Business development · 20 July 2015

North’south divide to hit small business revenue over the next ten years

More can be done to develop the small business network outside of London
Where to base your business is a big concern for all small firms and the latest research from e-lender Everline and the Centre for Economic and Business Research has found those based outside the capital may have reason to be concerned. The gap between London and the North looks set to double in the next ten years.

Over 500 small business decision makers were surveyed as part of the Everline Small Business Tracker and it found London businesses were most optimistic about their growth prospects, expecting revenues to increase over the next ten years by an average of 44 per cent 162, 000 to 528, 000 in 2025. This is more than double the turnover expected by small businesses in the North, anticipating growth of 33 per cent or 65, 000 to 263, 000 in the same period. A fifth don’t expect to see any increase at all.

Interestingly, it’s those in the South, who look to be most pessimistic about their growth prospects, as nearly a quarter predicted zero turnover by 2025. The average small business in this region only expects 33 per cent or 61, 000 growth. Small businesses in the Midlands expect to see growth of 31 per cent (£63, 000), while those in Scotland expect to see 37 per cent (£80, 000).

Sectors which looked particularly lively included media, marketing, PR and sales, with an expected revenue hike of 45 per cent by 2025, which could see turnover rising by 330, 000. The finance and accounting sector, as well as the IT and telecoms sector also looked set for a good period of growth anticipating a 43 per cent increase in revenue.

Russell Gould, COO of Everline, said: With the average turnover of small businesses in London already more than 80 per cent higher than that of other regions, businesses in the capital look set to move further ahead of the rest of Britain, with revenues set to increase by around 162, 000 by 2025 compared to the 82, 000 increase expected around the country as a whole.

The government has reiterated its commitment to establishing a Northern Powerhouse, with George Osborne promising to invest 7bn in the region, saying the once hollowed-out city centres are thriving again, with growing universities, iconic museums and cultural events.

George Osborne has pledged to develop a Northern Powerhouse
As well as 235m going towards a new science institute and a devolution deal of 1bn, the chancellor said the Northern Powerhouse would be established for a truly national recovery.

Gould said that the government’s commitment to devolving more powers to the regions and creating small business hubs outside the capital was particularly telling. While small business growth has increased dramatically in the last ten years, he said it was clear from the tracker that more needs to be done to encourage a similar decade of growth and instil confidence in our small business network, especially outside of London.

The disparity may in part be due to lack of digital development. Over a third of small firms in the North dedicate only a fraction of their financial resource to digital activities, such as buying and selling online. They also plan to keep online expenditure flat over the next ten years or even intend to reduceit. In London, this was a lower figure of 26 per cent.

Sam Alderson, economist at Cebr, said: A few years ago small businesses could be forgiven for thinking that sophisticated technologies were only within the reach of larger corporations who could afford the up-front investments. However, while there is still more that can be done to reduce the costs, digital technologies are becoming increasingly accessible to smaller businesses.

Those that do sell online make an average of 810, 000 through this channel, meaning over 1.5m small firms across the UK are missing out on a significant potential revenue boost by failing to capitalise on the ecommerce marketplace.



Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

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