Micro-firms were ‘best battlers’

UK micro firms proved more resilient in the recent economic downturn than their bigger rivals, new figures suggest.

Business data group Marketscan calculated the number of ‘growth businesses’ – measured on financial terms – in the tax year to March compared with the year before.

It found that while the total number of growth companies declined by 48% over the year, numbers of expanding micro-businesses – with between one and nine employees – fell by 43%.

The figures illustrate smaller businesses’ ability to adapt quickly when economic conditions turn for the worse. Big companies, meanwhile, must work harder to redirect themselves.

Julie Knight, managing director of Marketscan, said: “While Britain has avoided slipping into actual recession, the economic downturn has been considerable.

“Given that micro-businesses tend to be more exposed to internal and external market trends than international uk small firmscorporations, it seems surprising that they have fared better than larger businesses.

“This robustness may be partly attributed to the fact that many are service-based and can be more nimble, as they are able to strip out costs when necessary and absorb the impact of reduced profitability.”

Broken down into counties, the figures show that Derbyshire, Northumberland and Devon saw the smallest decline in micro-businesses, registering minus two, minus 20 and minus 29 respectively.

At the bottom of the table were North Humberside, Dorset and Cheshire, with minus 57, minus 54 and minus 53.

Company closures and falling profits usually outlast economic downturns because many businesses try to avoid cutbacks until they absolutely have to make them.

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