Official Statistics

Longitudinal Small Business Survey 2024: SME employers (businesses with 1 to 249 employees)

Published 25 September 2025

1. Headline findings

This edition of the Longitudinal Small Business Survey (LSBS) is the 10th Wave that has been completed since 2015. The report covers a broad range of topics that provide insights on small and medium enterprise (SME) performance and the factors that affect this. This report presents results for businesses with employees.

Fewer SME employers reported employment growth in the next 12 months compared with the past two years, while the percentage expecting to employ fewer people in the next 12 months was higher than previously. 

In 2024, the most frequently reported obstacle to growth for SME employers was taxation, VAT, PAYE, National Insurance and business rates, and this had significantly increased compared with 2023 and 2022.  Taxation overtook the level of energy prices and market competition as the most mentioned obstacle to business success.

Over the last three years there has been an upward trend in SME employers using technologies or web-based software to sell to customers or manage the business. There has been particularly strong growth in the use of technologies for managing the business.

2. Summary of highlights from sections

2.1 Business performance

In 2024, SME employers were as likely to report a decrease in the number employed as they were an increase (24% compared with 23%). The percentage reporting an increase was lower than in 2023 (down five percentage points) and in 2022 (down three percentage points), suggesting a reversal of the upward trend that was observed following the immediate post-coronavirus (COVID-19) pandemic recovery period.

The trend in sales (turnover) growth reflected that of employment growth, with fewer SME employers reporting sales growth in the last 12 months than over the last two years (36%, 40% in 2023 and 46% in 2022), while the percentage reporting a reduction in sales increased (30%, 27% in 2023 and 23% in 2022).

SME employers were less positive about growth than they had been since the post-coronavirus (COVID-19) pandemic, with fewer expecting sales growth in the next 12 months (31%, 38% in 2023 and 36% in 2022). They were more likely to expect turnover to fall in the next 12 months in 2024 than they were in the previous two years (17%, 13% in 2023 and 14% in 2022).

In 2024, there was little change in the percentage of SME employers reporting a profit or surplus in the last financial year compared with the last two years (77%, 78% in 2023 and 79% in 2022).

2.2 Exporting

51% of exporters expected to increase their level of exporting over the next few years, but this is down four percentage points on 2023 and down five percentage points on 2022.  Over the last three years, there has been little change in the proportion of SME employers who do not currently export who have plans to start doing so (3% of all SME employers in 2024; 4% in 2023 and 3% in 2022). Not having a product or service suitable for export was the main reason for not considering exporting. Among non-exporters, 71% said this was the case in 2024. Of those SME employers that exported, 73% had made overseas sales every year since they started exporting. This compared to 79% in 2023 and 68% in 2022.

In 2024 the percentage of SME employers that directly imported goods or services increased, back to the level seen in 2022 (23%, 20% in 2023 and 23% in 2022). They were more likely than in 2023 to import from EU countries (18%, compared to 16% in 2023), with little change observed with regard to non-EU countries (13%, compared to 12% in 2023).

2.3 Access to finance

Around three-quarters of SME employers (72%) were using some form of external finance, which is a similar proportion to that reported in 2023 (73%). Use of external finance has remained significantly higher than it was pre-2020 (pre-coronavirus (COVID-19) pandemic - 63% in 2019).  The most used form of external finance in 2024, as it has been over the years, was credit cards (38%), followed by bank overdrafts (29%) and loans from financial institutions (24%). Use of loans increased significantly in 2024, compared with 2023 (12%), 2022 and 2021 (both 11%). This may reflect the curtailment of coronavirus (COVID-19) pandemic measures and the return to normality that other figures suggest.

2.4 Innovation activity

In 2024, fewer SME employers reported having innovated – introduced new and improved processes, goods or services – than did so in the last two years; 19% had innovated processes, 13% had innovated goods and 23% had innovated services (21%, 15% and 26% respectively in 2023; 21%, 15% and 25% respectively in 2022). - There was no change in the propensity for SME employers to have invested in Research and Development (R&D) in the last three years in 2024 compared with 12 months ago (16%, as in 2023).

2.5 Major obstacles to the success of the business

The main reported obstacle to growth for SME employers was taxation, VAT, PAYE, National Insurance and business rates (61%), and this was a significant increase on 2023 and 2022 (45% in 2023, 41% in 2022). This overtook the level of energy prices (50% in 2024, 56% in 2023, 60% in 2022) and market competition (40%, 48% in 2023 and 41% in 2022) as an obstacle to business success.

The UK’s exit from the EU continues to be considered an obstacle to growth by around a third of SME employers (31% in 2024 and 30% in 2023).

2.6 Business support

The significant increase in face-to-face delivery of information and advice reported between 2020 and 2023 has been sustained in 2024 (45% in both 2024 and 2023, 41% in 2022, 28% in 2021 and 22% in 2020).

2.7 Training

Following a one percentage point increase in those arranging or funding training each year from 2021 to 2023, the percentage of SME employers that had arranged or funded training in the previous year has not changed (45%) in 2024.

2.8 Taxation

Of all SME employers who were categorised as sole proprietors or partnerships, 80% reported that they were liable to submit returns to HMRC for income tax self-assessment. Of these, 65% used record keeping software, which was an increase on those reported to be doing so in 2023 (61%).

2.9 Technology

In 2024, there continued to be an increase in SME employers using technologies or web-based software to sell to customers or manage the business (69%, 61% in 2023 and 50% in 2022). There was particularly strong growth in the use of technologies for managing the business (65%, compared to 54% in 2023 and 45% in 2022).

2.10 Future plans

SME employers with plans aimed at growing their business were most likely to be planning to increase workforce skills (62%) and recruit new staff in the UK (47%). Of those with plans to undertake growth-related activities, more than half (57%, up two percentage points on 2023 and 2022) reported plans had been affected by issues relating to rising costs, particularly (as in 2023) costs other than energy costs (81% of those affected, 76% in 2023).

2.11 Women-led businesses

Around 14% of SME employers were women-led (15% in 2023, 18% in 2022 and 19% in 2021), suggesting a downward trend in this respect. Compared with 2023, there was little change in the percentage of SME employers with a management team that represented men and women equally (26%, 25% in 2023,) and in the percentage that were entirely male led (43%, 44% in 2023). The sectors most likely to have women-led businesses were health, education, other services, accommodation and food and professional and scientific.

2.12 Minority Ethnic Group-led businesses

Around 6% of SME employers were led by a management team with at least half of its members from minority ethnic groups (MEG-led). This compared to 7% in 2023 and there has been little change since 2015.

2.13 Disability-led businesses

Measured for the first time in 2024, some 2% of all SME employers were led by people with a disability. Among SME employers with more than one owner, director or partner, 9% reported at least one of their senior team having a disability.

3. What you need to know about these statistics

The Longitudinal Small Business Survey (LSBS) is a telephone survey of UK businesses in the private sector with fewer than 250 employees. (This definition treats full-time and part-time employees equally.) This report summarises key findings from the 2024 survey (Year 10). It focuses on those businesses with between 1 and 249 employees (‘SME employers’), with a separate report on businesses without employees.

Separate reports are published because we use three separate sampling frames and because the estimates for businesses with no employees include a large proportion of businesses which are not registered for VAT or PAYE. For the SME employers we use the Interdepartmental Business Register from the Office for National Statistics, which has complete coverage of the population from VAT and PAYE records, whereas for the sample of business with no employees we use the IDBR, and both a commercial data provider and from the 2024 survey a commercial panel to include businesses not registered for VAT or PAYE.

The coverage of the unregistered business population is less well understood and small business who rely on word of mouth or platforms such as Facebook or Instagram are unlikely to be included in either of the sampling frames and therefore this should be considered when making comparison between the 2 reports. There is some guidance at the back of the report on the uncertainty that arises because we are using a sample of the UK SME population rather than collecting data from all of them. We refer to micro businesses which have 1 to 9 employees; small businesses which have 10 to 49 employees; and medium-sized businesses which have 50 to 249 employees.

In this report when we refer to business size this is defined entirely in terms of number of employees. Levels of turnover (sales) or assets are not part of our definition, though there are other definitions of business size which include these.

‘SMEs’ stands for ‘small and medium enterprises’ – but this is always taken to include micro businesses and non-employers too. The LSBS covers all SMEs, not just small businesses, though this report only covers SME employers.

This is a longitudinal survey as we try to re-interview businesses (SME employers and businesses with no employees) each year – 348 businesses have taken part in all ten years of the survey so far and another 6,304 businesses in 2024 had taken part in at least one previous survey (‘panellists’). In addition, there were 3,381 businesses new to the survey (‘top-ups’). The overall LSBS sample in 2024 was 10,611, including 8,419 SME employers, of which 23 were large employers (250+ employees) and are not included in the sample of 8,396 SME employers that this report is based on.

Throughout the report, where figures sum to less than 100% when you expect them to sum to 100% (because they cover all possibilities) the shortfall will be due to businesses saying they did not know the answer, refusing to answer or might be due to rounding of estimates to the nearest whole percentage.

Our respondents were each randomly assigned to one of three cohorts - A, B, or C and some questions were only asked of one cohort (though most questions went to all three cohorts). The underlying data tables that accompany this report group cohort questions separately, so the report and charts make clear when they are covering cohort questions, to allow you to find the corresponding data table if required.

4. Business performance

4.1 Changes in the levels of employment

In the data tables accompanying this publication, table 38 shows how many employees businesses had on their payrolls 12 months ago across all UK sites and table 39 shows how the size of the workforce has changed over the last 12 months.

In 2024, 23% of SME employers employed more people than a year previously, a lower percentage than in 2023 (down five percentage points) and 2022 (down three percentage points), while 24% reported a decrease in employment, a higher percentage than in 2023 and 2022 (up five percentage points).

In 2024, 54% stated they had made no change, one percentage point higher than in 2023 but the same as in 2022.

Figure 1: Change in employment compared to 12 months previously (2015 to 2024; based on all SME employers trading for at least one year) ^[Note]

[Figure 1 - Note] In the 2016-17 LSBS reports figures were only shown for ‘panellists’ (those that had taken part in the previous year’s survey), based on the actual number of employees reported in the survey year, and the previous year.  This was because those who did the survey for the first time in these years (‘top ups’) tended to approximate employment numbers more, and the datasets were not compatible.  Between 2018 and 2024, as in 2015 and before, the ‘perceived’ change in employment question was asked of all respondents.

Download Figure 1 chart data

By business size, among micro businesses, compared with a year ago, 20% had increased employee numbers, 22% had fewer employees, and 58% had approximately the same number.

For small businesses, 34% had more employees, 32% had fewer, and 33% had the same.

For medium-sized businesses, 44% had more employees, 29% had fewer and 26% had the same number.

By sector, those in education (36%) and transport and storage (34%) were the most likely to have increased employee numbers. Those in manufacturing and accommodation and food (both 29%) were most likely to have reduced employee numbers.

By nation, there were similar levels of employment growth across England (22%), Scotland (23%) and Wales (24%), but higher in Northern Ireland (32%). While in Northern Ireland there has been little change since 2023 (up one percentage point), fewer SME employers in the other nations reported employment growth compared with 2023 (down six percentage points in England and four percentage points in Scotland and Wales). 

SME employers in Northern Ireland were less likely than those in the other nations to report a reduction in employee numbers (15%, down one percentage point on 2023), compared with those in England (20%, up two percentage points), Scotland, (23%, up four percentage points) and Wales (20%, as in 2023).

4.2 Expectations for employment growth

In the data tables accompanying this publication, table 40 shows how many employees the business expects to have on the payroll in 12 months’ time and table 41 shows how they expect the size of the workforce to change over the next 12 months.

Looking ahead, 20% of SME employers expected to employ more people in a year’s time (down five percentage points on 2023, and down six percentage points on 2022). 67% expected to employ the same number (up three percentage points on 2023 and five percentage points on 2022) and 13% expected to employ fewer people (up three percentage points on 2023 and two percentage points on 2022).

By size, 16% of micro businesses expected to increase the number of employees, compared to 33% of small businesses and 43% of medium-sized businesses. Medium-sized businesses were more likely than micro and small businesses to expect to have reduced employment in 12 months’ time (17%, compared with 16% of small and 12% of micro businesses).

By sector, expectations for employment growth were most likely in health (28%), information and communications and administration (both 24%).

By nation, 22% of SME employers in Scotland and Wales were confident that employment numbers would increase, compared with fewer in England (19%), while SME employers in Northern Ireland were more confident of employment growth (26%). SME employers in Wales were most likely to expect a reduction in the number of employees (14%), followed by those in England (13%), Scotland (10%), and Northern Ireland (8%).

Figure 2: Expectations for employment in 12 months’ time, by year

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4.3 Changes in levels of turnover

In the data tables accompanying this publication, table 125 shows the change in turnover compared with 12 months ago.

Compared to the last two years, in 2024, a lower proportion of SME employers reported turnover growth over the previous 12 months (36%, four percentage points lower than in 2023 and ten percentage points lower than in 2022).

A higher proportion of SME employers reported a decrease in turnover in 2024 than in the last two years (30%, up three percentage points on 2023 and seven percentage points on 2022).

