News & Insight

The real cost of 370,000 small businesses closing? 1.8 million jobs

Christian Nellemann

New research predicts tough times ahead for British SMEs, and their employees.

A survey released by Bizdaq – an online marketplace for buying and selling businesses – has found that 370,000 small businesses plan to close their doors over the next five years.

And with an average of 5 employees working for each company, that could put 1.8 million jobs at risk.

Is this a government blind spot?

There are few subjects of rhetoric more popular in the Houses of Parliament than ‘job creation’. But this survey suggests that any effort to create more jobs over the next five years will be undone by job losses through the closure of small firms.

Aside from the 370,000 businesses planning to cease trading, 424,000 small business owners plan to quit by selling their business – a choice that could protect jobs. But many experts believe the government isn’t doing enough to support and educate small business owners to allow them to easily pass on the businesses they’ve built.

The situation is most serious in London, where 43% of small businesses plan to close, without selling, over the next five years. It’s all a timely reminder that entrepreneurs are essential to UK employment – far more essential, in fact, than we tend to recognise.

Small business entrepreneurs and job creation go hand in hand

I’m not convinced that enough attention is paid or credit given to the positive impact small businesses have on employment. I think it’s too often overlooked, which perhaps explains why this latest piece of research hasn’t been given much publicity.

Here are some useful stats to consider. Small businesses make up 99.3% of all private sector businesses, and SMEs as a whole make up 99.9%. SMEs are responsible for 60% of all private sector employment, and small businesses specifically provide jobs for nearly half of our population.

Combine these stats with Bizdaq’s survey, and the message is loud and clear: if we want to create and protect jobs in the UK, we need to protect small businesses. And that requires less rhetoric, and more action.

Let’s create jobs, and protect them too

It’s incredibly disappointing to hear that 370,000 small businesses are not only planning to close, but aren’t planning to sell their business in the process. And there’s an absurdity to all of this too.

The Conservative government’s trump card continues to be its apparent ability to stimulate business growth and creation – and the by-product, happily, is more jobs. Meanwhile, the issues of preventing small businesses from closing, and preventing small businesses from closing without selling, get far less attention. But it doesn’t take a genius to spot the flaw here – isn’t it actually easier and more vital to protect, support and educate businesses that are already up and running?

Of course, what we really want is a government that does both; a government that helps aspiring entrepreneurs to start a business, and a government that helps existing small businesses to survive and protect their employees. If we have that, we’ll create, and save, a lot of jobs.