Ben Law, head of GoDaddy in the UK, says micro business owners are passionate about what they do
Ben Law, Head of GoDaddy UK
According to the government, of the 6.0 million businesses currently operating in the UK, 5.936 million fall into the small business category, employing between zero and 49 people. Break the numbers down further and you’ll find that the vast majority of small businesses – 4.567 million, to be precise – are run solely by their founders.
So what does that tell us? Well, first of all, many people work for themselves or in very small businesses, and the sheer numbers doing just that suggests that micro-enterprises – collectively speaking – make a significant contribution to the UK economy and society as a whole.
But how much contribution exactly? Well, a new report from GoDaddy, a website building tools company, argues that micro-enterprises — defined in the study as companies with up to 10 employees — are not only an important part of the economy, but also play an important role in the process could “leveling” disadvantaged regions of the UK.
Godaddy’s VentureForward report, prepared in collaboration with George Saridakis – Professor of Entrepreneurship and Small Business at Kent Business School – identifies around 2.0 million companies that operate with ten or fewer employees on their books.
more diverse
And as the pandemic unfolds, she’s finding that ownership of these companies is becoming younger and more diverse.
For example, the proportion of micro-enterprises founded and run by under-35s has doubled since 2020, rising from 16.4 to 34 percent of the total. In the same period, the proportion of women has increased from 32 to 39 percent. Ethnic minority-owned businesses now account for 15.1 percent of the total, compared to 13.2 percent in 2020.
All of this has encouraged GoDaddy to claim that a “new breed of entrepreneurship” is emerging in the UK in the wake of the Covid crisis.
That’s probably true to some extent, but it raises questions about the definition of entrepreneurship. Many micro businesses – and I’m one of them – are essentially self-employed freelancers who don’t necessarily view their careers from an entrepreneurial point of view. At the other end of the spectrum, at least some of today’s micro-enterprises employ people and can grow into tomorrow’s SMEs or mid-sized companies. In this respect, it is an entrepreneurially very mixed segment of the economy.
So, can you summarize them in one report and draw conclusions about entrepreneurship? Ben Law – head of GoDaddy in the UK – says there is a common factor. “Micro-business owners tend to have a passion,” he says. “They have a passion for what they do and that drives them.”
viable ventures
Perhaps more importantly, micro-business owners in the UK are creating viable ventures, albeit often on a small scale. “What’s really encouraging is that more than half of the companies launched in 2020 are now generating an average turnover of £25,000. Around three-quarters of micro-enterprises employ more than one person,” says Law.
community benefits
Well, in an entrepreneurial world that tends to reserve its credit for companies that report stellar sales, generate employment in the hundreds, and secure millions of VC funders, those numbers probably don’t sound all that impressive. But as Law points out, Britain’s micro-enterprises benefit collectively and individually from their communities. They employ local people, buy from local shops and usually look for suppliers nearby.
And according to Law, micro-enterprises should contribute to the regional leveling-up agenda that is (supposedly) central to UK policy-making. Simply put, the growth of the micro-enterprise sector – made up of businesses that can often be started with very little capital and yet have the capacity to generate revenue in weeks or months rather than years – can contribute to economic prosperity in disadvantaged regions.
The big division
But here’s the problem. The UK economy is characterized by a north-south divide, with the areas around London and the South East persistently more prosperous than many of the regions across the country. Perhaps unsurprisingly, this is reflected in the figures for micro-enterprises.
If you want to find a micro-entrepreneur you will find the highest density in London, the South East and the South West.
In this regard, the potential for micro-enterprises to help equalize in disadvantaged regions of the UK is not yet matched by on-the-ground activities. And according to Law, the government is not doing enough to encourage very small business creation. “We are making policy decisions to support small and medium-sized businesses, but not enough is being done to support the smallest businesses,” he says.
That support isn’t necessarily financial in nature – although access to capital is clearly helpful. Law says businesses need support in areas like self-marketing, online access and technical expertise. “We need to figure out how to get educational materials to micro-enterprises,” he says.
It has to be said that the micro-business boom is likely linked in part to job losses during the pandemic, and the report notes that an increasing number of owners have cited unemployment as a trigger for action. Nevertheless, it is also true that many people have seen the pandemic as an opportunity to rethink their lives and try something new. And as the number of self-employed and small business owners grows, their future economic contribution could be important.
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