Medium-sized businesses were more likely than small and micro businesses to have reported turnover growth in the last 12 months (49%, 41% and 35% respectively), while the corresponding figures reporting a decrease in turnover were 21%, 26% and 31% respectively.

Figure 3: Current turnover compared to 12 months previously, by year (based on SME employers trading for at least one year)

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The sectors most likely to report turnover growth were arts and entertainment (43%), information and communications (42%) and transport and storage (41%), while those most likely to report a decrease in turnover were administration (35%), professional and scientific (33%), manufacturing (33%) and construction (33%).   

By nation, SME employers in Wales (32%) were less likely to have reported growth in turnover than those in Northern Ireland (39%), England (36%) and Scotland (34%). Those in England (31%) were more likely to report a fall in turnover than those in Wales (28%), Scotland (25%) and Northern Ireland (19%).

4.4 Expectations of turnover in 12 months’ time

In the data tables accompanying this publication, table 129 shows the expected change in turnover in 12 months’ time.

Expectations of turnover increasing in 12 months’ time were lower than in 2023 (31%, down seven percentage points on 2023 and five percentage points on 2022). A higher proportion of SME employers than in 2023 and 2022 expected turnover to fall in the next 12 months (17%, up four percentage points on 2023 and three percentage points on 2022). Around half of SME employers expected turnover to stay the same over the next 12 months (49%, up three percentage points on 2023 and two percentage points on 2022). 

By size, 29% of micro businesses expected turnover to increase, compared with 40% of small businesses and 52% of medium-sized ones.

Figure 4: Expectations of turnover in 12 months’ time, by year

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The sectors most likely to think that turnover would increase were information and communications (41%), arts and entertainment (40%) and education (38%).

By nation, SME employers in Northern Ireland were more likely to expect turnover to grow (39%), compared with those in Scotland (34%), England (31%) and Wales (30%).

4.5 Profit

In the data tables accompanying this publication, table 133 shows whether SMEs generated a profit or surplus in the last financial year

When asked about generating a profit or surplus, 77% of SME employers stated they had done so in their last financial year. This is down one percentage point on 2023 and two percentage points on 2022.

Whether a profit or surplus was made increased with business size; 76% of micros made a profit (down two percentage points on 2023 and three percentage points on 2022). This compares with 78% of small businesses (down two percentage points on 2023 and three percentage points on 2022) and 82% of medium-sized businesses (down two percentage points on 2023 and one percentage point on 2022).

Those most likely to have made a profit or surplus were SME employers in the following sectors: finance and real estate (85%) and professional and scientific (84%).

With a relatively high proportion of not-for-profit enterprises among their numbers, the sectors least likely to have made a profit or surplus were health (67%), education (70%) and accommodation and food (70%).

Figure 5: Generated a profit or surplus in the last financial year, by year

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By nation, 76% of SMEs have made a profit or surplus in Scotland and England (each down two percentage points on 2023) and the same proportion did so in Wales (down one percentage point on 2023), compared with 84% in Northern Ireland (up four percentage points).

5. Exporting

5.1 Sales of goods or services outside the UK in the last year

In the data tables accompanying this publication, tables 42 to 47 and 51 show whether businesses exported goods or services, and the extent to which exports contribute to total sales

Overall, 17% of SME employers exported goods or services in the last year. This is one percentage point lower than in the last 3 years, two percentage points lower than in 2020, and three percentage points lower than pre-2020 levels that were reported from 2017 to 2019.

Figure 6: Whether sold goods or services, or licensed products outside the UK in the last 12 months, by year

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By sector, similarly to previous years, exporters were most likely in the manufacturing (46%, down one percentage point on 2023 but the same proportion as in 2022), information and communications (40%, down one percentage point on 2023 and two percentage points on 2022), retail and wholesale (26%, down three percentage points on 2023 but the same proportion as in 2022) and professional and scientific sectors (26%, also down one percentage point on 2023 and two percentage points on 2022).

The sectors least likely to have exported were accommodation and food service (1%), health (3%), construction (4%), finance and real estate (6%), other services (6%) and primary (8%).

By employment size band, 16% of micro businesses were exporters, compared with 22% of small businesses and 30% of medium-sized businesses. There was a one percentage point fall among micro and small businesses compared with 2023, but the proportions that have exported has varied little in the last two years: 17%, 23% and 30% respectively in 2023 and 16%, 23% and 31% respectively in 2022.

By nation, SME employers in Northern Ireland were most likely to export (33%, one percentage point up on 2023 and two percentage points up on 2022). This is consistent with the National Survey of Registered Businesses where a higher proportion of Northern Ireland businesses exported to Ireland with which it shares a land border. The proportion of exporters was lower than average in Scotland (12%, down three percentage points on 2023 and one percentage point on 2022) and Wales (15%, up one percentage point on 2023 and 2022), while exporting among SME employers in England was on a par with the UK average (17%, down two percentage points on 2023 and one percentage point on 2022).

Of all SME employers, 9% exported services and 10% exported goods (as in 2023, 2022 and 2021, although service exporting is down one percentage point on both 2023 and 2022). Services exporters were most likely to be in the information and communication (35%, as in 2023, but down one percentage point on 2022) and professional and scientific (23%, two percentage points down on 2023 and 2022) sectors. Goods exporters were most likely to be in the manufacturing (43%, down one percentage point on 2023 and two percentage points on 2022), and wholesale and retail sectors (25%, down three percentage points on 2023, but up one percentage point on 2022).

Exports accounted for less than a quarter of turnover for 60% of exporters, between a quarter and a half for 13%, between half and three-quarters for 8% and over three-quarters for a further 12% (7% did not know). Compared with 2023, the scale of exports as a proportion of turnover increased slightly with fewer estimating exports as accounting for less than a quarter of turnover (63% in 2023) and more exporters estimating export sales at between a quarter and a half of turnover (13% in 2023).

When focusing specifically on SME employers that export to the EU, exports to the EU accounted for less than a quarter of turnover for 76% of all EU exporters (down two percentage points on 2023 and four percentage points on 2022), equivalent to 61% of all exporters (as in 2023 but down three percentage points on 2022), between a quarter and half for 9% (down one percentage point on 2023 but the same proportion as in 2022), between half and three-quarters for 2% (two percentage points down on 2023 and 2022), and over three-quarters for a further 4% (4% did not know) (as in 2023 and 2022).

5.2 Destinations of exports

In the data tables accompanying this publication, tables 49 and 50 show the destination of exported goods or services

Of UK SME employers that exported in the last year, 77% exported to European Union countries (up two percentage points on 2023 but down three percentage points on 2022) and 71% exported outside the EU (including EFTA countries), down two percentage points on 2023 and one percentage point on 2022.

Figure 7: Destination of exports in the last year, by year (based on SME exporters only)

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5.3 Plans to increase levels of exports, start exporting and intermittent exporting (Cohort C)

In terms of exports to non-EU markets, the USA was the most common, with 44% of exporters selling goods or services there, 24% sold to EFTA countries, 19% to Canada, 12% to China, 12% to India, 9% to Turkey, 6% to South Korea, and 46% to the rest of the world.

Overall, 82% cent of exporters sold to either EU or EFTA countries (up one percentage point on 2023 but down three percentage points on 2022), and 71% to countries outside the EU (down two percentage points on 2023 and one percentage point on 2022).

In the data tables accompanying this publication, tables 2, 5, 6, and 7 (Cohort C) show plans to increase, or to start, exporting goods or services in the next few years

Of those UK SME employers that exported in the last year, 51% reported planning to increase their level of exports over the next few years (down four percentage points on 2023 and five percentage points on 2022).

By employment size, plans to increase export sales increased with the size of the business; 66% of medium-sized businesses, compared with 58% of small and 48% of micro businesses.

Of those UK SME employers that did not export in the last year but have a product or service that is suitable for export, 24% reported planning to start exporting over the next few years (11% in the next 12 months; 13% further into the future). This equates to 3% of all UK SME employers (one percentage point down on 2023, but the same proportion as in 2022).  However, 71% of all UK SME employers reported that they did not have a product or service suitable for export.

Of SME employers that have exported for two years or longer, 73% have had overseas sales every year since they started exporting (down six percentage points on 2023, but up five percentage points on 2022). Some 24% have had some years without overseas sales (up five percentage points on 2023, but down six percentage points on 2022).

5.4 Purchases of goods or services from outside the UK in the last year (Cohort A)

In the data tables accompanying this publication, table 2 shows whether they directly imported goods or services

Overall, 23% of SME employers directly imported goods or services in the last year – 18% from suppliers based in the EU; 13% from suppliers based in non-EU countries. This compares with 20% in 2023 (16% from the EU and 12% from non-EU countries) and 23% in 2022 (19% from the EU and 14% from non-EU countries).

6. Access to finance

6.1 Types of external finance currently used

In the data tables accompanying this publication, table 66 shows the types of external finance currently being used.

Overall, 72% of SME employers were using some form of external finance. This was one percentage point lower than in 2023 and three percentage points lower than in 2022, but the same proportion as in 2021 and 2020. Compared with pre-2020 (pre-coronavirus (COVID-19) pandemic), it remained significantly higher (nine percentage points higher than in 2019).

By employment size, 70% of micro firms used finance (one percentage point down on 2023 and three percentage points down on 2022), compared with 82% of small businesses (as in 2023, but down one percentage point on 2022) and 87% of medium-sized businesses (up one percentage point on 2023 but down two percentage points on 2022).

In this 2024 survey, forms of external finance linked to the coronavirus (COVID-19) pandemic were removed from the options offered to survey participants, and none were mentioned in the ‘other finance’ category. As such, external finance options reverted to those that were most common pre-coronavirus (COVID-19) pandemic.

The most used form of external finance in 2024, as it has been over the years – before, during and after the coronavirus (COVID-19) pandemic  was credit cards (38%, up one percentage point on 2023, and the same proportion as in 2022). Next most used were bank overdrafts (29%, up one percentage point on 2023 and two percentage points on 2022), leasing or hire purchase (24%, as in 2023 and 2022) and loans from a bank, building society or other financial institution (24%, up 12 percentage points on 2023, and 13 percentage points on 2022 and 2021).

Also significant were loans from business partners/directors/owners (17%, down one percentage point on 2023 but up two percentage points on 2022) and government or local authority grants or schemes (16%, up 11 percentage points on 2023 and ten percentage points on 2022).

The increase in use of loans from banks, building societies or other financial institutions and government or local authority grants or schemes in 2024 may reflect the curtailment of coronavirus (COVID-19) pandemic measures and the resurgence of use of this external finance for other reasons, although there may be some pandemic-related funding still included in this.

Figure 8: Forms of external finance currently used by SME employers - percentages

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By nation, 80% of SME employers in Wales used some form of external finance (up two percentage points on 2023 and one percentage point on 2022), compared with 74% in Northern Ireland (up four percentage points on 2023 and down three percentage points on 2022), 75% in Scotland (down one percentage point on 2023 and the same proportion as in 2022). In England, use of external finance was on a par with the UK average (72%, down one percentage point on 2023 and three percentage points on 2022).  

By sector, SME employers in primary sector , 83%, (see Sector Definitions in the Technical Information section of this report), transport and storage (82%), manufacturing (78%), administration (77%), construction (76%), arts and entertainment (76%) were more likely than average to use finance. Use of finance was below average in finance and real estate (60%), other services (61%), professional and scientific (67%), education (67%), accommodation and food services (68%) and health (69%).

Different sectors use different types of external finance to suit their needs:

• credit cards were most likely to be used in primary (49%), manufacturing (49%) and transport and storage (48%)
• bank overdrafts were particularly likely to be used in primary (57%) and transport and storage (36%)
• leasing/hire purchase was used most within primary (47%), transport and storage (43%), manufacturing (33%) and construction (32%)
• bank loans were most common within primary (44%)
• business partner/directors/owner’s loans were most used in transport and storage (22%) and information and communications (22%)
• government grants were most used in education (32%), health (28%), arts and entertainment (24%) and primary (22%)
• commercial mortgages were most used in primary (18%) and accommodation and food (12%)
• loan from family/friend were most used in transport and storage (7%) and education (7%)
• factoring/invoice discounting was most used in administration (9%) and transport and storage (7%)
• equity finance was most likely to be used in information and communications (4%)

Small and medium-sized businesses were more likely than micro businesses to use many types of finance, with the exception to this being loans from peers or business partners/directors/owners, peers or family/friends. 

The use of any form of so-called ‘alternative finance’, not originating from banks, the public sector, or people known to the business (this refers to equity, factoring/invoice discounting, peer-to-peer loans and some forms of ‘other finance’), was reported by 5% of SME employers (down two percentage points down on 2023 and down three percentage points on 2022).

By employment size, 4% of micro businesses used alternative finance (down two percentage points on 2023), compared with 10% of small businesses (also down two percentage points on 2023) and 18% of medium-sized businesses (down one percentage point on 2023). Alternative finance was most likely to be used in administration (11%, as in 2023), manufacturing (10%, down three percentage points on 2023), sectors.

6.2 Whether sought external finance in the last 12 months

In the data tables accompanying this publication, tables 70 and 71 shows whether the business tried to obtain external finance in the past 12 months.

