Why Small Business is Key to Economic Growth in the West Country

With a combined population of around 1.5 million people, Devon and Cornwall are home to a enterprising population, not to mention stunning scenery.

As we know, the region is home to some of Britain’s most popular tourist destinations; including Dartmoor National Park, countless stunning beaches and some of the best small towns in the country (OK, we might be biased there).

The importance of small businesses within local economies cannot be underestimated and this goes for double in Devon, and more so for Cornwall. Small business accounts for 99% of all private sector employment in Devon & Cornwall, which equates to around 800,000 jobs across both counties.

The Importance of SMEs in Devon and Cornwall

In 2016, small businesses, or SMEs, employed more than 100,000 people and contributed over £7 billion to the regional economy.

In Cornwall, micro-enterprises (businesses with fewer than 10 employees) make up 80% of all businesses; this compares to an average across England of less than 50%. They contribute around £1 billion annually to the local economy through their output and employment levels – about 15% of total private sector turnover in Cornwall.

Micro-enterprises tend not only to be small but also young: over half have been established since 1990 compared with just 25% nationally; moreover, almost one third were founded between 2010 and 2020 – twice as many as elsewhere in England.

In Devon, there are nearly 58,000 businesses registered, and the majority of these businesses are small to medium enterprises with a dynamic micro business population.

A recent report by Business Live states that the number of businesses in Devon has grown for five straight years, with over 5,000 new businesses created each year. In fact, Devon and Cornwall have a higher self employment rate than the national average of 13%. In Devon the figure is around 25% and in Cornwall 24%.

This highlights the fact that small business is a major employer in both Cornwall and Devon, making them a critical part of the economic structure.

The Impact of Small Businesses

Small businesses are the backbone of our economy, creating jobs and driving economic growth.

The key factors that small businesses provide to local economy include:

• Creating employment opportunities for people in the local area;
• Improving the GDP (gross domestic product, or the average value generated) by the local area;
• Diversifying the economy to rely less on larger corporate businesses who are often profit driven and may relocate if an area stops serving a purpose;
• Supporting other small businesses by purchasing goods or services from them (this is known as “the multiplier effect”);
• Improving the perception of the region nationally and internationally.

In short, there are many reasons

Challenges Faced by Small Businesses

Despite the important of SMEs to the local economy, there continue to be several barriers faced by founders and business owners. These include:

• Access to finance: The most common challenge faced by small businesses is access to finance. Many banks have reduced their lending, which means that it can be difficult for small businesses to get the money they need.
• Lack of resources: Another issue is that there are not enough support services available for entrepreneurs who want to start up their own business but don’t know how or where to begin. The FSB and local chamber of commerce are always a good source of information and assistance to local businesses.
• Digital skills gap: There is also a lack of digital skills among many people who want to set up their own companies, meaning that they may struggle with things like marketing and social media management, especially in the west country. One of the main problems is the brain drain effect, where the majority of graduates leave the region after leaving university.

Another issue is that with the loss of graduates to bigger cities such as Bristol or London; Devon and Cornwall both lose out on the pioneering startup spirit of the younger generations. This means they tend to rely more on either long term residents or returning professionals.

Government Initiatives

There are a number of government initiatives that can help you to start your business.

Devon Get Started is scheme backed by Devon County Council, available to anyone aged 25 or over starting a business in Devon.

The Start Up Loans scheme offers loans of up to £25,000 per person who want to start a business, or who have been trading for up to 36 months. This is ideal for people who have the business plan in place, but don’t have enough money saved up yet.

For most government business loans, you will need to have the framework for your business including a business plan. Check a business startup checklist to help you get ready to apply for investment.

Support Services

Small businesses are the lifeblood of our economy and the backbone of our community. They provide jobs, economic growth and prosperity for Devon’s residents. Small businesses are also key to a thriving rural economy as they help keep people in their local communities while providing services that might not otherwise be available there.

The government understands this important role that small businesses play in our society, which is why they have created programs like Business Link (Business Advice), Start Up Loans (Funding) and Local Enterprise Partnerships (Support Services).

Conclusion

In conclusion, small businesses are key to economic success in Devon and Cornwall. Small businesses create jobs, which in turn help people earn money so that they can support their families and pay for their needs. If you own a small business or are thinking about starting one, don’t be afraid to take the plunge. There are lots of resources available for business development in Devon and Cornwall.

Read more in our online business startup guide.