It might be known for its characteristic fog but it’s pretty clear that things are looking good on the horizon for small businesses in the Big Smoke. New research carried out by Everline and the Centre for Economic and Business Research (Cebr) has shown that by 2025, revenues amongst micro-enterprises in the capital are set to increase by more than double their Northern counterparts. The finance and accounting sector is one of the most confident in its turnover forecasts for the next decade.
Ecliptic optimism for London’s small businesses
Despite the government outlining plans to boost the Northern Powerhouse in the Summer Budget earlier this year, London’s small businesses are due to ‘eclipse’ the rest of the country come 2025. 
Research predicts that these companies will rake in a revenue increase of more than £160,000 during the ten-year time period, while only £82,000 is expected around the country as a whole. This puts a gap of more than double in-between the two regions and explains why confidence levels among London’s small businesses is flying so high as of late. This is particularly true of the finance and accounting sector which is predicting an individual turnover growth of 44%.
The collaborative study between Everline and Cebr consisted of a survey of more than 500 small business decision makers and was part of Everline’s wider Small Business Tracker, which exists to support micro-ventures. Interestingly this research did reveal that business bodies in other Southern areas outside of London aren’t experiencing the same level of optimism, with almost a quarter predicting zero turnover. This is a curious statistic considering small businesses just a stones throw away are confident that they will be seeing a 44% increase in revenues over the same time period. Growth expectations in Scotland are less at 37% and even lower in the Midlands at 31%.
COO of Everline, Russell Gould said: “With the average turnover of small businesses in London already more than 80 per cent higher than that of other regions, businesses in the capital look set to move further ahead of the rest of Britain, with revenues forecast to increase by around £162,000 by 2025 compared to the £82,000 increase expected around the country as a whole.
“This is particularly telling given the government’s commitment to devolving more powers to the regions and creating small business hubs outside of the capital.”
With every silver lining comes a cloud
Although there is plenty of reason to celebrate for those small businesses in London looking forward to a bright future, company owners shouldn’t get too complacent just yet because there is still work to be done. There is even more work to be done for those regions that aren’t feeling so optimistic to better the environment in which their small businesses are hoping to succeed and grow.
Gould added: “Although small business growth has increased dramatically in the last ten years, it’s clear from our Small Business Tracker that more needs to be done to encourage a similar decade of growth and instil confidence in our small business network, especially outside of London.”
Economist at Cebr, Sam Alderson cites a lack of engagement with digitalisation and modern technology as being one of the main factors that is stunting the growth of some small businesses across the country. Despite the digital sector becoming more and more important every single day, micro-companies still aren’t investing a sufficient amount of time or money into it. A separate Everline survey found that a fifth of small businesses devote no time to digital activity, which rises to 30% in the Midlands and 22% in the South. While the cases are lower in the capital, a lack of engagement with the potentials of e-commerce is still a relevant issue.
He said: “A few years ago small businesses could be forgiven for thinking that sophisticated technologies were only within the reach of larger corporations who could afford the up-front investments. However, while there is still more that can be done to reduce the costs, digital technologies are becoming increasingly accessible to smaller businesses. Given the multitude of benefits that technologies can bring, from shaving time off everyday tasks to broadening a customer base, more could be done to promote and support the uptake of digital technologies in the nation’s small businesses.”
Access to finance and the ongoing skills shortage are also high up on the list of curveballs that could rear their ugly heads and change any positive predictions over the next ten years unless something is done to address them. A separate Everline survey published earlier this year showed that nearly half of small business decision-makers experience cash flow challenges at least twice a year, while 13% admitted to having problems every quarter. A lack of working capital and traditional lending also seem to posing a threat as more than a quarter found this cash shortage to be severely restricting their growth.