In 2024, 15% of SME employers had sought external finance in the preceding 12 months; two percentage points higher than reported in 2023 and four percentage points higher than reported in 2022.

Figure 9: Percentage of SME employers that sought external finance in the preceding 12 months, by number of employees and year

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The propensity to have sought external finance in the previous 12 months increased with business size, from 14% of micro businesses to 18% of small and 22% of medium-sized businesses. Compared with 2023, there has been an increase in SME employers seeking finance across all size bands (13%, 16% and 21% in 2023 respectively). 

By nation, 17% of SME employers in Wales sought finance in the preceding 12 months (down two percentage points on 2023, but up four percentage points on 2022), compared with 15% in Scotland (as in 2023 and 2022) and 15% in England (up two percentage points on 2023 and four percentage points on 2022), and 13% in Northern Ireland (up two percentage points on 2023 and three percentage points on 2022). 

SME employers in the primary and transport and storage sectors (both 27%) were most likely to have applied for finance in the last year.

Figure 10: Percentage of SME employers seeking external finance in the preceding 12 months, by sector and year

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Of those SME employers that sought external finance in the last 12 months, 23% had done so for the first time, the same proportion as in 2023.

By employment size, micros were more likely to be applying for finance for the first time than small and medium-sized SMEs (26%, 17% and 8% respectively). This is compared to 26%, 16% and 8% respectively in 2023.

Some 75% of all SME employers who had sought finance in the last year had done so before. Those within primary (92%), administration (83%), and manufacturing (81%) sectors were most likely to have had previous experience of applying for finance.

Compared to 2023, SME applications for finance increased in transport and storage (27%, an increase of 12 percentage points), arts and entertainment (16%, an increase of four percentage points), and other services (11%, an increase of three percentage points). 

The only sector in which fewer SME employers than in 2023 sought finance was that of finance and real estate (8%, down two percentage points). 

Of those SME employers that sought finance, 9% sought it once in the previous 12 months, and 5% sought it more than once. SME employers in primary sectors (17%), transport and storage (16%) and accommodation and food (12%) were most likely to have sought it just once.

6.3 Type of external finance sought

In the data tables accompanying this publication, tables 72 and 78 shows the types and amount of external finance sought in the last 12 months

The types of external finance that were sought in the previous 12 months were as follows:

• bank overdraft (37% of those that applied, as in 2023)
• bank loans (36% of those that applied for any, a decrease of two percentage points on 2023)
• leasing/hire purchase (20%, an increase of one percentage point)
• credit cards (17%, as in 2023)
• loan from family/friend (12%, a decrease of one percentage point)
• loan from business partner/director (12%, a decrease of one percentage point) -government or local authority grant or scheme (12%, an increase of five percentage points)
• loan from a Peer to Peer (P2P) platform (7%, an increase of two percentage points)
• commercial mortgage (6%, as in 2023)
• factoring/invoice discounting (3%, as in 2023)
• equity finance (1%, a decrease of one percentage point)

The mean amount of finance sought (for those that sought bank overdrafts, this includes the size of the overdraft facility, even if it was not used) was £513,000. This mean was £98,000 for micros, £394,000 for small businesses, and £9.9 million for medium-sized businesses. It should be noted that the mean can be affected by a relatively small number of large values, as well as small outliers, and so might not be very reliable as an estimate.

The median, which better represents the amount that the typical business sought, was £40,000. This was £30,000 for micros, £100,000 for small businesses, and £500,000 for medium-sized businesses.

By nation, the median amount of finance sought was £40,000 for businesses in England, £30,000 for businesses in Scotland, £45,000 in Wales and £56,000 in Northern Ireland.

6.4 Intentions to apply for external finance in the next three years

In the data tables accompanying this publication, table 136 shows the likelihood that the business will approach external finance providers in the next 3 years.

When asked whether they would approach external finance providers in the next three years, 21% of SMEs said it was likely they would do so, which is the same as in 2023, including 10% very likely (as in 2023) and 11% fairly likely (also as in 2023).  

By employment size, 32% of medium-sized businesses said they would be likely to approach external finance providers, compared with 26% of small businesses and 19% of micro businesses (34%, 26% and 19% respectively in 2023).

6.5 Trade credit and late payment (Cohort A)

In the data tables accompanying this publication, table 14 (Cohort A) shows whether they gave their customers trade credit. Table 17 (Cohort A) outlines whether they have a problem with customers paying later than expected business terms.

In 2024, as in 2023, 47% of SME employers reported that they give their customers trade credit.

Larger SMEs were more likely to give customers trade credit: 59% of medium-sized businesses gave trade credit (down five percentage points on 2023), compared with 52% of small (down three percentage points) and 45% of micro (as in 2023) businesses.

Whether credit was given varied considerably according to sector, ranging from 77% of SME employers in manufacturing, 76% in transport and storage, 58% in information and communications and 57% in construction down to 10% in accommodation and food, 13% in finance and real estate, 17% in arts and entertainment and 23% in health.  

Late payment was considered a problem by 57% of those that gave trade credit (two percentage points down on 2023). This equates to 27% of all SME employers (down one percentage point on 2023).

By employment size, late payment was more likely to be a problem for small (59%) and medium-sized (52%) than micro (57%) businesses (as proportions of those that gave trade credit).

By sector, late payment was most likely to be considered a problem by those that gave trade credit for education (75%), professional and scientific (67%), manufacturing (63%) and information and communications (63%) sectors.

7. Innovation activity

7.1 New or significantly improved processes in the last 3 years (Cohort B)

In the data tables accompanying this publication, table 2 (Cohort B) shows whether the business has introduced any new or significantly improved processes in the last three years.

Among SME employers, 19% had innovated processes for producing or supplying goods or services in the last three years (down two percentage points on 2023 and 2022, returning to the level reported from 2019 to 2021).  

The percentage was higher for medium-sized businesses (32%) than small (25%) and micro (18%) businesses. 

By sector, SME employers in information and communications (33%), professional and scientific (27%) and administration (26%) were most likely to have innovated processes in the last three years.

By nation, the proportion was higher in England and Wales (both 20%) than in Scotland (17%) and Northern Ireland (16%). Compared with 2023, fewer SME employers in all nations had innovated processes; one percentage point fewer in England, two percentage points fewer in Wales and Scotland, and three percentage points fewer in Northern Ireland.

7.2 New or significantly improved goods or services in the last three years

In the data tables accompanying this publication, 89, 90, 91 and 93 show whether the business has introduced any new or significantly improved goods or services in the last three years.

In the last three years, 13% of SME employers had introduced new or significantly improved goods – down two percentage points on 2023 and 2022.  This proportion increased with employment size, from 12% of micro businesses to 17% of small businesses, and to 19% of medium-sized businesses (14%, 19% and 22% respectively in 2023). 

The equivalent figure for the introduction of new or significantly improved services was 23% - down three percentage points on 2023 and two percentage points on 2022. Again, the propensity to have done so increased with employment size: 22% of micro businesses, 26% of small businesses and 32% of medium-sized businesses had innovated in this way (25%, 29% and 30% respectively in 2023).

Overall, 29% of SME employers had innovated goods or services in the last three years (down four percentage points on 2023 and five percentage points on 2022 and 2021), suggesting a return to the level reported in 2020, when a decrease was reported against 2019 (32%).

Figure 11: Percentage of SME employers which have introduced new or significantly improved goods or services in the last 3 years - by size of business, 2024

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Innovation in respect of goods was similar across nations, higher in Wales and Northern Ireland (both 15%) than in England and Scotland (both 13%). Compared with 2023, there has been a fall in innovation of goods in Wales, England (both down two percentage points) and Scotland (down one percentage point), but an increase in Northern Ireland (up two percentage points). 

SME employers in Wales were also more likely to innovate services (25%), followed by those in England (23%) and Scotland (22%), and it was lowest in Northern Ireland (20%). Compared with 2023, there was no change in Wales, but a two percentage points decrease in England, a nine percentage points decrease in Scotland and a four percentage points decrease in Northern Ireland.

Figure 12: Percentage of SME employers which have introduced new or significantly improved goods or services in the last three years - by sector, 2024

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By sector, SME employers in manufacturing (33%), information and communications (24%) and retail and wholesale (18%) sectors were the most likely to have innovated goods.

Those in education (43%), information and communications (42%), arts and entertainment (33%), health (31%) and professional and scientific (30%) sectors were the most likely to have innovated services.

7.3 Process- innovations which were new to the industry (Cohort B)

In the data tables accompanying this publication, table 4 (Cohort B) shows if the processes were new to the industry or business

Of those SME employers that had innovated processes in the last three years, these processes were new to the industry for 21% of them (up two percentage points on 2023), with the remainder introducing processes that were new only to the business (78%) (down one percentage point).

7.4 Goods and services innovations which were new to the market or industry

In the data tables accompanying this publication, table 92 shows whether the goods or services innovations were new to the market or business

Of those SME employers that had innovated goods and/or services in the last three years, these were new to the market (or industry) for 31%, with the remainder new only to the business (68%). Compared with the past two years, the proportion introducing goods and services that were new to the industry decreased by one percentage point.

By size, the proportion of SME employers introducing goods and/or services new to the industry was higher in medium-sized businesses (36%) than in small and micro businesses (30% and 32% respectively) (38%, 30% and 32% respectively in 2023).

Based again on those SME employers innovating new goods and/or services, these were most likely to be new to the industry in information and communications (49%), manufacturing (48%) and professional and scientific (36%) sectors.

7.5 Investment in R&D in the last three years (Cohort B)

In the data tables accompanying this publication, table 5 (Cohort B) shows whether the business invested in R&D in the last three years, and table 6 (Cohort B) shows how much has been invested. Table 124 in the main tables shows annual turnover for those who invested in R&D in the last three years and was used to calculate the percentage of turnover invested.

Among SME employers 16% had made any investment in R&D in the previous three years (as in 2023 but three percentage points lower than in 2022), This increased with employment size from 14% of micros to 23% of small businesses to 32% of medium-sized businesses (14%, 24% and 37% respectively in 2023).

Figure 13: Investment in R&D in the preceding three years by sector and by year - percentages

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Investment in R&D was most likely in the information and communications (40%), manufacturing (33%), arts and entertainment (29%) and professional and scientific (19%) sectors.

Of those investing in R&D, the mean amount spent over the previous three years was £149,000. This is equivalent to around £50,000 per year. Means are affected by high values and can be misleading as a measure of the investment in R&D by a typical SME employer. This figure has been calculated only using responses with the exact amount of R&D spending stated, so it excludes the respondents who gave an estimated figure within a range. The amount spent by a typical SME is better reflected by using the median.

The median amount invested over the previous three years was £30,000. This was £20,000 for micro businesses, £100,000 for small businesses, and £200,000 for medium-sized businesses.

The mean annual sales turnover for SME employers that invested in R&D was just over £2,450,000. Assuming constant sales turnover over three years, this suggests that the average SME employer that invests in R&D spends 2% of its annual turnover on R&D.

7.6 Applications for R&D tax credits in the last three years (Cohort B)

In the data tables accompanying this publication, table 7 (Cohort B) shows whether the business applied for or received R&D tax credits in the last three years

Around 7% of SME employers had applied for R&D tax credits in the previous three years (as in 2023, but two percentage points lower than in 2022). This proportion was higher for medium-sized businesses (18%), than for small businesses (14%) and micro businesses (5%) (25%, 16% and 4% respectively in 2023). By sector, applications were most likely in manufacturing (24%) and information and communications (20%).

8. Major obstacles to the success of the business

8.1 Overview of main obstacles (Cohort B)

In the data tables accompanying this publication, table 1 (Cohort B) shows the major obstacles to the success of the businesses interviewed.

In 2024, the most frequently mentioned major obstacle to business success was taxation, VAT, PAYE, National Insurance and business rates (61%, up 16 percentage points on 2023 and 20 percentage points on 2022). Previously, in 2023, taxation was third most frequently mentioned, behind the level of energy prices (50% in 2024, down six percentage points on 2023 and 10 percentage points on 2022) and competition in the market (40% in 2024, down eight percentage points on 2023 and one percentage point on 2022).

This year, while the level of energy prices remained the second most frequently mentioned obstacle to business success, regulations/red tape overtook competition as the third most frequently mentioned obstacle (44%, up three percentage points on 2023 and five percentage points on 2022).

Staff recruitment and skills was mentioned by fewer SME employers in 2024 compared with 2023 and 2022 (37%, down three percentage points on 2023 and 2022).    

Other major obstacles included: the UK’s exit from the EU (31%, up one percentage point on 2023 and down one percentage point on 2022), the National Living Wage (31%, up four percentage points on 2023 and up seven percentage points on 2022) and other issues related to costs (not related to energy prices) (30%, up one percentage point on 2023 and down one percentage point on 2022) . Late payment was mentioned by fewer SME employers in 2024 than in 2023 (26%, down six percentage points on 2023), as was the availability/cost of suitable premises (17%, down two percentage points) and obtaining finance (16%, down four percentage points). Workplace pensions were mentioned as an obstacle to business success by 12% of SME employers, as in 2023 and 2022.

