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UK small businesses lose value

14 November 2017

UK small businesses lose valueThe average value of small businesses in the UK is dropping, with restaurants and cafes in London being hit the hardest according to new research.

A survey by the business sales website Bizdaq has looked at data from nearly 7,500 small business valuations performed over the past three years, to chart the average value of small businesses across the UK.

Its latest findings show that the average UK small business is worth £90,000 in 2017, down from £94,000 in 2016 (although up from £89,000 in 2015). Some businesses have lost more value. These include cafes, which have dropped 15% in a year, from £53,000 in 2016 to £45,000 in 2017.

Meanwhile, the average value of small manufacturing businesses has increased by £93,500 in a year, climbing to an average of £418,500 from £325,000 last year.

There are some significant geographical differences in SME values, according to the findings. Small business values in the North have remained almost the same, while values in the South have fallen from £97,000 to £91,000.

However, London small business values have plummeted, with average prices in the capital falling by £20,000 in a year - from £115,000 in 2016 to just £95,000 in 2017. This drop is five times higher than the average drop seen in the rest of the UK. Falling values are especially apparent in the capital's restaurants and coffee shops.

The value of a London coffee shop has fallen from an average value of £92,000 to just £62,000 in a year; and the average value of a restaurant in London is now £97,000, down from £140,000 in 2016.

Sean Mallon, ceo of Bizdaq, said: "It's frustrating to see that small businesses are reducing in value across the UK, leaving the nation's small business owners with diminishing levels of return on their hard work and investment. In a period of economic uncertainty however, this is not unexpected.

"A business's value is in many instances tied to revenues, and particularly profit, so falling values may be indicative of a fall in these across the board, with a recent rise in interest rates putting further strain on the UK's small businesses."

Falling profits, he said, are often caused by rises in variable costs such as business rates or utilities. Mallon added: "I would urge the Government to work harder to relieve the strain on small business owners and allow them to make a fair return on their hard work. This should include allowing them to protect their investments through tax allowances when exiting their small business."

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