RSA and Etsy to examine boom in micro businesses

The RSA and Etsy, the ecommerce website, launched The Power of Small, a new partnership aimed at examining the dramatic growth of microbusinesses across the UK.

The number of firms with 1 to 9 employees has grown by 40 percent in the last decade alone and since 2010 a remarkable 500,000 microbusinesses have been created. These microbusinesses may be small but they are powerful - they now account for a third of all private sector employment in the UK (almost 8 million people) and a fifth of private sector turnover.

An examination by the RSA of the 2012 business population estimates (recently released by the ONS) revealed that the North East has half the number of businesses proportionally to London but numbers are growing at more than twice the rate of capital (14.6 percent compared with London's 6.5 percent).Wales and Northern Ireland have, however, suffered a shocking decline in entrepreneurialism with a shrinking business population proportional to their population.

The Power of Small will ask what is life really like for micro-business owners? How much of the growth is due to economic necessity and how much due to changing lifestyles? Will the community shrink once the economy returns to full health? And what does the trend mean for how we operate as a country? The 18 month partnership will:

• Expose the origins and nature of microbusinesses – exploring the current make-up of the microbusiness community and why it has grown in recent years

• Examine their impact on the economy and wider society –examining what microbusinesses mean for jobs, innovation, living standards, and attitudes to welfare

• Consider how government, business and civil society can capitalise on this growth

• Explore the make-up and impact of the UK’s Etsy community – looking at how their microbusinesses might be better supported

Commenting on the launch, RSA Director of Action and Research, Adam Lent said:

"Following the financial crash, the phrase 'too big to fail' has become all too familiar. An economy with its core sectors under the control of a wider range of small companies would be less risky for the long suffering tax-payer and more stable for all. Our partnership with Etsy is not a reductive case of big business bad, small business good. It’s about the recognition that the economic game will be more stable, fairer and creative when power and resources are distributed more widely to more players."

Commenting on The Power of Small, Senior RSA Researcher, Benedict Dellot said:

We know surprisingly little about the motivations and hopes of the people who run microbusinesses. How many, for example, run a micro-business primarily because it gives them greater autonomy and the freedom to be creative and how many are looking to make their fortune? How many are running their businesses to allow them to care for elderly relatives? We simply do not know.”

The aim is not just to find out more about microbusiness for its own sake. Ultimately, we want to help government, support organisations and, of course, microbusinesses themselves understand how small-scale enterprise can build the more creative society for which both the RSA and Etsy are aiming.”

Early research by the RSA found that:

• Since 2010 a remarkable 500,000 microbusinesses (firms with 1-9 employees) have been created.

• The number of workers in self-employment has reached record levels, with close to 16.5 per cent of the workforce now sole traders.

• Over the last forty years the total number of businesses in the UK has grown from around 800,000 to almost 5 million.

• Over 97 percent of these employ less than nine people meaning they are officially 'microbusinesses', representing a big shift in the way our economy works.

• Many more people are starting up mini-ventures/beta businesses that sit alongside their typical jobs.

• Microbusinesses are also becoming a powerful vehicle for allowing the most disadvantaged groups in society to fulfil their potential, such as those suffering from mental illness.

• Many microbusinesses started life due to the necessity of caring for elderly or disabled relatives and with an ageing society this trend looks set to grow.