Figure 14: Percentages of SME employers citing each major obstacle to the success of the business (Cohort B only)

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Small and medium-sized businesses were more likely to mention taxation as an obstacle to business success than micro businesses (75% of small, 71% of medium-sized and 58% of micros). This compares with 50%, 40% and 44% respectively in 2023.

Medium-sized businesses, with a larger number of staff to manage, were more likely than micro and small employers to cite staff recruitment and skills as an obstacle to business success: 62% of medium-sized businesses (down six percentage points on 2023), compared with 55% of small (down five percentage points) and 32% of micro (down three percentage points) businesses.

These larger businesses were also more likely to mention the National Living Wage than by businesses with fewer than 10 employees. In 2024, it was mentioned by 48% of small (up four percentage points on 2023) and 50% of medium-sized businesses (up eight percentage points), compared with 28 per cent of micro businesses (up five percentage points).

In 2024, small businesses were more likely than medium-sized and micro businesses to cite the level of energy prices (59%, 49% and 48% respectively, compared with 63%, 59% and 54% respectively in 2023).

Medium-sized businesses were more likely to cite competition in the market (47%, down seven percentage points on 2023) than small (44%, down seven percentage points) and micro (38% down nine percentage points) businesses.

Although slightly more likely to mention the UK’s exit from the EU, medium-sized businesses do not differ significantly from smaller businesses this year, with 35% mentioning this as an obstacle (down five percentage points on 2023), compared with 33% of small (down one percentage point) and 31% of micros (down two percentage points).   

There was some sectoral variation in the obstacles SME employers cited:

• taxation was most likely to be mentioned as an obstacle in accommodation and food service (89%, 68% in 2023), other services (68%, 39% in 2023), transport and storage (66%, 43% in 2023), retail and wholesale (64%, 45% in 2023) and manufacturing (60%, 53% in 2023)
• the level of energy prices was most likely to be considered an obstacle in accommodation and food (84%, 89% in 2023), primary (73%, 69% in 2023), manufacturing (61%, 71% in 2023), and other services (60%, 68% in 2023) sectors
• regulations were most likely to be considered an obstacle in the primary sector (84%, 66% in 2023), finance and real estate (66%, 70% in 2023) and transport and storage (66%, 53% in 2023)
• competition was most likely to be an obstacle for those in transport and storage (51%, 56%in 2023), information and communications (48%, 52% in 2023), and construction (46%, 43% in 2023)
• staff recruitment and skills were most likely to be considered an obstacle in primary (48%, 41% in 2023), manufacturing (46%, 45% in 2023), construction (44%, 47% in 2023), administration (43%, 45% in 2023) and health (43%, 50% in 2023) sectors
• the UK’s exit from the EU was most likely to be considered an obstacle in retail and wholesale (48%, 40% in 2023), primary (46%, 32% in 2023) and manufacturing (42%, 39% in 2023) sectors
• the National Living Wage was most likely to be mentioned as an obstacle in accommodation and food service (63%, 58% in 2023) and education (51%, 35% in 2023) -other issues relating to costs were most likely to be cited by SME employers within primary (59%, 41% in 2023) and manufacturing (41%, 32% in 2023) sectors
• late payment was most likely to be mentioned as an obstacle in transport and storage (38%, 46% in 2023), arts and entertainment (38%, 23% in 2023) construction (36%, 43% in 2023), professional and scientific (35%, 40% in 2023) and manufacturing (33%, 45% in 2023)
• the availability and cost of suitable premises was most likely to be considered an obstacle in arts and entertainment (31%, 19% in 2023), other services (27%, 22% in 2023) and transport and storage (25%, 26% in 2023)
• obtaining finance was most likely to be mentioned as an obstacle in arts and entertainment (30% as in 2023), health (26%, 38% in 2023), other services (24%, 25% in 2023) and accommodation and food (22%, as in 2023)
• workplace pensions were most likely to be viewed as an obstacle in accommodation and food (23%, 15% in 2023) and transport and storage (21%, 14% in 2023)

Taxation was mentioned by the majority of SME employers across all nations; 61% in England (44% in 2023), 59% in Scotland (47% in 2023), 60% in Wales (54% in 2023) and 64% in Northern Ireland (48% in 2023), although in Scotland, the level of energy prices was still the most frequently mentioned obstacle to business success (61%, 62% in 2023 and 72% in 2022)  

The level of energy prices was the second most frequently mentioned obstacle across England (49%), Wales (51%) and Northern Ireland (49%), but at the lowest levels since 2021 (England, 54% in 2023, 59% in 2022; Wales, 67% in 2023, 63% in 2022 and Northern Ireland, 64% in 2023, 75% in 2022).

SME employers in Northern Ireland were as likely to mention regulations/red tape as they were energy prices (49%, 44% in 2023) and were more likely to do so than SME employers in England (44%, 41% in 2023), Wales (43%, 41% in 2023) and Scotland (42%, as in 2023).

SME employers in Scotland were more likely than those in the other nations to mention staff recruitment and skills (46%; 36% in England, 37% in Wales and 41% in Northern Ireland) (43%, 39%, 55% and 47% in 2023 respectively). While SME employers in Wales were more likely to mention the availability and cost of suitable premises (21%; 17% in England and Northern Ireland and 18% in Scotland) (24%, 19%, 16% and 18% in 2023 respectively).

9. Business Support

In the data tables accompanying this publication, table 94 shows whether information or advice was used in the last 12 months

In 2024, 27% of SME employers reported seeking external information or advice in the preceding 12 months - defined as more than just a casual conversation. This was one percentage point higher than in 2023 and two percentage points higher than in 2022.

Figure 15: Percentage of SME employers that sought external information or advice in the last year, by employment size and year

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Larger SMEs were more likely to have sought external information or advice: 44% of medium- sized businesses sought it (same as in 2023), compared with 35% of small businesses (a one percentage point increase on 2023) and 25% of micro businesses (a two percentage points increase on 2023). While there has been little change in the propensity to seek external information and advice amongst small and medium-sized businesses, there has been a larger increase among micro businesses. Seeking external information and advice continues to be something that businesses are less likely to do now than in 2015.  

By nation, SME employers in England were most likely to have sought external information and advice (28%, up two percentage points on 2023 and up three percentage points on 2022), followed by those in Scotland (26%, down three percentage points on 2023 and down four percentage points on 2022) and Wales (26%, a four percentage points increase on 2023, and three percentage points increase on 2022). SME employers in Northern Ireland were least likely to have sought external information and advice (24%, a seven percentage points increase on 2023, and a five percentage points decrease on 2022).  

Businesses which sought information and advice were most likely to be in primary (47%), information and communications (41%), arts and entertainment (37%) and education (36%) sectors. SME employers in transport and storage (15%), accommodation and food (20%), manufacturing and retail and wholesale (both 24%) sectors were least likely to have sought information and advice.

9.1 Purpose of information and strategic advice sought

In the data tables accompanying this publication, table 96 shows the purpose of information and advice sought

The most common reason for seeking information and/or advice cited by those that had sought it was for financial advice, as in accounting and for general running of the business (25%, 24% in 2023 and 22% in 2022) and advice on business growth (23%, 25% in 2023, 21% in 2022), followed by legal issues (15% in both 2024 and 2023 and 12% in 2022).

Figure 16: Purpose of information and advice in the last year (Only responses >1% are shown in the chart)

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Some differences in the type of information and advice sought by size and sector are as follows:

• financial advice for the general running of the business was more likely to be sought by those with the professional and scientific (33%), transport and storage (32%) and administration (31%) sectors
• advice on business growth was more likely to be sought by SME employers in information and communications (35%) and administration (34%) sectors -legal advice was more likely to be sought by small (18%) and medium-sized businesses (24%) than by micro businesses (14%), and within the finance and real estate sector (33%)
• advice on tax and national insurance law and payments was more likely to be sought within the professional and scientific sector (18%)
• advice on improving business efficiency/productivity was more likely to be sought by SME employers in education (19%) and administration (16%) sectors
• advice on marketing was more likely to be sought by micro (12%) than by small and medium-sized businesses (7% and 8%) and within the education (19%) sector
• advice on employment law and redundancies was more likely to be sought by small (16%) and medium-sized (17%) than by micro (7%) businesses, and within administration (19%), manufacturing (18%) and health (17%) sectors
• financial advice on how and where to get finance was more likely to be sought by SME employers in the arts and entertainment (15%), administration (13%) and manufacturing (12%) sectors
• advice on health and safety was more likely to be sought by small businesses (11%) than by micro (6%) and medium-sized (8%) businesses, and most likely to be sought in manufacturing and construction (both 15%) sectors
• advice on regulations was more likely to be sought within the financial and real estate sector (17%)

9.2 Sources of external information and strategic advice

In the data tables accompanying this publication, table 98 shows sources of external information and strategic advice

In 2024, SME employers that sought information and advice were most likely to have approached an accountant (37%, an increase of two percentage points on 2023, but the same proportion as in 2022), followed by consultants and business advisers (34%, a two percentage points decrease on 2023, and a one percentage point decrease on 2022). Business networks/trade associations were used for information and advice by 22% of SME employers that sought information and advice (up three percentage points on 2023, and five percentage points on 2022), and solicitors/lawyers used by 15% (up two percentage points on both 2023 and 2022).

Much less frequently mentioned as sources of information and advice were local council/authority (6%, the same as in 2023, but one percentage point higher than in 2022), the internet/google/other search engine (6%, one percentage point lower than in 2023 and four percentage points lower than in 2022), the GOV.UK website (5%, one percentage point lower than in both 2023 and 2022) and/or a specialist financial adviser (5%, as in 2023, but one percentage point higher than in 2022).

Figure 17: Who provided information and strategic advice in the last year

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Small and medium-sized businesses were more likely than micro businesses to have sought information and advice from consultants or general business advisers (43%, 47% and 31% respectively), and the same was true in respect of using solicitors and lawyers (20% and 28% respectively, compared to 13%). Micro businesses that sought information and advice were more likely than small and medium-sized businesses to have sought it from an accountant (39% compared to 34% and 29% respectively). They were also, more likely to have sought it from business networks and trade associations (24% compared to 17% and 16% respectively).

• Accountants were most likely to be used for information and advice by SME employers in information and communications (47%) and primary (45%) sectors
• Consultants or general business advisers were most likely to be consulted by SME employers in education (60%) and primary sectors (45%)
• Business networks/trade associations were most likely to be the source of information and advice for SME employers within finance and real estate, and arts and entertainment13 (both 30%) sectors
• Solicitors/lawyers were most likely to be consulted by those in finance and real estate (32%) and other services (25%) sectors
• Local councils/authorities were most frequently cited as a source of information and advice by SME employers in health (20%) and arts and entertainment (15%) sectors

9.3 How information and strategic advice was delivered

In the data tables accompanying this publication, table 100 shows how the information and strategic advice was delivered

In 2024, face-to-face delivery was the most frequently cited mode of delivery of information and advice, as it has been since 2022 when there was a significant increase (45% in both 2024 and 2023, 41% in 2022, 28% in 2021 and 22% in 2020). The low level of face-to-face delivery of services in 2020 and 2021 was due to the social restrictions in place during the 2020/21 COVID-19 pandemic.

Since 2022 the use of email as a mode of delivery of information and advice has remained at a steady level. Email was the mode of delivery for 23% of SME employers who had received information and advice in 2024 (an increase of one percentage point in 2023 but the same proportion as in 2022). However, use of phone has increased since 2022, cited by 21% in 2024 (an increase of four percentage points in 2023 and five percentage points on 2022).    

By sector, face-to-face delivery was most common in primary (71%, 63% in 2023), and manufacturing (52%, 44% in 2023) sectors, and email was most common in health (35%, 21% in 2023), finance and real estate (30%, 38% in 2023) and professional and scientific (29%, 23% in 2022) sectors.

By nation, as reported in 2023, SME employers who sought information and advice in Northern Ireland were the most likely to have received it face-to-face (60%, 55% in 2023), but in 2024, Wales (rather than England as in 2023) were least likely to have done so (38%, 52% in 2023). SME employers in Scotland were also less likely to have received information and advice face-to-face than in 2023 (41%, 52% in 2023), while there was little change in England (45%, 44% in 2023).

SME employers who sought information and advice in Northern Ireland were less likely than those in the other nations to cite receiving it by email (19%, compared to 23% in England, 24% in Scotland and 25% in Wales), and on the phone (15%, compared to 21% in England, 24% in Scotland and 23% in Wales). Compared to 2023, there was little change in Northern Ireland in use of email and/or phone for receiving information and advice (19% and 16% respectively in 2023).

9.4 Paying for information and advice (England and Wales only)

In the data tables accompanying this publication, table 110 shows if SMEs had ever paid for external information or advice

Of SME employers in England and Wales that received information or advice in the last 12 months, 65% paid for it (the same as in 2023, one percentage point higher than in 2022).

Medium-sized businesses were more likely to have paid for information and advice (84%, 85% in 2023) than small (75%, 74% in 2023) and micro businesses (60%, 61% in 2023).

By sector, those in finance and real estate (82%, 79% in 2023) and professional and scientific (73%, 67% in 2023) sectors were most likely to have paid for information and advice; while those in retail and wholesale (54%, 58% in 2023) and other services (55%, 41% in 2023) were the least likely.

