South West Regional Skills Enterprise and Employment Analysis 2007/2008

Final Report

5.2 Small enterprise activity

The South West has the highest proportion of small enterprises of any region in the United Kingdom. Effective support for new and existing business is therefore one of the key tools for supporting increased productivity.

Other indicators of entrepreneurial activity in the South West include(85):

• Entrepreneurial Activity – on a par with the UK average, at 37 start-ups per 10,000 population;
• Survival rates for South West businesses are high; both the one-year and three-year survival measure are better than the national average;
• Higher than average proportion of SMEs – highest proportion of small enterprises, classified as employing fewer than 50 employees, of any region in the UK;
• Good use of new technology - highest level of start-ups that used new technology than any other region (29.9% of all start-up activity) and a good proportion using or producing technology that was not available the previous year. This is an indication that South West firms have been relatively active in adopting new technology which bodes well for future development prospects;
• High Proportion of Businesses in Agriculture and Tourism – Agriculture and Tourism are important sectors of the economy, reflecting the rural nature of the region. However they are often smaller businesses with lower growth potential.

SMEs have particular competitive advantages in the enterprise economy, due to their speed of response compared to larger corporations where ideas have to grind through layers of management and evaluation processes. Hence entrepreneurs and dynamic SMEs are seen as drivers of innovation and growth. They are also, collectively, major employers of young people accounting for 75 percent of youth employment according to the Labour Force Survey.

Analysis of Rural Businesses and the Rural Economy shows that, on average, the size of businesses decreases with rurality:

72% of urban businesses had zero to four employees, while 83% of businesses in isolated rural areas had this level of employment (South West average is 76%).

The provision of training and support needs to be fit for purpose for rural micro and small businesses. The significant contribution that rural businesses make to the region is significant.

(85) Regional Economic Strategy for the South West of England 2006-2015, South West RDA