It’s estimated that around 370,000 small businesses owners plan to cease trading within the next five years, with another 42,000 likely to sell their business on, according to a new report by business marketplace firm Bizdaq.
Small Business Closures
Bizdaq’s ‘UK Small Business Closure Report 2016’ arrives at these worrying estimates based on research conducted on its behalf by Opinium, which surveyed 300 small businesses.
“Using our responses we’ve been able to paint a picture of the average UK small business, and found that the average UK business makes £89,840 a year, employs 4.85 people and that 34% of small business owners are looking to exit their business in the next 5 years, “ says the report.
If their predictions are accurate, this could mean that 1.8 million jobs are at risk over the next 5 years, with a potential loss of 370,000 in the next year. The research also revealed that:
- London business owners are most likely to be thinking about an exit within the next five years, with 43% of them considering it.
- Small business owners in the East of England appear happiest, with only 11% of them considering exiting.
Making It Pay
The report also calculated the average revenue of companies according to their employee numbers and location, estimating that:
- A sole trader has an average revenue of £29,166
- Small businesses with 2-5 employees have an average revenue of £96,750
- Small businesses with 6-49 employees have an average revenue of £176,441
- The average revenue of a small business in the UK is £72,000
- The highest average small business revenue seems to be in East Midlands, at over £130,000
- The lowest average revenues are in London, which has an average revenue of just over £58,000.
These figures are interesting, as they indicate that a lack revenue is not the sole or most important factor behind the decision to exit a small business – as the East of England businesses appear to have both the lowest annual revenue and the least desire to close their business, while small business owners in the East Midlands, with the highest average revenue, are in second place behind those in London when planning to exit their business..
Sean Mallon, CEO of Bizdaq, said: “It is astonishing, given the government’s rhetoric around job creation, that little is being done to preserve the number of jobs at risk within Britain’s small businesses. If the government were to make leaving a business easier and promote this as the “norm”, then hard working small business owners could capitalise on their efforts and we could retain over 1.8m jobs – it’s a win-win situation.”