10. Training

10.1 Arrangement or funding of staff training and development

In the data tables accompanying this publication, table 120 shows training or development offered for employees

Following a one percentage point increase in SME employers that have arranged or funded training in the previous year each year from 2021 to 2023, there was no increase in 2024, with the percentage that did so remaining at 45% in 2024. This is three percentage points lower than in 2019, pre-coronavirus (COVID-19) pandemic.

Figure 18: Percentage of SMEs that arranged or funded training or development for staff in the year, by year and employment size

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Provision of any training is much more likely for larger organisations with 82% of medium-sized businesses providing training, and it has remained at the same level since 2022. Following a three percentage points increase each year from 2021 to 2023; there was a one percentage point decrease in small businesses providing training in 2024 (72%). There was no change in the propensity to have provided training for staff among micro businesses compared with 2023 (39%), although previously, between 2021 and 2023, there was a one percentage point increase each year.

In 2024, 13% of SME employers offered formal ‘off-the-job’ training only, which was a one percentage point increase on 2023, and 10% offered informal ‘on-the-job’ training only, a one percentage point decrease in 2023. Compared with 2023, there was a one percentage point decrease in SME employers who offered both ‘off-the-job’ and ‘on-the-job’ training, taking this back to the level reported in 2022.

Figure 19: Percentage of SMEs that arranged or funded training or development for staff in the year, by sector

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The most likely sectors to have provided training were health (75%, 72% in 2023) and education (64%, 67% in 2023). Arts and entertainment (54%, 56% in 2023) were also more likely than average to have provided training.

Training was least likely to be provided in the retail and wholesale (34%, 33% in 2023), information and communications (42%, 39% in 2023) and accommodation and food (42%, 40% in 2023) sectors.

By nation, training was most likely to have been provided by SME employers in Scotland (51%, 54% in both 2023 and 2022), compared to Wales (49%, 46% in 2023 and 45% in 2022), England (45%, as in 2023, 43% in 2022) and Northern Ireland (43%, 39% in 2023, 40% in 2022).

10.2 Dispute resolution (Cohort A)

In the data tables accompanying this publication, table 16 (Cohort A) shows whether they feel they can satisfactorily resolve a payment dispute with a larger business.

Micro and small employers (those with less than 50 employees) in Cohort A were asked if they felt they could satisfactorily resolve a payment dispute with a larger business (that is, one with 50 or more employees).

Overall, 75% of SME employers felt that they could resolve such a dispute (up one percentage point on 2023). This proportion varied slightly by employment size, with 74% of micro businesses thought they could resolve the dispute (up one percentage point on 2023), compared to 83% of small businesses (up one percentage point on 2023).

By nation, micro and small SMEs in Wales were the least likely to feel they could resolve such a dispute (67%, down three percentage points on 2023), compared with 85% in Northern Ireland (up five percentage points on 2023), 75% in England (as in 2023) and 73% in Scotland (up one percentage point on 2023).

10.3 Taxation

In the data tables accompanying this publication, tables 56, 57, 58, 60, 61, 62 and 63 show how businesses with employees keep records for taxation

In 2024, SME employers who were categorised as sole proprietors or partnerships were asked about income tax self-assessment. Overall, 80% of these SME employers reported that their business was liable to submit returns to HMRC for income tax self-assessment. 

Of those reporting a liability to submit returns for income tax self-assessment, 65% reported using record keeping software (up four percentage points on 2023 and nine percentage points on 2022), 46% used spreadsheets (up three percentage points on 2023 and 14 percentage points on 2022) and 57% used paper-based records (down one percentage point on 2023 and up three percentage points on 2022).

Use of record keeping software increased with employment size, from 64% of micro businesses (60% in 2023, 54% in 2022) to 76% of small (74% in 2023, 67% in 2022) to 80% of medium-sized businesses (82% in 2023, 87% in 2022). 

Medium-sized businesses were less likely to use paper-based records for keeping records for income tax self-assessment than micro and small businesses (41%, 58% and 58% respectively), while small businesses were more likely than micro and medium-sized businesses to use spreadsheets for this purpose (62%, 44% and 55% respectively).

10.4 Technology (Cohort C)

In the data tables accompanying this publication, tables 8 and 9 (Cohort C) show which businesses use technologies or web-based software to sell to customers or to manage the business, and which technologies they use

In 2024, 69% of all SME employers used technologies or web-based software to sell to customers or to manage the business, (up eight percentage points on 2023 and 19 percentage points on 2022). The remaining 31% did not use any.

Medium-sized (81%, up 12 percentage points on 2023 and up 14 percentage points on 2022) and small-sized (75%, up seven percentage points on 2023 and 14 percentage points on 2022) businesses were more likely to use technologies or web-based software than micro businesses (67%, up seven percentage points on 2023 and 20 percentage points on 2022).

As reported in 2023, SME employers in Northern Ireland (58%, up seven percentage points on 2023, and 10 percentage points on 2022) were less likely to use technologies or web-based software to sell to customers or to manage the business than businesses in Wales (73%, up five percentage points on 2023 and 23 percentage points on 2022), England (69%, up seven percentage points on 2023 and 19 percentage points on 2022) and Scotland (63%, up nine percentage points on 2023 and 13 percentage points on 2022).

SME employers in the information and communications sector (90%, up 12 percentage points on 2023 and 22 percentage points on 2022), finance and real estate (82%, up 12 percentage points on 2023 and 28 percentage points on 2022) and professional and scientific (78%, up 18 percentage points on 2023 and 27 percentage points on 2022) were most likely to use technologies or web-based software, particularly to manage the business, while those in construction (58%, up nine percentage points on 2023 and 17 percentage points on 2022) and primary (62%, up 24 percentage points on 2023 and 25 percentage points on 2022) and manufacturing (63%, up three percentage points on 2023 and 16 percentage points on 2022) sectors were least likely to use them.

In terms of what they used it for, SME employers were more likely to use technologies or web-based software for managing the business than for selling to customers online (65% and 23% respectively). There was an 11 percentage points increase on 2023 and a 20 percentage points increase on 2022 in the use of such software for managing the business but a four percentage points decrease regarding selling to customers online, back to the level reported in 2022. 

SME employers in arts and entertainment (47%, 45% in 2023), information and communications (41%, same as in 2023) sectors were most likely to use technologies or web-based software to sell to customers online, while those in education (33%, 39% in 2023) and retail and wholesale (31%, 44% in 2023) were also more likely than average to do so.

Among SME employers who used technologies or web-based software to sell to customers or manage the business, accountancy software (80%, 89% in 2023) and electronic invoicing (62%, 69% in 2023) were most commonly used, followed by videoconferencing software (57%, just 8% in 2023) and payroll software (57%, new to 2024).

Use of these technologies and software were more common in larger SMEs;

• 92% of medium-sized and 88% of small businesses had used accountancy software, compared to 78% of micro businesses.
• 84% of medium-sized businesses had used videoconferencing software, compared to 64% of small and 55% of micro businesses
• 80% of medium-sized and 74% of small businesses used payroll software, compared to 53% of micro businesses
• 74% of medium-sized and 69% of small businesses used electronic invoicing, compared to 60% of micro businesses
• 62% of medium-sized and 44% of small businesses used HR management software, compared with 14% of micro businesses
• 54% of medium-sized and 42% of small businesses used Customer Relationship Management (CRM), compared with 26% of micro businesses
• 44% of medium-sized and 43% of small businesses used booking software, compared to 27% of micro businesses

11. Future plans

11.1 Growth ambitions

In the data tables accompanying this publication, table 134 shows whether or not SME employers aim to grow sales over the next three years

About 71% of SME employers aimed to grow sales over the next three years, down four percentage points on 2023 and three percentage points on 2022. Small and medium-sized businesses were more likely to report this intention (85% and 89%) than micro businesses (67%). This compares with 85%, 92% and 72% in 2023, highlighting a decrease among medium-sized and micro businesses but no change within small businesses.

Figure 20: Percentage of SME employers that aim to grow sales of the business over the next three years, by employment size and year

Download Figure 20 chart data

SME employers in the arts and entertainment (82%, 76% in 2023), administration (78%, 80% in 2023), retail and wholesale (77%, 83% in 2023), accommodation and food (77%, 78% in 2023), manufacturing (75%, 80% in 2023) sectors were most likely to aim to grow.  Those in primary (60%, 69% in 2023), other services (62%, 65% in 2023), construction (63%, 72% in 2023), health (64%, 63% in 2023) and professional and scientific (65%, 67% in 2023) sectors were least likely to be aiming to grow.

Figure 21: Percentage of SME employers that aim to grow sales of the business over the next three years, by sector

Download Figure 21 chart data

By nation, growth ambition was higher in Northern Ireland (74%, 82% in 2023) than in Scotland, England and Wales (each 71% - 76%, 75% and 72% respectively in 2023).

11.2 Plans to undertake growth-related activities over the next three years (Cohort B)

In the data tables accompanying this publication, table 12 (Cohort B) shows what plans SME employers have for the business over the next three years

SME employers were asked about plans to implement various growth-related activities over the next three years. Of all SME employers:

• 62% planned to increase workforce skills (five percentage points down on 2023)
• 47% planned to recruit new staff in the UK (nine percentage points down on 2023)
• 40% planned to introduce new working practices (as in 2023)
• 39% planned to work towards a target to reduce carbon/greenhouse gas emissions/other emissions (five percentage points down on 2023)
• 38% planned to increase the leadership capability of managers (three percentage points down on 2023)
• 33% planned to develop and launch new products or services (seven percentage points down on 2023)
• 29% planned to invest in premises, machinery or other types of capital investment in the UK (four percentage points down on 2023)
• 22% planned to invest in R&D (three percentage points down on 2023)
• 14% planned to increase export sales or begin selling to new overseas markets (three percentage points down on 2023)
• 4% planned to recruit new staff in overseas offices (as in 2023)
• 3% planned capital investment overseas (as in 2023)
• 2% planned to decrease export sales or reduce the number of overseas markets they sell to (one percentage point up on 2023)
• 1% planned to transfer staff from the UK to overseas offices (as in 2023)

Figure 22: Percentage of businesses undertaking specified growth-related activities, by type of activity (Cohort B only)

Download Figure 22 chart data

Micro businesses were less likely to plan any type of growth-related activity than small and medium-sized businesses:

• Compared with 82% of small and 88% of medium-sized businesses, 57% of micro businesses planned to increase the skills of the workforce
• Some 40% of micro businesses planned recruitment of new staff in the UK, compared to 75% of small and 88% of medium-sized businesses
• While 56% of small and 64% of medium-sized businesses planned to introduce new working practices, just 37% of micro businesses planned this
• Around 32% of micro businesses planned to increase the leadership capability of managers, compared to 62% of small and 79% of medium-sized businesses
• Medium-sized businesses were twice as likely as micro businesses to have planned capital investment in the UK (54% and 27% respectively, compared to 38% of small businesses)
• Medium-sized businesses were also twice as likely as micro businesses to have planned to invest in R&D (40% and 20% respectively, compared to 29% of small businesses)
• Some 35% of micro businesses planned to work towards a target to reduce carbon/greenhouse gas emissions, compared to 55% small and 69% of medium-sized businesses

There was some variation in the intentions of SME employers across sectors:

• those in education (85%), arts and entertainment (86%) and health (83%) were most likely to plan to increase the skills of the workforce
• plans to recruit new staff in the UK were particularly common within education (60%), transport and storage (58%), administration (58%) and health (56%) sectors
• those in education (58%), health (49%) and transport and storage (49%) were most likely to plan to introduce new working practices
• those in primary (60%), transport and storage (54%) and arts and entertainment (50%) sectors were most likely to plan to work towards a target to reduce carbon/greenhouse gas emissions/other emissions
• those in education (54%) were most likely to plan to increase leadership capability
• those in information and communications (49%), education (46%) and manufacturing (40%) were most likely to plan to develop and launch new products and services
• those in primary (53%), transport and storage (47%) and manufacturing (42%) sectors were most likely to plan to make capital investments in the UK
• those in information and communications (47%), arts and entertainment (41%) and manufacturing (38%) were most likely to plan to invest in R&D
• those in manufacturing (32%) and information and communications (32%) were most likely to plan to begin selling to new overseas markets

11.3 Whether plans for growth-related activities have been affected by rising costs (Cohort B)

In the data tables accompanying this publication, tables 14 to 30 (Cohort B) show whether plans have been affected by rising costs

Again, the following section concerns SME employers planning to undertake specific growth-related activities. Only Cohort B were asked these questions.

Some 57% of SME employers with plans to undertake growth-related activities reported plans had been affected by issues relating to rising costs (up two percentage points on 2023). Small businesses were more likely than micro and medium-sized businesses to have reported rising costs affecting plans (65%, 55% and 59% respectively).

In 2024, by nation, SME employers in Scotland were the most likely to have reported plans affected by rising costs (61%, up three percentage points on 2023), followed by those in England (57%, up three percentage points), Wales (52%, down 11 percentage points) and Northern Ireland (51%, down five percentage points).

