve into key startup statistics, including the number of active businesses, their contribution to the economy, and the challenges and opportunities they faced.

Small Businesses Statistics: Big Impact on the UK

The private sector businesses are the lifeblood of the UK economy, playing a crucial role in multiple ways. Let’s explore SMEs’ essential role in job creation, economic growth, and community building. We’ll unravel the statistics and facts that quantify their impact, revealing the staggering numbers representing their contribution to the UK’s success. 

  1. Job Creators: They employ 61% of the private sector workforce, contributing significantly to employment and reducing unemployment rates.
  2. Economic Drivers: They generate around 25% of the UK’s GDP, fueling economic growth and prosperity across the nation.
  3. Community Champions: They bring life to local communities, providing essential services, supporting local suppliers, and fostering a sense of place.
  4. Innovation Hubs: They are hotbeds for innovation, driving new business ideas and entrepreneurship, and keeping the UK competitive in a globalised market.
  5. Diversity Generators: They create a diverse and dynamic business landscape, catering to a range of local needs and offering unique and personalized experiences.

The Latest Small Business Statistics UK 2023

This breakdown reveals a diverse and dynamic ecosystem where each size tier contributes uniquely to the overall small business landscape. Micro enterprises bring vibrancy and local flavour, small enterprises offer stability and growth potential, and medium enterprises drive innovation and job creation. Understanding this distribution allows us to appreciate the full scope of the impact of UK small businesses on the national economy and local communities.

TypeNumberPercentage of
of Total Businesses
SMES5.6 million99.9%61%£2.4 trillion
Small Business
(0-49 employees)
5.52 million99.2%13.1 million
£1.6 trillion
Medium-sized Businesses
(50-249 employees
36,900 0.7% 3.6 million
0.8 trillion

Regional Distribution:

  • London and South East: 1.89 million, occupying 34% of total businesses in the UK.
  • North East: 156,000
  • Scotland: 298,000
  • Wales: 219,000
  • Northern Ireland:122,100

Key Events Shaping the 2023 UK SME Landscape

1. Cost-of-Living Crisis: Inflation, influenced by energy price hikes and global supply chain disruptions, significantly impacted SMEs across various sectors. The Bank of England noted that inflation fell from a peak of 11% in 2022 to 6.7% in September 2023, reflecting ongoing economic challenges.

Small Business Statistics

2. Skills Gap: Skill gaps and talent competition posed a persistent challenge, hindering recruitment and growth. The Federation of Small Businesses reported that 22% of small business owners struggled to fill vacancies in June 2023, particularly in tech, healthcare, and engineering sectors (FSB).

3. E-commerce Surge: The accelerated shift towards online shopping presented both challenges and opportunities. While traditional businesses faced increased competition, the rise of e-commerce platforms offered new potential markets and revenue streams, as highlighted by Foxintelligence data showing an 11% increase in online retail sales in 2023 compared to 2022.

Brexit Fallout

The ongoing adjustments and uncertainties associated with Brexit continued to disrupt trade and operations for many small businesses. According to Bloomberg, Brexit costs the UK £100 billion per year, impacting business investment and hiring. While some sectors have seen opportunities emerge, others grapple with new hurdles, painting a nuanced picture of adjustment and adaptation. Let’s dive into the key facets of Brexit’s impact on UK SMEs:


  • Trade disruption and increased costs: New customs paperwork, border checks, and tariffs have added complexity and expense to cross-border trade, disproportionately affecting SMEs reliant on imports and exports.
  • Labour shortages: Brexit restrictions on EU migration have exacerbated existing labour shortages, particularly in industries like agriculture and hospitality.
  • Regulatory divergence: The UK-EU divergence in regulations creates additional compliance burdens and uncertainties for businesses operating in both markets.
  • Reduced access to EU funding: The loss of access to EU grants and subsidies has impacted innovative and research-intensive SMEs.


  • Reduced competition in domestic markets: Some UK businesses have benefited from decreased competition from European counterparts.
  • Greater regulatory freedom: The ability to set independent regulations provides an opportunity for some SMEs to adapt processes and potentially tailor them to specific needs.
  • New trade opportunities: New trade agreements with non-EU countries could open up new markets for UK SMEs.

Unveiling the Landscape of UK Small Businesses

The UK small business landscape isn’t just a static picture; it’s a vibrant ecosystem teeming with ventures of all shapes and sizes. Understanding their distribution by size provides crucial insights into the economic and community roles they play.

