• Sat. Mar 2nd, 2024

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The most profitable industry in the UK for SMEs

As of January 2021, there were 5.6 million private sector businesses in the UK. Described as the backbone of the UK’s economy, SMEs account for 99.9% of all businesses in Britain. 

Intrigued to find out more about the SME market, and as part of their new business statistics report, the business finance team at money.co.uk delved into the latest findings to conclude which business sector makes the most profit in the UK

A breakdown of median profit made by UK SMEs (2021)

Data reveals that SMEs in the business and property services have the highest profit in the UK, at £13,000. With house prices currently at a record high, it’s no surprise that business and property services are amongst the sectors making the most profit in the UK. 

Ranking joint first place was the wholesale and retail sector, which made a profit of £13,000 throughout 2021. Although the high street has struggled recently due to the pandemic and rising costs of inflation, online retail sales have excelled. In 2021, around 29 percent of retail sales were made online in the UK, making the sector one of the most profitable.

Data suggests that the median average profit of SMEs in the UK was approximately £11,000 in 2021. 

The health and social sector reportedly made the lowest average profit in 2021 at just £9,000

Business Performance of SMEs in the UK (2012 – 2021) 

Research found that by the fourth quarter of 2021, 53% of SMEs in the UK had made a profit in the previous 12 months, compared with 7% that broke even, and 18% that made a loss. 21% of businesses either didn’t know or refused to comment

The research reports that until 2020, the share of SMEs that made a profit was relatively stable. In 2020 however, this share fell from 73% in the first quarter of 2020 to 47% in the second quarter of 2021, due to an influx of external factors such as the pandemic, rising inflation costs and cost of living crisis. 

Data reports that by the end of Q4 in 2021, 21% of SMEs were borrowing more finance than they needed to before the pandemic. 

To conclude, James Andrews, senior personal finance expert, said: “Business performance has been tumultuous over the last few years, with the number of businesses making a profit decreasing since 2019 – before the COVID-19 pandemic had even begun. Despite businesses starting to make profit again in the second half of 2021, the cost of living crisis is inevitably going to have a significant impact on UK SMEs this year and beyond.

“However, it’s not all doom and gloom. The property/business services and wholesale and retail sectors made the most profit in 2021, accumulating £13,000 – £2,000 more than the median average profit of all UK SMEs.”

By admin