SME employers in arts and entertainment (73%), primary (71%) and accommodation and food (65%) sectors were most likely to report plans being affected by rising costs.

When asked about the specific issues relating to rising costs that had affected plans, those reporting to being affected were most likely to point to cost increases other than increased energy costs (81%, up five percentage points on 2023), with fewer citing increased energy costs (41%, down six percentage points). Around one in four reported that their plans had been affected by expectations of cost increases (25%, up four percentage points), with fewer citing uncertainty relating to cost increases (21%, up three percentage points).

Among SME employers citing specific plans for growth-related activity, those with plans to recruit new staff in the UK (45%) were most likely to report these plans affected by rising costs, followed by those planning for capital investment within the UK (44%), those planning to invest in R&D (40%), and those planning to develop and launch new products/services (38%). Some 35% of those planning to work towards a target to reduce carbon/greenhouse gas or other emissions reported these plans to have been affected by rising costs.

Less likely to have been affected by rising costs were plans to introduce new working practices (27%), those looking to increase the leadership capability of managers (27%) and those planning to increase the skills in the workforce (29%).

12. Profiles of SMEs

This section provides a snapshot of SME employers in terms of their characteristics and ownership.

12.1 Changes in the organisation in the last 12 months (panel only)

In the data tables accompanying this publication, table 4 outlines the changes in the business in the last 12 months.

SME employers that were panellists - that is those that had also taken part in 2023 - were asked whether a number of changes had occurred in the last 12 months. The changes and the percentage of respondents reporting that such changes had occurred are given here:

• 10% had gained or lost directors in day-to-day control of the organisation
• 5% had opened or closed a new branch, site or office
• 4% had changed their ownership structure
• 1% had moved their head office
• 1% had changed their legal status
• 1% had changed the principal activity of their business
• <1% became VAT registered for the first time
• <1% had de-registered for VAT
• for 83%, none of these changes had occurred

12.2 Number of sites

In the data tables accompanying this publication, table 6 provides detail on the number of sites operated from by SME employers.

The majority of SME employers (88%) reported operating from a single site  and 11% reported operating from multiple sites. The percentage of SME employers operating from a single site was unchanged from 2023 and one percentage point lower than in 2022.

Unsurprisingly, the proportion of SME employers operating from multiple sites increases as the number of employees within the enterprise increases, with 51% of medium-sized businesses reporting multiple sites, compared with 22% of small and 8% of micro businesses. These were similar proportions (within one percentage point) to 2023 (50%, 23% and 8%, respectively).

SME employers operating in transport and storage (20%, two percentage points higher than in 2023), health (19%, one percentage point higher than in 2023) and wholesale and retail (13%, down two percentage points than in 2023) sectors were most likely to have multiple sites.

12.3 Business premises in residential settings

In the data tables accompanying this publication, table 21 shows whether they have a separate business premises or work from home premises.

Around 30% of SME employers have business premises in their home or the home of the business owner. This is one percentage point higher than in 2023: six percentage points higher than in 2022.

By employment size, 36% of micro businesses run their business from a domestic address (a two percentage points increase on 2023, a seven percentage points increase on 2022 compared to 5% of small businesses (as in 2023, up one percentage point on 2022 and 2% of medium-sized businesses (up one percentage point on 2023 and 2022).

By sector, the proportions of SME employers that operate out of a domestic address are highest in primary (60%, 56% in 2023, 55% in 2022), construction (47%, 43% in 2023, 38% in 2022), information and communications (46%, 42% in 2023, 35% in 2022), professional and scientific (45%, 46% in 2023, 34% in 2022), and administration (34%, 37% in 2023, 28% in 2022) sectors.

Those in retail and wholesale (10%, 9% in 2023, 8% in 2022), manufacturing (11%, as in 2023, 7% in 2022), other services (15%, 12% in 2023, 14% in 2022), arts and entertainment (17%, 18% in 2023, 19% in 2022), health (18%, 15% in 2023, 13% in 2022) sectors were least likely to be home based.

Home-based businesses were most prevalent in Northern Ireland (32%, 29% in 2023, 30% in 2022) and Wales (32%, 28% in 2023, 24% in 2022), and less so in England (30%, 29% in 2023, 24% in 2022) and Scotland (29%, 26% in 2023, 25% in 2022).

12.4 Age of business

In the data tables accompanying this publication, table 17 shows the summary age of the business.

Amongst all SME employers, 9% had started trading within the preceding five years, that is between 2019 and 2024 (down four percentage points on 2023); 14% had started trading between 6 and 10 years previously (down two percentage points); 29% had started trading between 11 and 20 years previously (up one percentage point), while 48%  have been established 21 years or more (up five percentage points).

Small and medium-sized businesses tended to be older than micro businesses. Some 10% of micro businesses were aged between zero and five years (15% in 2023, 13% in 2022), compared with 6% of small businesses (7%, in 2023, 8% in 2022) and 5% of medium-sized ones (6% in 2023 and 2022). At the other end of the scale, 46% of micro businesses were aged 21 or more years (41% in 2023, 43% in 2022), compared with 57% of small businesses (55% in 2023, 53% in 2022), and 63% of medium-sized businesses (60% in 2023, 63% in 2022).

By sector, those most likely to be aged between zero and five years were in transport and storage (15%, 20% in 2023) and accommodation and food services (13%, 18% in 2023). Those most likely to have been trading 21 years or more were in primary (73%, 74% in 2023), other sectors (65%, 61% in 2023) and retail and wholesale (55%, 54% in 2023).

By nation, SME employers in Northern Ireland (14%) were more likely to be aged between zero and five years than those in Wales (12%), England (9%) and Scotland (7%).

12.5 Legal status

In the data tables accompanying this publication, tables 15 and 16 show the legal status of the SME employer.

74% of SME employers in our survey were private limited companies, limited by shares (a one percentage point increase on 2023 and a five percentage points increase on 2022), 6% were sole proprietors (a one percentage point decrease on 2023, a three percentage points decrease on 2022), 7% were partnerships (as in 2023 and 2022), 5% were private companies limited by guarantee (CLGs) (a one percentage point decrease on 2023, the same proportion as in 2022), and 1% were limited liability partnerships (LLPs) while 2% were charitable incorporated organisations (CIOs) (both as in 2023 and 2022).

Micro businesses were more likely than larger businesses to be sole proprietorships. Around 7% of micros were sole proprietorships, compared with 2% of small and less than 1% of medium-sized businesses. Small (77%) and medium-sized (80%) businesses were more likely than micro (73%) businesses to be private companies limited by shares.

Not-for-profit enterprises often had alternative legal statuses, tending not to be limited by shares, sole proprietors, or any form of partnership. They were mainly CLGs, although others were IPS (Industrial and Provident Societies), CIOs, CBS (Community Benefit Society), CICs (Community Interest Company) or described themselves as trusts, friendly societies, co- operatives, royal charter companies or unincorporated associations. Overall, 7% of SME employers had these alternative legal statuses (6% in 2023 and 7% in 2022).

These alternative legal statuses were most common in other services (31%), health (25%), education (21%) and arts and entertainment (21%) sectors.

12.6 Registered charity status

In the data tables accompanying this publication, table 5 shows if the SME employer is a registered charity.

In 2024, 6% of SME employers were registered charities (up one percentage point on 2023 and 2022). Micro businesses were less likely than small and medium-sized businesses to be registered charities. Some 5% of micro businesses were registered charities, compared with 7% of small and medium-sized businesses.

Of those with alternative legal statuses, as described above, 45% had charitable status. Of those with more common legal statuses (sole proprietorships, companies, partnerships), no more than 3% were registered charities.

Charitable status was most common in the health (42%), other services (33%), education (32%), and arts and entertainment (26%) sectors.

12.7 Number of owners/partners/directors

In the data tables accompanying this publication, tables 25 and 26 provide the number of owners, partners and directors.

In 2024, 69% of SME employers had no directors in day-to-day control of the business who were not owners or partners (75% in 2023 and 79% in 2022), while 15% reported having one director (12% in 2023), 9% had two directors (7% in 2023), 4% had between three and five (3% in 2023) and 1% had six or more (2% in 2023).

There was little change in the number of owners, partners or directors reported by SME employers compared with 2023, around 41% of SME employers reported having no more than one owner, partner or director (42% in 2023), 37% reported having two, 17% reported having between three and five and 4% having six or more (each as in 2023).

The number of owners, partners and directors increases with employment size, with 45% of micros having no more than one owner, partner or director compared with 26% of small and 22% of medium-sized businesses.

12.8 Family-owned businesses

In the data tables accompanying this publication, tables 22, 23 and 24 show whether the business is classified as family owned.

Overall, 73% of SME employers were majority-owned by the person or family who set it up (down two percentage points on 2023 and down six percentage points on 2022). In 98% of these businesses, the person or family who majority-owned the business was actively involved in managing it. Note that we classify businesses with just a single owner or partner as family businesses, but not those without any owners.

Family-owned businesses were more common among smaller enterprises, comprising 76% of micro businesses, 62% of small businesses and 51% of medium-sized businesses.

By sector, family businesses were most likely in primary (88%), construction (80%), administration (79%), retail and wholesale (78%) and transport and storage (78%) sectors.

12.9 Women-led businesses

In the data tables accompanying this publication, tables 34 and 35 show whether the business is classified as women-led, table 27 provides more detail on the proportion of women owners and directors

Women-led businesses are defined as those majority-led by women, that is, controlled by a single woman or having a management team of which a majority are women. In 2024, 14% of SME employers were women-led. This was a one percentage point decrease on 2023 and a four percentage points decrease on 2022.

There were fewer women-led medium-sized businesses (11%), compared with small and micro businesses (14% and 13% respectively). This has been a consistent trend across the years.

Women-led businesses were most likely in health (35%), education (34%), other services (20%), accommodation and food (19%) and professional and scientific (19%) sectors (it should be noted that in the service sectors of education, health, arts and entertainment and other services, about one in five respondents were unable to provide sufficient information in order to identify them as women-led or not).

While 14% of SME employers were women-led, a further 26% were ‘equally-led’, with an equal number of men and women in the management team (one percentage point up on 2023, three percentage points up on 2022 and two percentage points up on 2021).

A further 10% of SME employers had women in the minority in the management team (9% in 2023, 11% in 2022 and 10% in 2021), and 43% were entirely male-led (44% in 2023, 2022 and 2021).

It was not possible to classify 6% of all SME employers as women-led or male-led, as there was insufficient information provided for these businesses (uncertainty regarding owners/partners’ gender or refusal to supply the information). The 2024 survey findings suggest that fewer SME employers were women-led and that there is downward trend in this respect. There was little change – up just one percentage point – in SME employers who included any women in their management teams.

12.10 Minority Ethnic Group-led businesses

In the data tables accompanying this publication, table 36 shows whether the SME employer is classified as led by people from minority ethnic groups

About 6% of SME employers were minority ethnic group led (MEG-led), defined as having a person from an ethnic minority in sole control of the business or having a management team with at least half of its members from minority ethnic groups (one percentage point lower than in 2023, the same percentage as in 2022). This proportion has changed little over the course of the survey that has run from 2015 to 2024, and there has also been little change in the proportions of MEG-led SME employers by employment size; 6% of micros, 6% of small and 8% of medium-sized businesses.

MEG-led SME employers were more likely in health (13%) and finance and real estate (9%) sectors. They were less likely in primary (2%), arts and entertainment (2%), construction (3%) and manufacturing (3%) sectors.

Overall, 5% of all SME employers could not be classified as either MEG-led or non-MEG-led as there was insufficient information provided for those businesses (uncertainty regarding owners/partners’ ethnicity or a refusal to provide it).

12.11 Businesses leaders with a disability

In the data tables accompanying this publication, table 30 shows the number of owners, directors or partners with a disability, table 33 shows whether the sole owner has a disability, while table 37 shows whether the SME employer is classified as led by people (someone) with a disability

Whether owners, directors or partners had a disability was asked for the first time in 2024. Of those with more than one owner, director or partner, 9% reported one or more having a disability. This was higher among micro than small and medium-sized businesses (10%, 6% and 6% respectively).

By sector, SME employers in arts and entertainment (23%), primary (15%), information and communications (14%) were most likely to have at least one owner, director or partner with a disability. Those in construction (3%) and finance and real estate (7%) were least likely to report one of their senior leadership team having a disability.

Where there was just one owner, 4% were reported to have a disability. This was higher in micro than small and medium-sized businesses (5%, 2% and 2% respectively).

By sector, sole owners with a disability were most common in administration (8%), education (8%) and retail and wholesale (7%).

About 2% of SME employers reported being led by people with a disability. This was defined as having a person with a disability in sole control of the business or having a management team with more than half of its members with disabilities. By employment size; 2% of micros, 1% of small and less than 1% of medium-sized businesses.

The term ‘disability’ was not defined in the question and survey participants were not asked about the nature of the disability.

Figure 23: Ownership of organisation, by year

Download Figure 23chart data

13. Accompanying tables

The data tables below are available in Excel format and ODS for this publication:

• Longitudinal Small Business Survey 2024: SME employers – data
• Longitudinal Small Business Survey 2024: SME employers – data – Cohort A
• Longitudinal Small Business Survey 2024: SME employers – data – Cohort B
• Longitudinal Small Business Survey 2024: SME employers – data – Cohort C

The survey microdata will be deposited with the Secure Research Service and the UK Data Service during the Autumn of 2025. This will be available to approved researchers.

