News & Insight

The average value of the UK's businesses fell by 4000 pounds this year

Oliver Jones

New data shows the average value of small businesses is in decline.

Research by Bizdaq, an online business transfer agent, shows average value of small businesses is in decline, down to £90,000 in 2017 from a peak of £94,000 this time last year.

The decline is particularly bad in London, where average value has fallen by a chunky £20,000. Worst hit are coffee shops, who’ve had a full third of their value wiped off the books, while restaurants have lost about £40,000 of their value, on average.

A separate report published last August showed that restaurant sales in London are slowing relative to the rest of the country, as consumers reduce their spend on meals out. Like-for-like sales declined 3.6% from September 2016 to September 2017.

How are the Bizdaq figures calculated?

Bizdaq’s numbers are based on how much a business owner could expect to make if they were to sell their business. The reduced sale prices are thought to reflect a fall in consumer spending and rise in business costs.

The fall is concentrated mainly in the South, which has seen a £6000 fall in average value, compared to a small £1000 dip in the North – but southern businesses are still worth £2000 more on average.

Closing the North-South divide

Back in 2016, the Federation of Small Business reported a hefty North-South divide, especially when it came to business confidence. North East England, Yorkshire and Scotland felt far less confident about their economic futures than the South.

But with business confidence in London stalled at -11.4 on the Business Confidence Index (though up from a -17.3 low-point recorded immediately after the Brexit referendum), and with just £2000 North-South difference in average business value, the gap may be closing.

Manufacturing boom

In another surprising turnaround, manufacturing businesses have climbed in value by around £100,000 on average. A weak pound is credited with making British manufacturing exports more competitive, and the industry has benefitted from technological innovations in robotics, automation and additive printing.

Manufacturing growth rose by 0.7 this September, vastly outperforming expectations, with some hailing a “fourth industrial revolution”, also known as Industry 4.0.