1 Use the definition of less than 50 employees accepted by both EU and UK government.
2 Using this definition the percentage of construction businesses that are small is: × 100 = 98.3%
3 All three of the industries chosen have a high proportion of small businesses (less than 50 employees). In retail the percentage is 97.4% and in hotels and catering the percentage is 95%. However, these percentages take no account of the value of output produced by these small firms as a percentage of total output in each industry. In addition, the percentage of very small firms (less than 5 employees) is greatest in the construction industry (78.9%).
4 The data certainly suggests that small businesses with less than 50 employees make a very significant contribution to the UK economy. However, the data is too limited to make a thorough assessment of this. Additional data that would have been useful would have been the total number of workers employed by small firms in the UK and the total number of workers employed in total. This would have allowed the percentage of all workers employed in small firms to be calculated. In addition, the value of total output in the UK could have been compared with the value of output produced by all small firms to allow a further judgement of the relative importance of small firms to be made.
Case study: Why small businesses are vital to the UK, page 8
1 An economy based on skilled workers, innovation