Are management consultants a dying breed?


By Itrat Bashir

Business person looking at statisticsRecent figures relating to UK business released by the Office for National Statistics (ONS) shows a positive trend in the growth of enterprises, which has been continuously increasing since 2011.

The new statistics, ‘Business Demography data for 2014’, reveal that the number of UK business births increased by 1.2 percent from 346,000 to 351,000 between 2013 and 2014, a birth rate of 13.7 percent; the highest recorded since comparable records began in 2000.

The figures reflect the confidence of new entrepreneurs in the prevailing economic environment; undeterred and continuing to take bold steps to start their own business.

The declining figure of businesses ceasing to trade (known as death rate) must also be adding confidence among business owners, sensing a good chance of success with their new venture. The death rate decreased from 9.7 percent to 9.6 percent between 2013 and 2014, the lowest death rate in the UK since 2008.

Looking at the figures from a broad industry group perspective, in 2014 the highest rate of business births continued to occur in business administration and support, at 20.7 percent, the same rate as 2013. The second highest rate occurred in finance and insurance at 17.6 percent, compared with 16.9 percent in 2013. Within the overall number of business births, professional, scientific and technical had the largest number of businesses at 78,000. Within professional, scientific and technical, the largest contributing industry was management consultancy activities, with 30,000 births (this was an increase of 1,000 on the 2013 figure).

The highest business death rate, at 13.1 percent, was accommodation and food services (previously the second highest rate at 12.7 percent in 2013). This was followed by business administration and support, at 11.0 percent, compared with 10.7 percent in 2013. Within the overall number of business deaths, professional, scientific and technical had the largest number, at 45,000 (of which 17,000 came from management consultancy activities) followed by construction, at 31,000.

Interestingly, management consultants took one of the hardest hits with a substantial death rate of 17,000 businesses in 2014, more than 50 percent of the startups within this industry.

Within the regions, London had the highest business birth rate at 17.7 percent followed by the North East (14.0 percent) and North West (13.7 percent). Northern Ireland had the lowest birth rate, at 8.7 percent. The region with the highest business death rate was London at 10.6 percent, followed by the North East, at 10.2 percent. Not surprisingly, the highest number of births and deaths were in London, at 89,000 and 53,000 respectively.

Federation of Small Businesses (FSB) viewed the survival rates as a positive story. It believes that the latest figures indicates a leveling off of improvements to business survival rates with the rate of business births decreasing by 0.4 percent while the rate of business deaths fell by 0.1 percent between 2013 and 2014.

Commenting on the numbers, FSB National Chairman John Allan said that these figures provide an interesting insight into the entrepreneurial spirit that has helped drive the recovery over the past five years.

“In recent years, business births have seen unprecedented levels as more people see self-employment and starting out in business as a rewarding career choice. Coupled with the gradual gains in business survival rates, assisted by the improving economic outlook and a range of helpful policy measures, this has led to more than 5.4 million businesses in the UK.”

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