Small firms thriving in the UK shows report

Record numbers of SMEs are starting up in the UK. We look at the reasons why the UK’s regulatory framework, skills and new legislation are helping them to flourish.

There were an estimated 4.5 million business enterprises in the UK at the start of 2006, up 125,000 on the start of the previous year.

The figures have just been released by the UK’s Department of Business Enterprise and Regulatory Reform (BERR).

Numbers were up 2.9 per cent on the beginning of 2005 – the highest since the survey began back in 1994.

Setting up is easy

With international comparisons frequently ranking the UK as one of the easiest places in the world to start up a business, it is no wonder the numbers of SMEs are growing.

The World Bank rates the UK as the top country in Europe for ease of doing business and sixth out of 175 countries ranked throughout the world.

Looking into forming a company?

Find out how easy it is to register your UK firm in this factsheet.

The UK’s stable economic framework, supported by a transparent and business-friendly process to form a company contributes to the high levels of entrepreneurship.

Getting the right staff

An important factor to the success of firms starting up in any country is the flexibility with which they can employ the right workers.

The UK has a diverse workforce including an abundance of specialist skills to meet the needs of growing firms.

Labour market flexibility helps start-ups in the UK to take on more employees during start-up and growth periods.

And in recent years, an increasingly strong partnership between labour unions and business management has helped companies to resolve conflict with employees constructively and keep labour strikes to a minimum.

New legislation enhances

It’s all very well starting up a business, but what about making it work on a long-term basis?

The 2006 Global Entrepreneurship Monitor found the proportion of people running established businesses in the UK to be 93 per cent of the start-up rate, showing that the vast majority of ventures are successful.

How will the Companies Act impact on SMEs?

Learn about changes to corporate legislation and new reporting procedures for small firms in our article The short cut to setting up.

A further boost to small businesses will be delivered when the Companies Act 2006 is fully implemented in 2008.

Previously separate pieces of corporate legislation will be condensed into a single framework, with accounting and financial reporting procedures simplified for SMEs.