  • Micro Enterprises (no employees): The smallest and most numerous cohort, representing 74% of all UK SMEs (Finder).
  • Micro Enterprises (1-9 employees): This cohort represents 22% of all UK small businesses, contributing to hiring 8.77 million employees in 2023. (Statista)
  • Small Enterprises: Comprising 4% of the landscape and hiring 4.35 million employees.
  • Medium Enterprises: Occupying a smaller yet crucial space at 1% of all small businesses, employing an average of 3.6 million. These mid-sized engines often act as anchors in local economies, driving innovation and attracting talent.

Sector Highlights:

While UK small businesses thrive across diverse sectors, certain industries see them taking the reins, shaping the landscape and fostering local economies. Let’s explore three key areas where small ventures hold the dominant power:

  • Construction: Most popular sector for UK SMEs, accounting for 16% of all businesses.
  • Professional, scientific, and technical activities: Second most popular sector, accounting for 14% of all businesses.
  • Wholesale and retail trade: Third most popular sector, accounting for 10% of all businesses.

UK initiatives and support programs for small businesses

2023 proved a year of choppy waters for UK small businesses, buffeted by economic headwinds like rising costs, labour shortages, and Brexit uncertainties. Yet, amidst these challenges, a raft of government initiatives and support programs emerged, offering lifelines and propelling these ventures forward. Let’s explore some key initiatives that were instrumental in aiding their resilience and adaptability:

Financial Support

  • Energy Bill Relief Scheme: Providing grants and discounts to help businesses cope with surging energy costs.
  • Help to Grow: Digital: Offering training and financial incentives to adopt digital technologies and boost online growth.
  • Start-up Loans: Enabling access to loans for new businesses struggling with traditional financing channels.
  • Seed Enterprise Investment Scheme (SEIS): Tax relief for investors in early-stage businesses, fostering risk capital for potentially high-growth ventures.

Skills and Development

  • Skills Bootcamps: Providing intensive training courses for in-demand skills, tackling the labour shortage challenge.
  • Apprenticeship Levy: Funding employers to create apprenticeship opportunities, developing a skilled future workforce.
  • Business Basics: Essentials of Entrepreneurship: Free online courses equipping aspiring entrepreneurs with the knowledge to launch and scale their businesses.

Trade and Innovation

  • UK Export Academy: Supporting businesses to navigate international trade through training and market access programs.
  • Innovate UK: Grants and funding for research and development, fostering innovation and technological advancements.
  • Help to Grow: Management: Subsidised leadership and management training programs, empowering business owners to make informed decisions.

Community and Collaboration

  • Local Enterprise Partnerships (LEPs): Regional bodies providing funding and support tailored to local business needs.
  • Small Business Support Helplines: Offering free advice and guidance on issues ranging from finance to regulation.
  • Networking Events and Collaboration Platforms: Facilitating knowledge sharing and peer-to-peer support among small businesses.

While uncertainties linger, the predictions for UK small businesses in 2024 paint a cautiously optimistic picture. Their inherent resilience, adaptability, and innovative spirit, coupled with supportive policies and collaborative efforts, offer a roadmap to navigate the challenges and capitalize on potential opportunities.

As we embark on the journey of 2024, it’s crucial to acknowledge the crucial role these ventures play in the nation’s economic recovery and local communities while providing them with the necessary support to thrive in the ever-evolving landscape.

2023 was turbulent for UK small businesses: cost of living squeezed profits, labour shortages hampered growth, and Brexit cast a shadow. Despite these challenges, they displayed remarkable resilience, adapting with innovation and collaboration. While 2024 carries uncertainties, cautious optimism prevails, fueled by their adaptable spirit and potential for continued growth.

What is a medium size enterprise in the UK?

A medium size enterprise has between 50 and 250 employees, generating an annual turnover of less than €50 million.

What is a small enterprise in the UK?

In the UK, a small enterprise is typically defined by two main criteria:
Number of employees: It usually has less than 50 employees.
Annual turnover: Its annual turnover generally falls below €10 million

What is an SME in the UK companies Act?

The UK Companies Act 2006 is based on two out of three of the following criteria:
Turnover: No more than £36 million.
Employees: No more than 250 employees.
Balance sheet total (gross assets): No more than £18 million.

What are the funding options for startups in the UK?

UK startups have a plethora of funding options in 2023, from bank loans and angel investors to crowdfunding and government grants. Choose your mix, refine your pitch, and fuel your entrepreneurial journey to the stars!

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