Ten years of tracking the UK's small businesses: The findings

The 2024 Longitudinal Small Business Survey marks 10 years of tracking how small and medium-sized employers are performing, and the story this year is one of steady resilience under strain.

Growth has slowed, concerns about tax have surged, and innovation is slipping back, even as firms continue to invest in people and technology.

Here are some of the survey's key findings.

Growth under pressure

• Hiring and sales have softened. Around a quarter of SMEs hired staff in 2024 while a similar share cut back.

• Medium-sized firms proved most resilient, especially in education and transport, but contraction hit manufacturing and hospitality.

• Only one in five businesses expected to expand their workforce in 2025, down from stronger optimism in recent years.

• Turnover growth also cooled. Just over a third of SMEs saw their sales rise (compared with 41% in 2023), while 30% reported a fall. Profits held steady for most, though margins were tightest in health, education and hospitality.

Exporting and importing

• Only 17% of SMEs exported last year, the lowest level since before the pandemic. Among them, 77% sold to EU markets and 71% to countries outside the EU, with the US remaining the top non-EU destination.

• Half of exporters plan to expand, but only 3% of all small firms intend to start selling overseas. Imports have stabilised, with sourcing from the EU recovering slightly.

Finance and late payment

Many firms continue to rely heavily on outside investment, with seven in 10 using some form of borrowing or credit.

Use of bank loans and government grants rose sharply in 2024. Applications for new finance ticked up, and the typical amount sought – around £40,000 – continues to rise.

One in five firms expects to seek funding over the next three years, suggesting there continues to be demand despite it being more expensive to borrow. Late payment remains widespread but has eased slightly.

Innovation and technology

Fewer firms are innovating, with declines across products, services and processes. Investment in research and development (R&D) investment has held steady at around 16% of firms, though fewer are claiming R&D tax credits.

Yet digital adoption continues to climb. Nearly 70% of SME owners now use web-based tools to run their businesses, up sharply from 2022.

Taxation tops the list of obstacles

For the first time since the survey began in 2015, taxation overtook all other issues as the biggest barrier for small firms.

Six in 10 SMEs now cite VAT, Pay As You Earn (PAYE), National Insurance contributions (NICs) or business rates as major obstacles. Energy costs have eased but remain a concern, while red tape and skills shortages also weigh heavily.

Advice, training and future plans

A quarter of SMEs sought outside advice in 2024, mostly on finance, growth and the law. Training levels were flat, with less than half of firms investing in developing their staff's skills.

The ambition to grow remains strong but is muted by rising costs. Over 50% of firms say higher prices have forced them to delay their plans to recruit employees or innovate.

Who small businesses are today

The SME population is ageing. Fewer than one in 10 firms have started in the past five years, and women-led businesses have dropped to 14%, continuing a worrying downward trend.

Ethnic minority-led SMEs remain steady at 6%, and for the first time the survey included business leaders who have a disability.

The takeaway

After a decade of data, this year's survey underlines a clear message – Britain's small employers are holding the line, but growth and confidence are under pressure.

Read the full results from the survey