Growth Spurt: 1.6 Million Small Businesses Double Their Revenue in a Month
New research published by Direct Line for Business reveals that for 1.6 million of the UK’s small businesses it is normal for their revenue to double or halve in certain months of the year. These large fluctuations in revenue make business and cash flow management difficult. Businesses and the services they use need to be flexible and willing to continually adapt, as more than a quarter (26 per cent, or 1.5 million) state their revenue fluctuates wildly month to month.
Controlling employee numbers is one way to manage these fluctuations as businesses scale staff up and down to cope with changes in demand and income at different points of the year. Twenty-three per cent of small businesses have had to employ more staff because of rapid expansion.
However, these uncertainties don’t seem to be putting entrepreneurs off as the UK SME industry continues to grow. In the past year, 53 per cent of SMEs reported an increase in revenue, with one in 20 of these (three per cent) experiencing revenue growth of more than 50 per cent.
There has been a 23 per cent growth of VAT registered SMEs in the last five years, with 2.7 million now operating within the UK. This has been driven by the 25 per cent increase in the number of microbusinesses (those that employ fewer than 10 employees), which now stand at 2.4 million.
In 2017, there were 381,885 business ‘births’ in the UK, an increase of 10 per cent on the figure recorded in 2013. This was largely driven by the number of new businesses registered in Northern Ireland (41 per cent increase) and the North West (35 per cent increase). London continued to see the highest number of new business start-ups, with 92,300 SMEs registering in the capital in 2017, accounting for almost a quarter (24 per cent) of all those formed in the UK.
Jazz Gakhal, Managing Director at Direct Line for Business, said: “Small company owners and operators are amongst the most resilient and adaptable business leaders in the UK. Fluctuating revenues and demand can be difficult to manage, but British SMEs continue to thrive. It’s important, however, that if revenues and employees fluctuate that businesses ensure they have appropriate insurance cover and are making updates to their policies as needed to prevent them being under or over insured. With some insurers this can be expensive because they charge admin fees to make changes to the policy.
“We recognise that insurance needs to keep up with the changing needs of businesses and operators shouldn’t be penalised for progress, so we don’t charge our customers an admin fee to make mid-term amendments, meaning they can make as many changes as they need to ensure they’re properly insured.”
For more information about Direct Line’s Small Business Insurance visit the website here!