Despite only accounting for less than 1% of the 5.3 million companies in Britain, high-growth small businesses (HGSBs) are responsible for around 20% of the UK’s economic growth. This was among the findings published in the High Growth Small Business Report 2015 compiled by Octopus Investments.
This annual study closely analysed the impact of Britain’s 22,470 HGSBson the economy. These types of small businesses manage to achieve more than 20% average annual growth in turnover over a three-year period – reaching figures ranging between £1 million and £20 million.
Besides the financial boost, these firms were responsible for the creation of one in three jobs in the UK last year – triple the amount created by the top FTSE100 companies. The report outlined how working to increase the numbers of HGSBs by 25% would lead to an additional 170,000 jobs and £22.5 billion turnover.
Tom Thackey, Head of Enterprise at the Confederation of British Industry (CBI) praised the disproportionate success of these businesses.
He said: “We need to encourage more businesses to grow and create the right ecosystem across the country in which both current and future high growth small businesses can reach their potential.”
Where are these high-growth small businesses located?
A strong regional presence is indicated from the fact that 70% of these HGSBs are located outside of London and spread out across the UK. London has the highest amount with 6,500, followed by the North-West with 1,900 and Scotland with 1,300. The lowest number of HGSBs can be found in Wales (600) and Northern Ireland (400).
Most of these small business powerhouses are located in the construction sector (3,577), admin and support (3,016) and manufacturing (2,490). Only one in ten of these firms are in the technology sector.