14. Technical information

14.1 Aims of the survey

This report sets out some of the key findings for the 2024 Longitudinal Small Business Survey (LSBS), a large-scale telephone CATI (Computer Assisted Telephone Interviews) survey of 10,611 UK small business owners and managers, commissioned by the Department for Business and Trade.

This survey is the latest in a series of annual and biennial Small Business Surveys (SBS) dating back to 2003. The 2024 survey was conducted between October 2024 and May 2025 by BMG Research Ltd.

The 2024 survey follows surveys conducted annually since 2015.  Sample bases for each year from 2015 to 2024, are summarised in Table 1. The 2015 survey was the largest SBS yet undertaken, while the second highest sample was undertaken in 2018. The main reason for large sample sizes in both 2015 and 2018 was to enable the survey to have a longitudinal tracking element, so, in 2015, establishing, and in 2018 further boosting, a ‘panel’ of businesses that might be re-surveyed in subsequent years, enabling a detailed analysis of how combinations of factors affect business performance through time. Any panel has an element of attrition, hence the need for a large sample size in 2015 and a boost in 2018.

Table 1

Year	Sample size
2024	10,611
2023	9,681
2022	9,524
2021	9,325
2020	7,636
2019	11,002
2018	15,105
2017	6,619
2016	9,248
2015	15,502

In 2024, 4,337 top up interviews were conducted. This was in addition to 6,305 interviews with enterprises that had already completed at least one LSBS survey between 2015 and 2023. Top-ups were needed for the following reasons:

• to represent sections of the SME population that were not active in the 2023 survey fieldwork period (businesses less than one-year old)

• to represent sectors in the raw data that may be under-represented due to businesses in the panel closing, or being hard to secure an interview with (for example, in cases where businesses work away from their main offices)

All interviews were conducted with owner/proprietors, Managing Directors or other senior directors in UK-based enterprises. For the top-ups, named contact details were not supplied, and it was necessary to screen to find an appropriate respondent. The average interview length was 18.6 minutes (16.5 minutes for panellists, 21.9 minutes for top-ups).

The main aim of the survey is to collect a range of information on SMEs. The survey measures:

• recent turnover and employment growth
• capabilities (in terms of their ability to innovate, export, train staff, etc)  - experience of accessing finance
• use of business support
• expectations of growing turnover and employment
• the major obstacles that prevent SMEs fulfilling their potential
• the characteristics of SMEs such as the number of sites they occupy, the number of owners, whether they have separate business premises, whether or not they are a social enterprise (or a socially oriented SME) etc
• the characteristics of their owners and leaders

There are 3 main reports based on the 2024 LSBS:

• a cross-sectional report based on SME employers. A cross-sectional report is a snapshot of the state of SMEs at any stage in time, this one being from the latter quarter of 2024 up to and including the first quarter and first half of the second quarter of 2025
• a cross-sectional report based on businesses with no employees
• a longitudinal report based on those businesses that responded in the last 4 years of the survey. This looks at the main changes that apply to the ‘panellists’ from year to year, and what appears to influence these changes

23 of the 10,611 interviews were with large employers with 250 or more employees. The reason for interviewing these is that these businesses were SMEs when first interviewed but have grown since. They form a part of the longitudinal analysis, but not the cross-sectional.

14.2 Survey method

Of the 9,681 interviews conducted in 2023, 8,419 (91%) agreed to a follow-up interview. The objective was to obtain the highest possible number of repeat interviews with these panellists. 4,791 were interviewed between October 2024 and May 2025 (57%, higher than in 2023 - 54%, but lower than 2022 - 60% and 2021 – 62%). Of these, 883 had no employees, 17 were large businesses with 250+ employees, and the remainder (3,891) were SME employers. This group is known as the ‘full panel’.

In addition, 9,244 businesses interviewed from 2015 to 2022 but not in 2023 could be re- approached for interview (they had given permission for re-interview and had not refused to take part between 2015 and 2022 and had not ceased trading). 1,513 of these were interviewed in 2024, a response rate of 16% (18% in 2023, 16% in 2022 and 18% in 2021), of which 203 had no employees, 1,304 were SME employers, and 6 were large businesses with 250+ employees. This group is known as the ‘past panel’.

In addition to these, 4,337 ‘top-up’ interviews were conducted, of which 1,140 had no employees and 3,197 were SME employers. As a result, the total sample size in the 2024 survey was 10,611, of which 1,907 had no employees, 8,415 were SME employers and 23 were large employers (250+ employees).

The top-ups were sampled using a method consistent with the 2015 to 2023 surveys:

• the sample was stratified within each of the 4 UK nations
• targets were set according to the employment size of enterprises and, within those targets, by 1-digit sector (using SIC 2007)
• the targets over-represented businesses with 5 to 249 employees substantially in comparison to their actual numbers within the business population

For registered businesses, the Inter Departmental Business Register (IDBR) was used as the sample source. For unregistered businesses with no employees, a database from the commercial database provider MailingLists was used. These contacts were screened out if they either had employees on their payroll or paid VAT, as these would have duplicated contacts found within the IDBR.

In addition, in 2024, we used a commercial panel to identify very small-scale unregistered businesses within the general UK population. Many unregistered businesses promote themselves via word-of-mouth and social media and may be missing from traditional business lists as a result.

The IDBR is a record of all UK enterprises that pay VAT or PAYE, which contains around 2.7 million unique entries for enterprises. The DBT Business Population Estimates (BPE) publication 2024 estimated around 5.5 million enterprises in the UK in total. The difference in the figures is explained by the number of unregistered enterprises that do not pay VAT or PAYE, estimates of which derive from the Labour Force Survey (LFS). This is the reason why an alternative database was retained as the source for top-up businesses with no employees, as it contains records for both registered and unregistered businesses.

The targets within the sample stratification matrix were informed by the 2023 BPE, the latest available at the start of fieldwork. However, survey findings were weighted to the 2024 BPE which were published a few months into the fieldwork period. The 2024 BPE was used for weighting as it more accurately represents the IDBR contacts used for the survey, as well as providing a more up-to-date picture of UK small businesses than the 2023 BPE.

A 336-cell sample stratification matrix was devised, the targets within each cell informed by the 2022 BPE. These cells were defined by cross classifying the following 3 categories:

• 14 ‘one digit’ SIC 2007 categories (ABDE, C, F, G, H, I, J, KL, M, N, P, Q, R, S)
• 6 size categories (unregistered zero employees, registered zero employee, 1 to 4 employees, 5 to 9 employees, 10 to 49 employees, 50 to 249 employees)
• 4 nations (England, Scotland, Wales, Northern Ireland)

Once the sample was drawn, with sample sizes informed by differential likely tele-matching success rates for each cell (based upon experience from the previous surveys), no quotas were employed on size, sector or any other criteria except for country, where minimum sample sizes were sought within Northern Ireland, Scotland and Wales.

A review of the 2023 questionnaire was undertaken through consultations with stakeholders. This resulted in a number of alterations to existing questions from previous surveys, new question additions and deletions. The changes were informed by the requirement to balance stakeholders’ latest needs with the desire to exploit the longitudinal power of the survey. The consultation was followed up by a ‘live’ pilot of 100 interviews of the adjusted year ten questionnaire.

Based on the whole sample, the response rate for full panellists was 57%, three percentage points higher than in 2023. For past panellists the response rate was 16%, two percentage points lower than in 2023, but the same as in 2022. For IDBR top-ups the response rate was 4%, as in 2023. For unregistered top-ups, the response rate was 2%, three percentage points lower than in 2023. There is more detail in the technical report, which includes tele-matching rates and other forms of non-response.

14.3 Note on this report

Please note that the findings presented in this report relate to SME employers only - Enterprises with no employees, and large employers, have been excluded from the dataset on which this report is based. This procedure is consistent with reporting of previous surveys. The overall sample size for SME employers across the UK in 2024 was 8,396.

14.4 Sample Cohorts

One of the main reasons given by respondents who do not want to participate in LSBS is that the interview length is too long. In 2018, BEIS made a commitment to bring down the average interview length and introduced ‘cohort questions’, which we used again in 2024.

Three cohorts (A, B and C) were created. Each cohort was exclusively asked a series of non- key questions. For example, only Cohort A was asked questions on business energy usage. Cohorts were chosen for respondents at random during their interview.

There were approximately 3,500 respondents in each 2024 Cohort: 3,575 in Cohort A, 3,533 in cohort B and 3,504 in Cohort C. Each respondent is part of one cohort only. Where a business is in each of the datasets from 2018 to 2024, its Cohort for 2024 is entirely independent of its cohorts between 2018 and 2023 (for example, knowing a business was in Cohort A in 2018 tells you nothing about which cohort it is in in 2024). Because of the different respondents answering questions for different cohorts, we have calculated separate cohort weights for analysing responses to the cohort questions. To analyse questions asked of Cohort A in 2018, analysts should use the 2018 Cohort A weights, for questions to Cohort C in 2019 they should use the 2019 Cohort C weights, and so on.

14.5 Sector definitions

Throughout this report, data tables show sectoral analysis by one-digit SIC 2007 codes. Because of relatively small numbers in the business population and survey sample, some of these sectors are grouped together: ABDE, labelled as ‘primary’, comprises:

• (A) agriculture, fishing and forestry
• (B) mining and quarrying
• (D) electricity and gas
• (E) water, sewerage and waste management

KL, labelled as ‘financial and real estate’, comprises (K) finance and insurance, and (L) real estate.

To gain a better picture of the types of businesses that fall into each sector category, the following gives the most populous sub-sectors for SME employers at the 3-digit level:

• ABDE (primary). There were 60,160 UK SME employers in this sector in 2023. The sector is dominated by farming but also includes mining and quarrying, and utilities such as electricity and gas. The 3 most populous sub-sectors within the category were animal production (38%), growing of non-perennial crops (21%) and mixed farming (13%)
• C (manufacturing). There were 85,300 UK SME employers in this sector in 2023. Manufacturing is the most classified sector, with 95 3-digit SIC codes. The most populous sub-sectors within the category were treatment and coating of metals (9%), manufacture of wood, cork, straw products (8%), printing, and repair of fabricated metal products, machinery and equipment (each 7%)
• F (construction). There were 193,600 UK SME employers in this sector in 2023. The most populous sub-sectors within the category were electrical and plumbing (30%), building completion (24%) and building construction (19%)
• G (retail and wholesale). There were 243,400 UK SME employers in this sector in 2024. The most populous sub-sectors within the category were retail sale of other goods in specialised stores (16%), maintenance and repair of motor vehicles (14%), and retail sale in non-specialised stores (13%)
• H (transport and storage). There were 46,700 UK SME employers in this sector in 2024. The most populous sub-sectors within the category were road freight transport (48%) and other passenger land transport (mainly taxi businesses,17%)
• I (accommodation and food service). There were 142,800 UK SME employers in this sector in 2024. The most populous sub-sectors within the category were restaurants (65%) and beverage serving activities (pubs and bars - 19%)
• J (information and communications). There were 75,800 UK SME employers in this sector in 2023. The most populous sub-sector within the category was computer programming and consultancy (68%)
• KL (financial and real estate). There were 75,300 UK SME employers in this sector in 2024. The most populous sub-sectors within the category were estate agents (34%), property rentals (30%) and auxiliary financial services (14%)
• M (professional and scientific). There were 187,500 UK SME employers in this sector in 2024. The most populous sub-sectors within the category were management consultancy (28%), architecture and engineering (19%) and accountancy (13%)
• N (administrative services). There were 127,100 UK SME employers in this sector in 2024. The sector was dominated by ‘business support services not elsewhere classified’ (40%). This is a miscellaneous category. Sector N also included house and business cleaning (15%) and landscaping (10%), and employment placement agencies (8%)
• P (education). There were 21,800 UK SME employers in this sector in 2024. The most populous sub-sector within the category was ‘other education’ (60%, for example, driving schools and sports coaches). The next most populous was pre-primary education (13%)
• Q (human health and social work). There were 62,500 UK SME employers in this sector in 2024. The most populous sub-sectors within the category were medical and dental (40%), non-residential social work activities and other human health activities (each 19%)
• R (arts and entertainment). There were 27,500 UK SME employers in this sector in 2024. The most populous sub-sectors within the category were sports activities (45%), creative and arts (33%) an d amusement and recreation (17%)
• S (other services). There were 68,500 UK SME employers in this sector in 2024. The sector was dominated by ‘other personal service activities’ (87%). This includes hairdressing and beauty, funeral directors and dry-cleaning

Much more detail on the sectors is available in the DBT Business Population Estimates.

14.6 Uncertainty

Since the LSBS questioned a sample of UK SMEs, rather than all of them, there is inevitably a level of uncertainty around the estimates we derive from the survey and how close they will be to the true values.

