SMEs: The Engine of UK Growth – But Are We Holding Them Back?

By: Simon Groom – CEO| MagnifyB

SMEs aren’t just important — they are the backbone of our economy. The UK is home to 5.5 million small and medium-sized enterprises, making up over 99% of all businesses, providing 60% of jobs, and contributing more than half of UK GDP.

When SMEs thrive, the whole UK economy thrives. But right now, too many are struggling with survival, growth, and global competitiveness.

The Reality Check

• Around 60% of new businesses fail within three years.
• The productivity of the lowest-performing SMEs is just 13% of the top performers — a huge gap.
• More than half of failures are blamed on “bad management”, but often it’s a case of “you don’t know what you don’t know.”

These statistics reveal the scale of the challenge — but also the opportunity.

Barriers to Growth

1. Access to Finance
   Startups needing small sums often find help. But high-potential businesses — those aiming for international markets — struggle to access growth capital. Our funding culture still applies bank-level risk models to government-backed loans. That mindset risks losing tomorrow’s scale-ups.
2. Exports & Global Competitiveness
   Only 11.4% of SMEs exported in 2023. The potential is vast, but entrepreneurs need practical support and clear routes into markets — not just another information portal.
3. Foreign Direct Investment (FDI)
   The UK attracted 1,555 FDI projects in 2023/24, but the benefits rarely trickle down to SMEs. We need better pathways to connect investors with smaller businesses — through hubs, clusters, and universities.
4. Regional Disparities
   While 84% of British Business Bank-backed firms are outside London, access to affordable finance remains uneven. True levelling up demands support that works nationwide, not just in principle.
5. Entrepreneurial Culture & Skills
   Finance alone isn’t enough. SMEs need confidence, digital infrastructure, mentoring, and simplified regulation to grow sustainably.

The Digital Game-Changer

None of this will succeed at scale without the right digital infrastructure. SMEs don’t lack ambition — they often lack the tools and insights bigger firms take for granted.

Modern digital systems can:

• Make enterprise-grade advice affordable.
• Provide forward-looking guidance, not just historic reporting.
• Deliver always-on support when decisions need to be made.

These tools can act as a force multiplier for policy, helping SMEs boost productivity, profitability, and cashflow — the essentials for success.

The Takeaway

Policy sets the framework. But digital platforms, finance access, and entrepreneurial culture are the engines that will power growth for all 5.5 million UK SMEs.

The challenge — and opportunity — is clear: create a support system that combines practical tools, joined-up policy, and the innovation of our professional community.

What’s the single biggest barrier you see holding SMEs back today — and how can our region’s business community work together to change it?