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November 07, 2014

The rise of the super SME

The rise of the super SMENew research has highlighted the significant contribution that Britain’s fastest growing smaller companies are making to the UK economy.

According to a report commissioned by Octopus Investments and produced by the Centre for Economics and Business Research (CEBR), just 1% of the UK’s businesses are fuelling 68% of employment growth and generating 36% of the UK’s economic growth.

These high-growth small businesses (HGSBs) are defined as having an annual turnover between £1 million and £20 million and with average annual growth greater than 20% over a three-year period.

The report found that, on average, these super SMEs created nearly 5,000 new jobs a week from 2012 to 2013 – which represents two out of three of all new jobs created in that time and more than 250,000 jobs across the UK altogether.

Simon Rogerson, CEO of Octopus, said: “This report shows just how vital these companies are to our economy – they are not just the lifeblood but the lifeline to our economic growth and recovery. We often hear about the value and importance of enterprise and high growth companies, but for the first time this report quantifies the sheer size of the contribution made by these companies.”

Graham Brough, CEO of CEBR, said: “The contribution of HGSBs to UK economic and employment growth is staggering – much higher than a first glance at their small size would suggest. Our survey of 400 such businesses however highlights the particular and important challenges that they face in their journey towards further expansion. Access to capital, skills shortages and the rate of taxation in particular were found to be key issues.”

There are currently 30,000 HGSBs in the UK, following an 18% rise in HGSBs between 2011 and 2013. The report shows that more than one third of HGSBs are located in London and the South East – and it highlights the correlation between underperforming regional economies in the UK and the absence of HGSBs.

John Allan, national chairman of the Federation of Small Businesses (FSB), said: “The report shows that some small firms play a disproportionately large role in creating growth, innovation and new jobs. It highlights how important it is for policy-makers to give their backing to small businesses and endeavour to create a business support environment that allows these businesses to grow and prosper.”

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