The Enterprise Research Centre (ERC) has warned that Britain is failing to unlock one of its most powerful economic assets, as micro-businesses with the potential to drive GDP growth are being constrained by regulation, complexity and neglect.

In the latest episode of the ERC’s Exploring Enterprise podcast series — Micro Business: The Untold Story — researchers and practitioners examine why the UK’s smallest firms remain overlooked despite their central role in the economy.

Professor Mark Hart, speaking on behalf of the ERC, said the issue is both structural and urgent.

“Micro-businesses are fundamental to the UK economy. They are not peripheral — they are central to productivity, job creation and local growth. Yet too often they are either ignored in policy design or burdened with systems that don’t reflect how they operate in practice.”

The discussion highlights a persistent imbalance. While micro-businesses account for the vast majority of UK firms and a significant share of economic activity, policy frameworks often prioritise larger organisations or impose compliance requirements that disproportionately affect smaller operators.

As a result, many owners spend more time navigating regulation than growing their businesses.

“There is a clear opportunity to improve GDP growth by enabling micro-businesses to scale, invest and employ,” Professor Hart added. “But that requires a shift away from one-size-fits-all policy towards an approach that reflects the realities of running a small firm.”

The podcast explores how overlapping regulatory changes, fragmented support systems and rising administrative burdens are combining to create a sustained drag on growth across the sector.

For many owners, the challenge is not a lack of ambition but a lack of clarity and time. Identifying relevant support, understanding compliance obligations and adapting to constant policy change places disproportionate pressure on small teams.

The episode also considers how better coordination between national and local support, alongside digital platforms, could simplify access to trusted guidance.

The collaboration with Business111 reflects a shared commitment to bridging the gap between research, policy and the lived experience of micro-business owners across the UK.

Micro Business: The Untold Story is part of the ERC’s Exploring Enterprise podcast series and is available now across major podcast platforms and YouTube.

Notes to Editors

The Enterprise Research Centre (ERC) is a leading UK research organisation focused on small business and enterprise dynamics, based at Warwick Business School.

Professor Mark Hart is a leading UK expert on entrepreneurship and small business growth.

Exploring Enterprise is the ERC’s podcast series examining key issues affecting UK SMEs. https://www.enterpriseresearch.ac.uk/podcast_series/exploring-enterprise/

Business111 is a UK-based platform supporting micro and small businesses through curated guidance and community engagement.

Micro and small businesses account for over 99% of UK firms and play a critical role in employment and economic growth.

Media contacts: Professor Mark Hart — wendy.ferris@wbs.ac.uk Liz Barclay — tony@business111.com

In this episode of the Business111 Coffee Pod, the conversation turns to one of the biggest frustrations facing micro and small business owners: policy instability. Samantha Acton, founder of Domestic Angels, explains why constant legislative change creates uncertainty that many small businesses simply don’t have the time or capacity to absorb.

Running a micro business often means wearing every hat — HR, operations, marketing, finance and customer service — often while juggling family responsibilities and the realities of day-to-day trading. Samantha describes how policy shifts can feel relentless, with new rules arriving just as businesses have finally adjusted to the last set of changes. For larger companies with compliance teams this may be manageable, but for a small employer it can mean late nights, extra costs and a great deal of anxiety.

The discussion highlights how multiple regulatory changes are arriving at the same time for many businesses. From the Employment Rights Act and increases to minimum and living wages, to the rollout of Making Tax Digital for those earning over £50,000, many small employers are facing what Samantha describes as a “policy pile-up”. While each reform may have merit individually, the combined impact can be overwhelming when implemented simultaneously.

One consequence, Samantha argues, is that business owners become more cautious about hiring. When margins are tight and compliance costs rise, the safest choice is often to recruit experienced staff rather than take a chance on newcomers to the workforce. In some cases, businesses avoid employment entirely by turning to the growing “fractional” economy — hiring independent specialists on contract rather than taking on permanent employees.

The conversation also explores the financial risks attached to employment for very small firms. Sick pay, holiday pay and other statutory responsibilities can place a heavy burden on businesses with only one or two employees. Samantha argues that many policies are well-intentioned but constructed without fully understanding how risk is distributed in micro-businesses, where the owner’s own income often disappears if a member of staff is absent long-term.

At its heart, the episode raises a simple question: how can policymakers create stability and balance for the country’s smallest employers? Samantha’s view is clear — micro businesses need more consistent policies, longer lead-in times and, crucially, a genuine seat at the table when legislation affecting them is designed. Without that, the people creating the majority of the UK’s businesses may remain unheard.

Episode two of three

More information on Domestic Angels - https://franchise.domestic-angels.com/

From a blank sheet of paper to a national franchise network — Samantha Acton’s story shows what the UK’s micro-business economy really looks like in practice. In this episode, the founder of Domestic Angels explains how curiosity, persistence and plenty of hard lessons helped her grow from a one-person operation into eight franchises employing around 50 people across the country.

Samantha speaks candidly about the toughest part of building a business: employing people for the first time. From learning payroll the old-fashioned way with pencil and paper to navigating HR issues without established processes, she describes the steep learning curve many first-time employers face. Her experience highlights a common reality for micro-business founders — the determination to create jobs often comes long before the systems and guidance needed to manage them.

The conversation also tackles a wider issue affecting millions of UK entrepreneurs: the fragmented nature of business support. Samantha argues that the country’s 4.8 million micro-businesses need something simple and practical — a single place where employers can access clear, legally correct guidance on hiring, policies, and payroll without paying expensive membership fees or hunting through multiple websites.

Drawing on research from the Enterprise Research Centre, the discussion also explores the wider economic and social role of micro-businesses. These small firms create jobs at a disproportionate rate, sustain local economies and provide flexible work for people balancing caring responsibilities or part-time employment.

It is a conversation about lived experience — and why the UK’s smallest businesses deserve a much bigger voice in how policy, support and economic planning are shaped.

Episode one of three

More information on Domestic Angels - https://franchise.domestic-angels.com/