A closer look at the UK's sole traders

The government's latest Longitudinal Small Business Survey gives a rare close-up of how the UK's sole traders are coping – and changing.

Now in its 10^th year, the study focuses on the country's self-employed people, freelancers and one-person companies who make up most UK businesses, but whose voices are often quieter in policymaking.

The results show ambition returning after a tough few years. More sole traders are planning to grow and even to take on staff, but financial strain and competition remain powerful brakes on progress.

Growth returning, but patchy

Fourteen per cent of sole traders had employed someone in the past year, the highest figure since before the pandemic.

Nearly one in five expect to hire in the year ahead, with confidence strongest in the manufacturing, administration and construction sectors.

Yet the headline numbers on turnover and profit tell a slower story. Just over a quarter saw sales rise in 2024, compared with a third last year.

Profitability slipped too, with 69% reporting a surplus, down from 73% in 2023. Scotland's sole traders led on growth, while Wales trailed.

Still, sales-related ambition is climbing. Fifty-nine per cent now plan to grow in the next three years, up from 50% in 2023.

That's not far behind the 71% of small employers whose ambitions are equally as positive.

Export energy and uncertainty

Exporting activity is quietly growing. Sixteen per cent of the UK's sole traders now sell their goods or services abroad, on par with small employers.

The EU remains the biggest market, though fewer exporters are focused there than last year. The US leads among non-EU destinations.

What's striking is the fall in optimism around exporting. Only 36% of exporters plan to expand their sales overseas, down from almost half in 2023.

But interest among businesses currently not exporting is rising, suggesting that many are still weighing up their first move into international territory.

Finance – appetite rising, access tightening

Sole traders' use of outside finance fell again to under half, even as more tried to borrow.

Applications rose to their highest level since the survey began, an increase driven by overdrafts and credit cards. Nearly half of those applying were first-time borrowers.

Behind the numbers lies a clear signal of pressure. Rising costs are squeezing cash flow, yet many still see finance as difficult to secure.

Fewer sole traders are offering trade credit, and those that do are facing more late payments, a theme that echoes across Enterprise Nation's own community of founders.

Innovation and technology

Around a quarter of sole traders launched new or improved goods or services, and one in seven changed how they work.

Most innovations were modest but increasingly original. A third were genuinely new to the market.

Use of technology continues to rise but remains far behind employer firms. Only one in three sole traders keeps records on accounting software, with most still relying on paper or spreadsheets.

The growth, however, is clear. More than half now use digital tools in some form, often to manage operations or reach customers online.

Obstacles and resilience

For the first time, competition has overtaken energy prices as the main barrier to growth, cited by 35% of the people surveyed.

Energy costs – still a heavy burden for a third – have eased slightly from their peak in 2023.

Tax and red tape follow closely behind – but, interestingly, sole traders are less likely than employers to raise these as major issues.

This may reflect their leaner, more informal operations, or a sense that day-to-day costs now dwarf concerns around regulation.

Support and advice

Only 17% of the sole traders surveyed sought external business advice last year – which highlights the need for more accessible, trusted guidance. Accountants remain the main port of call, followed by consultants and business networks.

There's a quiet digital shift here too. Use of web-based support nearly doubled, while the average spend on advice fell to £1,000.

That suggests many business owners are learning to blend self-help with selective paid input, something we see daily through the Enterprise Nation platform.

Who are today's sole traders?

The profile of self-employed people in the UK is evolving. Seven in 10 work from home, and the share of women-led firms has leapt from 18% to 30% in a single year, partly thanks to improved survey coverage of micro and unregistered businesses.

Six per cent are led by people from ethnic minority backgrounds, while the same percentage are run by founders with disabilities.

Most businesses are long-established. A third have traded for more than 20 years, yet newer entrants are growing too.

One in five has been trading for less than six years, showing there's a steady flow of new start-ups despite economic headwinds.

The takeaway

The 2024 Longitudinal Small Business Survey paints a picture of resilience and realism.

Sole traders are ambitious, adaptable and increasingly digital, but they remain exposed to late payments, cost pressures and uneven access to finance.

For policymakers, the message is clear. Support designed for small employers often misses this huge section of the business base.

Their needs are simpler but more fragile – reliable cash flow, practical guidance and affordable routes to adopt technology.

And for the UK's self-employed people themselves, the data shows promise. Growth ambitions are climbing again, confidence is returning and opportunities – especially in digital markets and exports – are opening up.

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