Micro businesses boomed in the last five years

Nearly 400,000 companies are trading in the UK that run on staff of just one or two, a new set of research has found.

Information company, Experion, found that the number of these 'micro-companies has exploded in the last five years, having numbered just 140,000 in 2005. They have also been found to suffer the lowest insolvency rates and have the second healthiest financial score compared to other businesses.

The managing director of Experion UK, Charlotte Hogg, said the increasing number of people creating their own employment has is an inevitable consequence of the recession.

"We do think the recessionary period has been a trigger but the credit quality of these one or two man businesses has been very strong," she said. "The challenge seems to come when you get to 10 employees to 100 employees - that's where insolvency rates double."

She said that young men were leading the way with these businesses, with the number of 24-year-olds working for themselves increasing by 62 per cent in the last five years. There was also a significant rise in women getting involved in micro enterprise – rising 72 per cent since 2005 – although women over the age of 60 were more likely to be directors than younger women.

The study looked at the 4.3 million directors registered on Experion's UK database.