Statistics

STATS

Government Statistics

The statistics shown in these 2 reports are the number of Small to Medium Enterprises in the United Kingdom by sector and by turnover.

The UK government defines SMEs as three categories, based on employee numbers and turnover:

  • Microbusiness – less than 10 employees and an annual turnover under £2 million
  • Small business – less than 50 employees and an annual turnover under £10 million
  • Medium-sized business – less than 250 employees and an annual turnover under £50 million

Number of SMEs in the UK by sector 2023

Number of SMEs in the UK by turnover 2024

Source: Statistica.com (taken from the Office of National Statistics)

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The size of the environment companies are bought and sold in

  • 1

    80% of all businesses that are put up for sale do not sell. Internet search tends to support this comment as at least accepted folklore. There are 3 main reasons commonly attributed to this:

      • Owner reliance
      • Unrealistic price expectations
      • Poor financial reports
  • 2

    88% of business owners hoped, in the early years of growing their business, 20 years earlier, while their children were still at school that the business will stay in the family at the time they retire. Most are wrong. The world changed around them. Only about 30% of family-owned businesses survive into the second generation, 12% are still viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond. If your own family won’t take on your business, who will?

  • 3

    As the baby boomers head for retirement, who is going to swoop in and take on the business the boomers are looking to sell? Generation X is 40% smaller than the post-war generation. Are there going to be many potential buyers with the money or the skills to take on your business?

  • 4

    There are 40% fewer potential buyers for your business.

Item 1 is an interesting (at least folklore) statistic, sure: but some added perspective is that, according to the Federation of Small Businesses, the following

STATS

Composition of the business population

  • In 2023, there were estimated to be 5.6 million UK private sector businesses.
  • 1.4 million of these had employees and 4.2 million had no employees.
  • The UK private sector business population is made up of 3.1 million sole proprietorships (56% of the total), 2.1 million actively trading companies (37%) and 365,000 ordinary partnerships (7%) in 2023.
  • 2.6 million private sector businesses are registered for VAT or PAYE, 48% of the estimated total population.

For anyone buying a sole-trader business, they are simply buying themselves a job, defining owner reliance. However, many companies of up to £2 millions turnover, often with 10 or more employees are little better. The few companies in this framework which do actually find a buyer, are purchased for this reason and have taken years to sell and most do not.

BUSINESS OWNER

Steering Sales Price expectations

Many companies may well have quite a few personnel but if all major functions of operations require the owner’s decision, technical know-how, permission, contribution or, indeed sole action, and, additionally often the case, the owner’s spouse is the book-keeper, the company is a sole trader with employees. Company owners often operate this way to save costs, or because the business does not generate sufficient profit to pay good staff.

In these circumstances, at the time of attempting a company sale, the single largest asset intends to leave the company. At that instant the owner’s anticipated increase to the EBITDA multiple plummets, as costs to the new owners rises to employ competent, experienced managers: which should never come cheap.

  • The new owners will need to replace many of the functions carried out by the owner by separate people, at a much higher cost than the owner paid himself. When these costs are factored into reducing his accountant’s EBITDA calculation, often made worse by him imagining an unrealistic multiple of EBITDA (which only huge multi-nationals with world renowned branding achieve) because his sales agent told him, it can be so disappointing for the owner to receive offers much lower than his expectations so that he refuses all offers to purchase – often ending up closing the company 10 years later because a buyer was never accepted. If you know your company stands out –

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