Uswitch reveals SMEs account for 44% of UK turnover
New analysis from Uswitch business savings accounts experts has shed light on the impact of SMEs in local communities, and how much these communities thrive in terms of employment and wealth in the economy.
By analysing recent data sets including number of employees working at SMEs vs larger corporations, overall retail sales, unemployment benefits claimed per authority and more, Uswitch experts have laid out how communities benefit from small businesses. These findings have also been broken down by sector, revealing which types of small businesses encourage the most growth for their local economies.
SME expert Andy Elder has also provided his top tips on how to encourage consumers to shop at your local business.
Small business job creation
Small businesses are vital drivers of economic growth, generating employment opportunities across many industries. Their ability to adapt quickly to changing market trends allows them to expand and recruit talent, often becoming a stepping stone for individuals entering the workforce.
A recent ONS study found that SMEs (less than 250 staff) accounted for 45% of all UK employees and 44% of UK turnover in 2023, highlighting that SMEs make up a substantial amount of UK business employment and turnover, even though they are considerably smaller than their large enterprise counterparts.
Uswitch worked out the % change between 2022 and 2023 for both count of employees and the turnover of SMEs with less than 249 employees, in the UK.
Total number employees | No. of employees in 0-249 size businesses | |
2022 | 30,503,374 | 13,619,446 |
2023 | 30,963,788 | 13,800,435 |
% change | 1.51% | 1.33% |
Total turnover (£) | Turnover in 0-249 size businesses (£) | |
2022 | 6,084,361,021 | 2,640,506,134 |
2023 | 6,334,790,635 | 2,741,446,712 |
% change | 4.12% | 3.82% |
Looking at the increase year on year in both the number of employees and total turnover of SMEs, indicates that small businesses are a growing market, creating more employment opportunities.
Business size vs unemployment
Uswitch found that there was a slight correlation with local authorities where a greater proportion of businesses have under 50 employees and a lower rate of the population claiming unemployment benefits, further supporting the theory that small businesses create jobs in local communities.
Uswitch has demonstrated, using the table and graph below, the correlation between SMEs and persons claiming unemployment benefits:
% of businesses with less than 50 employees | claimant rate |
96.00% | 4.06% |
97.00% | 3.86% |
98.00% | 3.66% |
99.00% | 3.46% |
Small business retail sales contributions
Uswitch further examined how much SMEs contributed to sales and broke this down by industry using an ONS report. Small retailers (less than 100 employees) – made up 22.52% of sales in 2023 – a slight increase from 2022 (22.07%). Their YoY sales rose by 5.2%, compared to only 2.4% from large retailers.
Small food stores saw a YoY sales increase of 11.1%, compared to 8% for larger stores.
Small clothing businesses saw a rise in sales of 32.9%, compared to 2.9% for larger retailers.
These figures underscore the significant impact of small businesses across various sectors. Not only are they driving impressive year-over-year growth, but they are also outpacing their larger counterparts in key industries like food and clothing.
Which SME industries boost local economies the most and the least?
In 2023, food store small businesses contributed £28.8bn to retail sales, whereas non-food stores contributed £54.1bn. Uswitch found that non-food retail stores are therefore the highest contributors to their local communities, with household goods accounting for the most £12.4bn, followed by textile, clothing and footwear (£10.5bn).
How small businesses contribute to local economies
A recent Federation of Small Businesses study, revealed that many communities have flourished due to small business support.
The research examined how small businesses shape their communities, finding that:
80% of FSB members have volunteered and/or contributed to a local community organisation or charitable cause in the last three years. Of those that have, the most common ways to contribute are by donating their time (38%) and providing skills, resources and mentoring (32%).
27% of FSB small businesses hold a position within their local community.
42% of small businesses engage with schools, colleges and youth organisations.
41% of small business employers offer work experience either as part of the recruitment process or through their community outreach.
Top tips on how to encourage consumers to shop small
Andy Elder, Uswitch business savings accounts expert, has put together ten, simple tips for encouraging consumers to shop at your small business:
Build relationships: Greet customers warmly and get to know them personally by engaging in genuine conversations to establish trust and a personal connection. Make sure you consistently check in without being overbearing, so they feel valued rather than sold to.
Unique experiences: Offer exclusive products and a memorable shopping atmosphere. If you have the time, consider hosting in-store events like product launches or themed shopping nights to create a sense of excitement and community.
Social proof: Share testimonials and collaborate with local influencers who align with your brand to showcase your products authentically. You can also highlight milestones, such as your shop being featured in local media, to reinforce credibility and trust.
Use technology: Maintain an active online presence by updating your website and social media profiles with current products, promotions, and engaging content. It’s also a good idea to introduce a user-friendly loyalty program, accessible via an app or email, to reward repeat customers.
Educate customers: Position yourself as an expert by hosting workshops, demonstrations, or informational sessions related to your products or industry. If you don’t have the time or resources for this, instead you can share useful tips, tutorials, or behind-the-scenes insights through blogs, videos, or social media. Educated customers feel empowered and are more likely to return for guidance.
Create urgency: Run time-limited offers and seasonal promotions to encourage consumers to spend. Highlight phrases like “limited stock” or “offer ends soon” to encourage prompt action.
Reward loyalty: Offer discounts, early access, or personalised perks such as birthday discounts or handwritten thank-you notes to show genuine appreciation for your customers’ continued support.
Make shopping easy: Ensure your website is mobile-friendly, with smooth navigation and easy checkout options. It also helps increase the chance of a customer completing a purchase if you provide multiple shopping options, such as click-and-collect, same-day delivery, or flexible return policies.
Highlight local identity: Celebrate your community by featuring products from local artisans, using local ingredients, or supporting local causes. Share the story behind your business and its connection to the area to foster a sense of pride and belonging among your customers. Consider showcasing local events, landmarks, or cultural traditions in your branding.
Listen and adapt: Actively seek feedback through surveys, reviews, or casual conversations, and implement changes based on customer input. Always make sure you follow these up by letting customers know how their feedback has influenced improvements, to demonstrate that their voice matters.
Andy Elder concludes: “It’s clear to see that small, local businesses are continuing to grow in popularity with consumers, with a recent study finding 51% of consumers prefer to shop small to support their local community and economy, and 38% felt that small businesses provided better customer service and quality of products.
Shopping at small businesses is more than just a transaction; it’s an investment in the community. By choosing local stores, consumers help create jobs, retain money within the local economy, and encourage the unique character of their neighbourhoods to thrive.”