A spike in new start-ups represents the biggest threat to established UK businesses, research by a financial firm indicates.

Business launches have escalated in recent times and 54,336 new firms opened their doors in March 2014 alone, a five-year peak.

Bibby Financial Services conducted a survey of businesses with turnovers below £25 million and found that 24 per cent – almost one-in-four – saw increasing domestic competition as their biggest challenge.

Jim Doherty, FD of a facilities management company based in the Wirral, said that the industry has become more competitive.

“We have definitely seen an increase in competition over the last few years, which has caused an increasing downward pressure on margins,” he said.

“As the sector is a combination of a few large players and many smaller companies – most have less than 10 employees – the larger businesses tend to buy out the smaller ones and contracts move around a lot, making it a very fluid sector.

He added: “This fluidity and pressure on prices means all smaller companies have had to raise their game to win contracts.”

Other threats outlined in the survey included the rising cost of materials, red tape, access to sufficient funding and a lack of skilled recruits.