The UK government seeks to support and expand the number of small businesses operating. SMEs have a number of potential advantages:

SMEs are encouraged into markets by the government as they create competition for incumbent firms which can help to lower prices and/or improve quality of the output (1m)

SMEs are often nimble and innovative and can encourage dynamic efficiency in the market.

Successful SMEs grow in size and offer many employment opportunities too especially in areas of above-average unemployment.