By Lynne Gowers on 15th June 2015

Micro-businesses ‘driving productivity in UK economy’

A new report has highlighted the increasingly critical role that self-employed people starting their own micro-businesses are playing in driving growth for the UK economy.

Compiled by the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA), in collaboration with Etsy, the Second Age of Small report has called on the British business community to recognise the positive impact these smaller firms are making nationwide.

According to the analysis, the number of micro-businesses – meaning firms with up to nine employees – has shot up by 50 per cent over the last 15 years, with their performance challenging conventional assumptions that the growth of the small business community would be accompanied by an economic decline, or the creation of lower-quality jobs.

In fact, micro-businesses are outperforming larger competitors in 12 of the UK’s 19 fastest-growing sectors, delivering higher productivity in areas such as health, education and social work, while staff satisfaction also tends to be higher.

According to the Global Entrepreneurship Monitor, 80 per cent of people think entrepreneurs have a high level of respect in society, while 55 per cent believe most people see starting a business as a good career choice.

Key drivers of this trend include the advent of new technology that make it easier than ever to start up a company, as well as a reduction in bureaucratic burdens by successive governments to make life easier for smaller organisations.

Meanwhile, the shift in the UK economy from a manufacturing focus to a service-oriented model has also suited micro-businesses, which are better placed to deliver tailored, responsive and close relationships with their clients than large monolithic corporations.

Benedict Dellot, senior researcher at the RSA, said: “Our research has shown that micro-businesses can thrive under the right conditions and provide far greater value to the UK economy than previously thought. We should not fear the second age of small – rather, we should celebrate its coming.”

Written by Lynne Gowers
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