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General Knowledge

This section contains information on General Knowledge (Business). As with the other sections it is in no particular order.

Q. Which is the most common form of business ownership in the UK today?

A. Sole Trader.

The latest statistics from the Small Business Service show that there are some 3,746,370 business enterprises operating in the UK.

  • Partnerships account for 557,570.
  • Companies for 862,270.
  • Sole traders, also known as sole proprietorships, account for the balance of 2,326,530.

Q. What is the major source of funding for an independent business?

A. Bank borrowings.

Total bank lending to small firms, according to the latest Bank of England was £41.4 bn, 11% up on a year earlier. Of the increase of £1.24 bn between June and September, fixed term lending accounted for £0.88 bn and overdrafts for £ 0.36 billion.

Total factoring and invoice discounting volumes were £22.1 bn, 17.2% higher than a year ago. No one really knows how much retained profits account for in SME finance but we do know from British Venture Capital Association's annual 'Report on Investment Activity' that total investment in the UK by BVCA members was some £6,371 million, invested in 1,182 companies.

The use of company charge cards has been growing fast, with an increase of 86% since 1995, as companies seek to streamline and control expenditure more rigorously. There are more than 1 million corporate charge cards in circulation with the largest use being for corporate hospitality, which in total is £0.69bn.

By any measure bank finance accounts for the lions share of SME finance and has done since statistics have been kept by the Bank of England.

Q. What proportion of private businesses close within 2 years of starting up?

A. 35%

Business survival rates show the percentage of businesses that are still trading a certain number of years after they first started. Those that are no longer trading should not be presumed to be failures. Some will have closed for other reasons - the owner may have retired; the business may have been taken over, or it might simply have changed its legal form, say from being a sole trader to a limited company.

There are two sources of survival rates:

Businesses that are registered for VAT can be tracked from the time they first register until the time that they notify Customs and Excise that they have ceased trading or that their turnover has fallen below the VAT threshold.

Barclays Bank also produce survival rates by monitoring business bank accounts that are opened and closed. The Barclays estimates of survival tend to be lower because they come into contact with many more of the very smallest one-person businesses, most of which are not registered for VAT. Such businesses have the lowest survival rates.

The latest figures from the Small Business Service show an average three year survival rate of 65% across the UK, up from 60% a decade ago. Surprisingly Northern Ireland has the highest survival rate of 72% and the North West of England the lowest at 61%.

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