Definitions of Micro, Small and Medium Businesses in the UK Economy

Posted on October 30, 2013 by

SMEs (small and medium-sized enterprises) are the lifeblood of the UK economy, they account for 4.8 million (99%) of all private sector businesses in the UK. SMEs significantly impact the promotion of economic and social development such as employment generation, poverty reduction, wealth, innovation and social integration.

SMEs are classified into micro enterprises and small and medium enterprises. In this article, we will discuss briefly micro, small and medium businesses in the UK.

Definition of micro, small and medium businesses in the UK
According to European Commission, there are two main factors that help in determining whether a company is micro, small or medium business. They are, the number of employees in the organization and the turnover or balance sheet total. A business is defined based on these criteria:

  • Micro Business: A micro business is one that has less than 10 employees with a turnover or a balance sheet total of less than €2 million.
  • Small Business: A small business is one that has less than 50 employees with a turnover or a balance sheet total of less than €10 million.
  • Medium Business: A medium business has less than 250 employees and has a turnover of less than €50 million or a balance sheet total of less than €43 million.
Enterprise Category Headcount: Annual Work Unit Annual Turnover or Annual Balance Sheet Total
Micro <10 ≤ €2 million ≤ €2 million
Small <50 ≤ €10 million ≤ €10 million
Medium – Sized <250 ≤ €50 million ≤ €43 million
  • Total Number of Enterprises, Employment and Turnover of SMEs in UK

Enterprises Employment Turnover (£ billions)
No employees 3557000 3902000 208 £ billions
Micro (0-9 employees) 4580000 7750000 624 £ billions
Small (10 -49 employees) 178000 3471000 454 £ billions
Medium (50-249 employees) 30000 2909000 450 £ billions
Total SME (0-249 employees) 4788000 14130000 1529 £ billions
Large ( 250 + employees) 6000 9763000 1603 £ billions
Total, all enterprises 4794000 14130000 1529 £ billions
SMEs as % of total 99.00% 59.00% 49.00%
Micro as % of total 96.00% 32.00% 20.00%

Source: BIS , Business Population Estimates (2012)

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