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Construction ranks second worst for growth in SME numbers

Construction is one of the worst performing sectors for growth in SME numbers, new research has shown.

Of 10 industries measured by Hampshire Trust Bank, in conjunction with the Centre for Economics and Business Research, construction ranked the second lowest for increased volumes of companies with under 250 employees between 2010 and 2015.

The number of SMEs entering into the construction industry increased by just 4 per cent to 284,425 over that time, according to analysis of official data.

The national average rate for SME growth stood at 17 per cent over that time, according to the research.

Only the retail sector had fewer small businesses enter it in the five years to 2015, while the technical and professional sector – including legal and design workers – saw a whopping 39 per cent growth in SME numbers.

More than a quarter of construction companies polled said competition in the market was the biggest barrier to SME growth.

Planning costs and access to appropriate finance were also identified as factors hindering SME growth in the sector.

Just under half of SMEs in the construction industry said they were optimistic about the long-term economic prospects for their sector.

Hampshire Trust Bank managing director of property finance Robert Grigg said: “What is crucial is that the government focuses on how these SMEs can be more competitive quickly, to not only take a step towards boosting sector growth, but help more people take their first steps onto the housing ladder.”

Research conducted earlier this month by online property finance marketplace Lendinvest showed the number of SME housebuilders had plummeted by more than 80 per cent from 1988 to 2014.

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