Micro-Enterprises and their Contribution to UK Job Growth Michael Anyadike-Danes, Karen Bonner & Mark Hart Enterprise Research Centre Presentation to ERC Workshop on “Realising Growth Potential of New Enterprises, 1st June 2014, London

1. Micro-Enterprises and their
Contribution to UK Job Growth
Michael Anyadike-Danes, Karen Bonner &
Mark Hart
Enterprise Research Centre
Presentation to ERC Workshop on “Realising Growth
Potential of New Enterprises, 1st June 2015, London

2. New Firms and Micro-Enterprises
• Simple question: what has been the
contribution of new firms and micro-enterprises
to job growth – especially since 2008
• Data – use ONS Business Structure Database
(BSD) – based on annual extracts from the IDBR
• UK longitudinal business demography dataset
constructed by ERC – focus on ‘employer
enterprises’ in the analysis

3. Presentation Structure
• Micro-enterprises in context
– Job Creation and Destruction since the
‘Great Recession’
– Job Creation - HGFs and non-HGFs
– Size Distribution; Sector; Age
• Survival
• Growth
• Start-ups

4. Job Creation: HGFs and non-
HGFs

5. Job Creation and Destruction since
the Great Recession (ONS:BSD)

6. Private Sector Micro-Enterprises
2004 -2014 (Source: ONS BSD)
2014
• 1.5m micro-businesses
in UK, 3.5m employees
• Total UK businesses =
1.7m, total
employees=19.3m
2004
• 1.2m micro-businesses
in UK, 3.1m employees
• Total UK businesses =
1.4m, total
employees=18.4m

7. Firms & Employees by Size 2014
0
10
20
30
40
50
60
70
80
90
100
1-9 10-49 50-99 100-249 250+
%ofTotal
Firms
Employees

8. Average Size of Firms by Size-band
2004 2005 2008 2010 2014
1-9 2.5 2.5 2.4 2.5 2.4
10-49 19.7 19.7 19.5 19.4 19.2
50-99 69.5 69.4 69.1 69.1 68.6
100-249 152.8 152.9 152.5 151.9 153.2
250+ 1437.3 1488.0 1499.2 1510.7 1471.7

9. Micro-Enterprises by Sector 2014
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
%Shareoffirms
Micro
All Firms

10. Sectoral Distribution of Employees
within Micro-Enterprises 2014
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
%ofEmployees
Micro
All Firms

11. Composition of Sectors by
Size & Employees 2014
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
%ofEmployees
Large (250 +)
Med (50-249)
Other Small (10-49)
Micro (1-9)

12. Age Composition of Firms 2014
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Micro (1-9) Other Small (10-49) Med (50-249) Large (250 +)
%ofFirms
10+ years old
5-9 years old
1-4 years old
born 2014

13. Composition of Employees by
Firm Age 2014
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Micro (1-9) Other Small (10-49) Med (50-249) Large (250 +)
%ofEmployees
10+ years old
5-9 years old
1-4 years old
born 2014

14. Survival Rates: Firms born 2009
20%
30%
40%
50%
60%
70%
80%
90%
100%
Born 2009 1 Year 2 Year 3 Year 4 Year 5 Year
%offirmsbornineachcategorysurviving
Micro
Small
Med/Large
17k -> 7k
2877 ->1172
186k -> 70k

15. Survival Rates: Firms born 2004
20%
30%
40%
50%
60%
70%
80%
90%
100%
Born 2004 1 Year 2 Year 3 Year 4 Year 5 Year
%offirmsbornineachcategorysurviving
Micro
Small
Med/Large
23k -> 10k
246k -> 92k
3769 -> 1500

16. Employment Growth for 5 Year
Survivors, born 2009

17. Origin – Destination of Survivor
Firms by Size (Born 2009)
sizeband14
sizeband09 1-9 10-49 50+ Total
1-9 70971 4221 289 75481
10-49 1163 1406 264 2833
50+ 68 85 228 381
Total 72202 5712 781 78695

18. Growth Rate Distribution (avg.
annual growth) 2009-14: Born 2009
0
5
10
15
20
25
30
35
40
45
50
-20 or
less
-20 to -
10
-10 to -5 -5 to -1 0 1 to 5 5 to 10 10 to 20 20+
%ofFirmsineachsizeband
Micro
Small
Med/Large

19. Contribution to Job Growth
2009-14: Born 2009
-100,000
-50,000
0
50,000
100,000
150,000
200,000
250,000
positive growth negative growth
Numberofemployees
med/large
small
micro
net change in emp=176,077

20. Start-ups (2013) – Surviving to 2014
sizeband N
Employees
2013
Employees
2014
%
growth
1-9 173,478 291,164 400,080 37.4
10-49 5,672 103,374 113,490 9.8
50+ 613 88,284 66,011 -25.2
Total 179,763 482,822 579,581 20.0

21. Start-ups 2013 - Contribution
to Job Growth 2013-2014
-100,000
-50,000
0
50,000
100,000
150,000
200,000
positive growth negative growth
Numberofemployees
med/large
small
micro
net change in emp =96,759

22. Headline Summary
• Micro-enterprises comprise just under 90% of all UK
employer businesses and just under 20% of
employees – constant over time
• Average size of micro-enterprises is ~ 3 employees
• Micro-enterprises found in all sectors - over 40% in
business services accounting for one-third of
employees
• Largest contribution to employment in a sector is
Construction – micro-enterprises accounting for 30%

23. Headline Summary cont’d
• Micro-enterprises not necessarily all young firms –
half are aged 5 years or more, one quarter aged 10+
• Around 37% of micro-enterprises survive 5 years
after birth
• Micro-enterprise survivors have the highest growth
rates of all size-bands – particularly in first 2 years

24. Headline Summary cont’d
• For cohort born in 2009 - 94% remain in same size-
band 5 years after birth – and around 50% have the
same (+/- 1%) employment
• The 40% that do grow (32,000 businesses) contribute
almost three-quarters of all gross new jobs within 5
years – in the period since 2009 as the economy
recovered

25. Thank You
• Contact details for further info
– Michael Anyadike-Danes m.anyadike-
danes@aston.ac.uk
– Karen Bonner k.bonner1@aston.ac.uk
– Mark Hart mark.hart@aston.ac.uk
This work contains statistical data from ONS which is Crown Copyright. The use of the ONS statistical data in this work does
not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses
research datasets which may not exactly reproduce National Statistics aggregates