Why microbusiness matters

Recent years have seen a rapid increase in microbusiness activity. Capturing the nature of this change in the business population is important. And to achieve this we need the right measures and categories of business activity.

The rising prominence of microbusinesses – those businesses with less than ten employees – relates to important trends in the growth of self-employment and home-based business activities. Such trends are being driven by technological change, greater use of outsourcing and project-based working and wider labour market transformation associated with increased flexibility, entrepreneurship and job insecurity. One consequence of rising microbusiness activity is an increased number of unregistered businesses. It was estimated that 56% of UK businesses were not registered for VAT or PAYE in 2015.

There is a need to develop a fuller and more coherent understanding of the registered and unregistered microbusiness population – those operating both above and below the radar – to inform policy and research. This requires drawing together and evaluating the wide range of existing surveys, research and analysis to identify what knowledge is being built. It also requires consideration of how we can improve existing measures and categories of business to capture better the changing business landscape. The Microbusiness Research Portal has been created to meet these research and policy needs.

The policy implications of increasing microbusiness activity are profound. They relate not only to the critical role of microbusiness in shaping current and future economic and business growth but also to a range of other policy areas, such as planning, urban design, housing, innovation, technology, families and life-course, and community development.

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