According to the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) the micro business (defined as a business with 0-9 employees) community is booming.

The RSA, in it's report 'The Second Age of Small', says that the number of micro businesses in the UK economy has increased in number from 3.5 million in the year 2000 to 5 million today. That contrasts, it says, with the number of all other sized firms where numbers have either fallen or increased only very marginally.

This translates into micro businesses providing 33 percent of private sector employments and 19 percent of total output says the report.

Although traditionally regarded as an inferior business model to the larger ones that can provide economies of scale, the RSA says they can do well in the faster growing sectors and are also "well placed to engage in 'intangible' innovation – the creation of new concepts, experiences and designs – that is vital to industries like music, food and media".

Tool Belt (PD)The RSA also likes the way that micro businesses are able to keep a workforce motivated and satisfied despite lower wages and less job security.

"Micro businesses are often painted as inefficient, lightweight and an overall drain on our economy. But our research finds that many are in fact thriving, boosted by new technologies, changing consumer habits and a pro-business policy agenda. So are we at the dawn of a 'second age of small'?" says the report.

Reacting to the report the Chief Executive of the Association of Independent Professionals and the Self Employed (IPSE), Chris Bryce, said:

"This report confirms much of what we know about the self-employed. They work incredibly hard and are a significant driver of the UK's productivity but often don't get the recognition they deserve. There is a very important message to get out about working for yourself. While it may be hard work, the self-employed are more satisfied with their jobs and are more enthusiastic about their work.

"The smallest businesses need the right kind of support so they can continue making the difference to the UK's economy. One area needing action is our payment culture. A shocking 85 per cent of small businesses suffered from late payment in the last two years – this is simply not acceptable. It holds back businesses from investing in new staff and equipment and can even mean people aren't able to pay themselves or their workers. Plans to implement IPSE's proposal of a Small Business Conciliation service are welcome and need to be pushed forward by the Government in the coming months.

"Developing new skills is also often trickier than it should be for those running their own business. This is because of the way the tax system treats training for the self-employed. Making training for new skills tax-deuctible would provide a real boost to those entrepreneurial individuals looking to grow their business and help the self-employed boost the UK's productivity levels."

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