I have a problem with the term SME.
Not because it is technically wrong. It just covers such an enormous range of businesses that I’m not convinced it is particularly useful when we start talking about support, funding and growth.
Launch NW is a microbusiness.
Yet under the definition used in public procurement, we sit under the same SME umbrella as a business with 249 employees and turnover of up to £44 million.
We are both SMEs.
We are clearly not operating with the same resources, capacity or challenges.
And when you look at how many UK businesses are actually at the micro end of that scale, I think we should be talking about this more.
95% of UK Businesses Have Fewer Than 10 Employees
According to the latest UK Government Business Population Estimates, there were approximately 5.69 million private sector businesses at the start of 2025.
Around 4.27 million had no employees beyond their owners, while another 1.15 million employed between one and nine people.
Together, that means approximately 95.3% of UK private sector businesses have fewer than ten employees.
Just 220,085 businesses employed between 10 and 49 people.
So businesses at the very smallest end of the scale are not some niche section of the economy.
They are the overwhelming majority of it.
Yet when we talk about business policy, support, procurement and funding, we regularly reach for the same three letters.
SME.
A Microbusiness Is Not a Smaller Version of a 40-Person Business
This is where I think the distinction matters.
A business with three people does not have a smaller HR department than a business with 40 people.
It probably doesn’t have an HR department.
It might not have somebody responsible solely for finance, marketing, training, procurement, compliance or business development either.
Very often, several of those jobs sit with the same person who also has to deliver the work that actually pays the bills.
Time away from the business has a different impact. The cost of taking somebody off the job for training has a different impact. Absorbing another piece of administration has a different impact.
The Government’s own research shows those differences quite clearly.
In 2024, 39% of micro employers provided staff training compared with 72% of small businesses.
Only 25% of micro employers sought external business information or advice, compared with 35% of small and 44% of medium-sized businesses.
Micro employers were also less likely to use external finance: 70% compared with 82% of small businesses and 87% of medium-sized businesses.
These are different businesses behaving in different ways.
So why do we keep designing so much “SME support” as though one approach can reasonably serve all of them?
The Government Knows There Is a Difference
This is the bit that really interests me.
The Government already knows micro and small businesses are different.
Its own regulatory guidance requires officials to consider the impact of regulation separately on small businesses with fewer than 50 employees and microbusinesses with fewer than 10.
Its Backing Your Business strategy also says that supporting SMEs requires “recognising the diversity” of the SME population.
So the distinction exists.
The data exists.
The Government measures it.
But when we get into the language of business support and policy, those distinctions have a habit of disappearing again.
SME Support – But Which SME?
Take Help to Grow: Management.
It is a Government-funded programme designed to help SME leaders improve productivity and grow their businesses.
But businesses need between five and 249 employees to take part.
So a four-person business is an SME when we count it in the national business population, but too small to access that particular SME growth programme.
That is not me saying Help to Grow is a bad programme. It may be exactly right for the businesses it serves.
It simply demonstrates the problem with the umbrella.
When someone says a programme is “for SMEs”, that tells a microbusiness owner almost nothing about whether it has actually been designed for them.
Public procurement gives us another example.
Government procurement rules define an SME as having fewer than 250 staff and turnover of no more than £44 million, or a balance sheet total of no more than £38 million.
Again, technically fine.
Practically, a business employing two people and a business employing 249 can sit in the same headline category.
That is an enormous difference.
Andy Burnham Says He Wants a Stronger Business Voice
This feels particularly timely now.
Since becoming Prime Minister, Andy Burnham has talked about building a new relationship between Government and business.
On 24 July, he promised businesses greater certainty, faster decision-making and a stronger business voice in shaping policy. Earlier this month he sat down with small business owners and said he wanted to make it easier for businesses to invest, grow and plan for the future.
And today, as businesses look towards the October Budget, he is again talking about reducing the pressures facing businesses and making the operating environment easier.
Good.
I genuinely welcome that conversation.
But if we are going to strengthen the business voice in policymaking, I think we need to ask which businesses are being heard.
Because a roundtable containing a business employing 200 people cannot automatically represent the experience of one employing three simply because both have SME written next to their names.
Maybe We Need to Stop Starting With SME
I understand why the term exists.
Government needs categories. Data has to be grouped somehow. Nobody expects completely bespoke policy for 5.7 million individual businesses.
But perhaps SME has become too convenient.
It allows us to talk about almost the entire UK business population as though it were one group, when the businesses inside it can be worlds apart.
And when 95% of UK businesses have fewer than ten employees, surely the microbusiness experience should be central to conversations about business support rather than an adjustment made afterwards.
That might mean shorter programmes.
Smaller funding requirements.
Less complicated application processes.
Support that can be accessed around actually running the business.
Procurement opportunities that recognise capacity as well as turnover.
And perhaps, sometimes, simply asking microbusiness owners what would make a difference before designing the thing intended to help them.
Micro Needs Its Own Voice
I’m not arguing that microbusinesses need special treatment; I’m arguing that they need to be recognised for what they are.
The Government already makes the distinction when it collects the statistics and assesses regulation.
It needs to survive beyond the spreadsheet.
Because the smallest businesses in Britain are not a tiny minority asking to be accommodated.
Businesses with fewer than ten employees make up around 95% of the UK private sector business population.
If Government genuinely wants a stronger business voice around the table, there are an awful lot of us who should be part of the conversation.
Nichola.
