The UK’s small businesses are driving an estimated £1,000billion through their local economies each year, according to research by Yorkshire Bank.
The new research by the Bank looked at the economic impact and involvement of small and medium sized enterprises (SMEs) on their local areas. The survey of SMEs found that in the West Midlands more than half (54%) used suppliers all or mostly from within a 10 mile radius of their business.
According to the Bank’s research, a further 15% of SMEs in the West Midlands are looking no more than 25 miles away; the recirculation of money within the local economy is potentially enormous.
In addition, the SMEs surveyed in the West Midlands stated that just over half (52%) of the business they do is with local customers, people from within 10 miles, meaning that they are bringing in billions of pounds to their economies from outside the area.
UK SMEs turnover around £1,500billion each year, with around two-thirds of that estimated to stay in the immediate vicinity; Yorkshire Bank has calculated that the impact of this local investment is around £1,000billion for those economies.
Regionally, the financial impact of SMEs runs in to many billions of pounds, according to the Bank’s estimates:
| Region |
SMEs* |
Employees |
Total Average T/O |
| London |
748,000 |
2,244,000 |
£246,973,365,617 |
| South East |
745,000 |
2,235,000 |
£245,982,830,729 |
| East ofEngland |
474,000 |
1,422,000 |
£156,504,512,437 |
| North West |
453,000 |
1,359,000 |
£149,570,768,215 |
| South West |
427,000 |
1,281,000 |
£140,986,132,512 |
| West Mids |
333,000 |
999,000 |
£109,949,372,661 |
| Yorks & Humber |
332,000 |
996,000 |
£109,619,194,365 |
| East Mids |
307,000 |
921,000 |
£101,364,736,958 |
| North East |
119,000 |
357,000 |
£39,291,217,257 |
| Scotland |
290,000 |
870,000 |
£95,751,705,921 |
| Wales |
193,000 |
579,000 |
£63,724,411,182 |
| NI |
122,000 |
366,000 |
£40,281,752,146 |
| Totals |
4543000 |
13629000 |
£1,500,000,000,000* |
*Source: Dept. Business Innovation & Skills
On average, each of theUK’s 4.5million small businesses is responsible for employing three people, and generates a turnover of roughly £330,000 each year.
While the evidence from the research suggests that SMEs are doing the majority of their business locally, a significant number are combining this with their use of the internet. A quarter of those questioned said they relied on the internet to do most of their business.
Stephen Cronin, managing partner at Yorkshire Bank’s Business Banking Centre at the Ricoh Arena inCoventry, said: “Small businesses are the very heart of local communities and the life-blood of their economies, from the newsagent to the garage owner to the family-run manufacturer or engineering firm. Our economy is reliant on them to generate wealth and jobs.
“These businesses may be small, but they are responsible for almost two thirds of jobs and half the turnover of all British business. The success of these small businesses, from the sole trader upwards, is the key to growth not just in local economies, but in the recovery of theUKas a whole.”