Member Article

Start-up numbers 'misleading'

A small business forum has accused the government of ‘misleading’ people over the number of small businesses in the UK. The Forum of Private Businesses (FPB) was responding to Competitiveness Minister Stephen Timms’ assertion that there are now a record number of small businesses in the UK by pointing to new research suggesting they are struggling to grow under Gordon Brown’s leadership.

The FPB’s National Chairman, Len Collinson, pointed out that the move to encourage existing small firms and one-man bands to officially register as businesses was the major reason for the increase, rather than a surge in new start-ups.

Mr Collinson said: “The fact of the matter is that there are no more employers than there were in 1997. This increase in the number of small firms is all about more companies without employees.”

A study carried out by the European School of Management (ESM) has claimed that small business growth is in decline. In its report, the ESM said that the proportion of businesses achieving an annual turnover in excess of £1 million in their first five years fell from 29% in 1998 to 16% in 2006.

Only 6.8% achieved a turnover of more than £7 million in their first five years, a far lower rate than the 16.3% elsewhere in Europe. Since 2002, this figure has continually fallen in the UK, while rising across Europe.

Tracy Hoather, of courier firm Sameday Plc, said: “I would be interested to know how many of those ‘new’ firms are micro businesses and one man bands that have now officially registered. Beyond former employees now employing themselves, how many actual jobs have these businesses created?”

This was posted in Bdaily's Members' News section by Ruth Mitchell .