14.7 Coverage and representativeness

Users might wonder if the sample we have used is adequately representative of the target population (the UK SME population). We have drawn our sample from three sampling frames to draw our sample from. One is the IDBR from the Office for National Statistics (ONS), which has excellent coverage of registered businesses in the UK, as it is regularly updated with information from HMRC and ONS surveys. We use the commercial database provider, MailingLists, to provide us with a sample of unregistered businesses and for the 2024 survey a commercial panel to include businesses not registered for VAT or PAYE .

The coverage of the unregistered business population is less well understood. It is likely that the MailingLists frame is good for well-established businesses that advertise their presence in trade directories for example. Small businesses that rely on word of mouth, or platforms such as Facebook or Instagram for business and have no wish to expand are unlikely to be included in either of the sampling frames.

Our sample is deliberatively unrepresentative in the sense that it overrepresents larger SMEs, and also over-represents non-English businesses. This is to ensure that we have reasonable sample sizes for medium-sized businesses, Scottish businesses etc., otherwise we would not be able to obtain robust estimates for important subgroups. A truly proportionate sample would otherwise contain just a handful of medium-sized businesses. We produce survey weights so that analysts can nevertheless arrive at estimates that take due account of the actual distributions in the population – micro businesses have larger weights than medium-sized businesses for example.

Another way that our sample might be unrepresentative is that the businesses that take part in the survey (which is after all voluntary) are different from the businesses that we sample but do not agree to take part, with respect to the various questions we ask. This is known as non-response bias. For example, if struggling businesses are more likely to refuse to take part than thriving ones, then our final achieved sample will underrepresent struggling businesses, and estimates of things like future ambition, that might differ considerably between struggling and thriving businesses.

It is hard to quantify non-response bias. We have taken a number of standard steps to try to minimise its risk. The research company that conducted our interviews made multiple attempts for each sampled business for which we could obtain a telephone number, so that we can get more of the reluctant businesses, and we did not have hard quotas for each of our ‘target cells’ (quotas for a target cell, for example 25 interviews of micro businesses in finance and real estate in Wales, can encourage an interviewer to give up quickly on reluctant businesses and focus on snapping up as many easier businesses as possible in order to meet their quota as quickly as possible). Sampled businesses were also given contact details for government officials so they could confirm the survey was genuine and official.

14.8 Sampling uncertainty

It is possible to quantify the amount of uncertainty that arises from using a sample instead of interviewing the entire population. There are a few ways of doing this, but we will focus on using a statistical tool known as confidence intervals.

In order to run our survey, we drew a random sample. This means that on another day we would have drawn a different sample. With our actual sample, we estimated that 77% of SME employers in 2024 made a profit or generated a surplus in the previous financial year. But it is possible that another random sample might have found that number to be within +/-1.0% even though the actual true figure is unchanging. This is known as sampling variability.

What we can do is produce a 95% confidence interval around an estimate. The interval is calculated using a method that, for 95% of the possible random samples we could have drawn, will produce an interval that contains the true value of this profitability measure. Each different random sample would have a different confidence interval, but 95% of the time the interval produced will contain the true value. So, our actual survey estimate is 77%, and we are 95% confident that the true value is in the range 76% to 78%.

Our survey contains hundreds of measures, and it is not practical to produce confidence intervals for each one of them. Instead, Table 2 summarises the sampling uncertainty for the key measures reported in this publication.

Most of the estimates from this survey are presented as proportions or percentages (such as 10%). If this was an estimate relating to all UK SME employers, then we look at the ‘all UK’ row and the column for estimates at 10%. The confidence interval is given as +/- 0.6%. So, our confidence interval around the 10% estimate is 10% +/- 0.6%, that is, from 9.4% to 10.6%. We are 95% confident that the true figure is between 9.4% and 10.6%.

If the estimate had been closer to 30% or to 70%, then our interval would have used +/-1.0% according to Table 2. When estimates are close to 50%, that is the ‘worst case scenario’ in the sense that the confidence intervals are at their widest. They narrow more as the estimate moves away from 50% (in either direction). So, the intervals are slightly narrower for 30% or 70% estimates, and narrower still for 10% and 90% estimates.

Confidence intervals get narrower when you have larger sample sizes too. If our 10% estimate is for medium-sized SME businesses rather than for all UK SME employers, we use a different row of the table and find the confidence interval to be 10% +/- 1.7%. If we have an estimate of 65% for the medium-sized businesses, that is close to 70% so we use that column of the table and arrive at an approximate confidence interval of 2.6%.

Table 2 is useful for estimates of proportions but cannot be used for other measures. For example, we have estimated a mean amount of external finance sought by SME employers as £512,978.

Table 2 cannot be used to produce a confidence interval for this estimate, though it can be done, it is +/- £325,216. The underlying data tables published alongside this report contain ‘standard errors’ for estimates that are not proportions, such as amount of finance sought, or number of employees. Standard errors are another way of quantifying the sampling variability. As a rule of thumb, twice the standard error gives you the ‘+/-’ for a 95% confidence interval, which is how we calculated the +/- £325,216 figure above.

Table 2

	Sample size	Confidence interval for an estimate of 10% or 90%+/- (%)	Confidence interval for an estimate of 30% or 70%+/- (%)	Confidence interval for an estimate of 50%+/- (%)
All UK	8,396	0.6	1.0	1.1
England	6,119	0.8	1.1	1.3
Scotland	859	2.0	3.1	3.3
Wales	892	2.0	3.0	3.3
Northern Ireland	526	2.6	3.9	4.3
Micro businesses (1-9 employees)	3,724	1.0	1.5	1.6
Small businesses (10-49 employees)	3,523	1.0	1.5	1.7
Medium-sized businesses (50-249 employees)	1,149	1.7	2.6	2.9
ABDE. Primary sector	242	3.8	5.8	6.3
C. Manufacturing	927	1.9	3.0	3.2
F. Construction	748	2.1	3.3	3.6
G. Retail and wholesale	1,389	1.6	2.4	2.6
H. Transport and Storage	299	3.4	5.2	5.7
I. Accommodation and Food	769	2.1	3.2	3.5
J. Information and communication	397	3.0	4.5	4.9
KL. Finance and real estate	367	3.1	4.7	5.1
M. Professional and scientific	1,058	1.8	2.8	3.0
N. Administration and support	674	2.3	3.5	3.8
P. Education	248	3.7	5.7	6.2
Q. Human health	703	2.2	3.4	3.7
R. Arts and entertainment	232	3.9	5.9	6.4
S. Other services	343	3.2	4.8	5.3

For cohort questions, the margins of error increase by about 70% - for example +/- 2.0% becomes +/- 3.4% (to increase a number by 70%, multiply it by 1.7). This table applies to estimates of proportions.

14.9 Which differences are statistically significant?

Generally, throughout this report where we talk about differences (between the estimate for a subgroup and the total, say, or between 2 subgroups) we mean they are different even after taking account of the sampling variability. This is often described as statistically significant. Where we simply list numbers that are different (for example ‘England (41%), Scotland (38%), Wales and Northern Ireland (both 36%)’) this does not necessarily mean that they are statistically significantly different from each other. Where we draw attention to some estimate being ‘higher’, or a subgroup being ‘most likely’, or single out a sector as higher than the rest, this is a statistically significant difference.

For example, suppose we have stated the following: Exporters were most likely in manufacturing (46%, down one percentage point on 2023 but the same proportion as in 2022), information and communications (40%, down one percentage point on 2023 and down two percentage points on 2022), retail and wholesale (26%, down three percentage points on 2023 but the same proportion as in 2022) and professional and scientific (26%, also down one percentage point on 2023 and down two percentage points on 2022). The sectors least likely to have exported were accommodation and food service (1%), health (3%), construction (4%), finance and real estate (6%), other services (6%) and primary (8%).

This does not mean that manufacturing businesses were statistically significantly more likely to have exported than those in information and communications, but both sectors were statistically significantly more likely than the rest of the SME employers to have done so, i.e., they are more likely than average. Similarly, we are 95% confident that the six other sectors mentioned were less likely than average, even though there is some uncertainty over those specific figures of 1% and 2%.

15. Definitions

Term	Description
Business, enterprise, firm	In this report these terms all mean the same – they are interchangeable.
Cohort	We use this term to describe the way the survey samples since 2018 are divided into 3 separate groups (the cohorts) and answer some questions that are for their cohort only. This was done to increase the number of questions asked in the survey without increasing the average length of interview.
Disability-led business	A business where at least half of the leadership team is reported as having a disability (the term, ‘disability’ was not defined for respondents, nor were respondents asked about the nature of the disability).
EFTA	European Free Trade Association. This comprises the countries of Iceland, Liechtenstein, Norway and Switzerland. The 3 countries apart from Switzerland are part of the European Single Market as members of the European Economic Area.
EU	The EU is the European Union. This comprises the countries of Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden
Exports	In this report this means a British business selling goods or services to a customer outside the UK. An English business selling to a Northern Irish business is not exporting, but a Northern Irish business selling to a customer in the Republic of Ireland is exporting.
Family-owned business	This means a business where a majority of owners are in the same family. A business with a single owner is automatically a family-owned business, although a business with no owners is not. ‘Majority’ means more than half, but ultimately, we require the respondent to the survey to interpret this: where a business has more than one working owner or partner, they are simply asked if the business is family-owned and this is defined in the questionnaire as ‘majority-owned by members of the same family’.
Finance	In this report when we talk about businesses accessing finance or applying for finance, we usually mean borrowing money for business reasons. This might be from banks or other financial institutions or might be less formal arrangements such as money borrowed from friends and family.
Health sector	The health sector in this report is more accurately described as the ‘human health and social work sector’. It does not include veterinary services (which fall under the professional and scientific sector). As this survey covers the private sector, the National Health Service (NHS) does not come under the health sector for this survey; but private sector healthcare providers do.
Imports	In this report this means a British business buying goods or services from a business outside the UK. A Northern Irish business buying from a Welsh business is not importing, but a Northern Irish business buying from a business in the Republic of Ireland is importing.
Innovation	This refers to a business implementing a new or significantly improved product or process (which can also include new marketing methods or organisational methods). The international manual on collecting data about innovation is known as the Oslo Manual.
Longitudinal	A longitudinal study is one which collects data from the same unit at different times. We call this survey longitudinal because each year we try to re-interview businesses that took part in the survey in previous years. Analysts have specific methods for analysing longitudinal data. This report focusses on cross-sectional analysis – even when we refer to results from earlier years of the survey, we take no particular account of the fact that some businesses will have contributed to both years of the survey (in other words, the analysis is not longitudinal). We have longitudinal analysis in the panel report which we publish separately, and the dataset is available to approved researchers to perform their own longitudinal analysis if they wish.
Mean	A measure of the average which takes the total of whatever is being measured and divides it by the number of units being measured. (For example, mean turnover of micro businesses in 2024 is the total turnover of micro businesses in 2024 divided by the total number of micro businesses in 2024.)  As the LSBS is a sample survey, the mean is estimated, as we can only estimate the relevant total for example. The mean is a common and well-known statistical measure, but it can be affected by extreme values which make it poor as a measure of the ‘typical’ value of whatever is being measured. This is often a problem with business statistics as there are often many ‘extreme’ values.
Median	The median is an alternative measure of the average which is not affected by extreme values in the way that the mean can be. As such it is often a better way of finding a ‘typical value’ of whatever is being measured. The median is the middle value of what is being measured if all the measured values are put into order from smallest to largest value. As with the mean, in the LSBS we can only estimate the median as we are working from a sample.
Medium-sized business	A business which has between 50 and 249 employees (whether they are full-time or part-time). These are the largest SMEs, since businesses with 250 or more employees are defined as large businesses in this survey. Alternative definitions of business size are sometimes used by other studies (which might include consideration of annual turnover or total assets belonging to a business).
MEG-led business	A business where at least half of the leadership team comes from minority ethnic groups (as this is a UK survey, minority ethnic groups are those that are not of any White background, including White British, where White British includes White English, White Scottish etc). The leadership team comprises the directors and working owners. We can include members of several ethnic groups and can include people who describe themselves as mixed ethnicity where White British background is one of those ethnicities.
Micro business	A business which has between one and 9 employees (whether they are full-time or part-time).
National Minimum Wage, National Living Wage	The National Minimum Wage has been in operation in the UK since 1999. This sets a minimum value for the hourly rate of pay that employers must pay, though this level depends on the age of the employee and differs for apprentices. It does not depend on the size of the employing business. It is usually updated once a year following a (non-binding) recommendation by the Low Pay Commission but ultimately determined by the UK Government. The National Living Wage is a minimum wage that applies to workers from the age of 25 and has been in place since 2016.  It was extended to 23- and 24-year-olds on 1 April 2021. As it is higher than the National Minimum Wage it effectively supersedes it for employees aged 25 or more.
PAYE	This stands for ‘pay as you earn’ and describes the system where employees’ taxes on income are deducted automatically from their pay before they are paid. If this is done accurately then the employee does not face an annual tax bill for these taxes. The relevance for this survey is that businesses that we describe as ‘unregistered’ will not be registered for PAYE with the UK tax authorities – so if a business is registered for PAYE, we know that it ought to be included in our sampling frame for registered businesses, the IDBR.
Private sector, public sector	The survey is one of private sector businesses, which are businesses where the government ‘does not exercise significant control over the general corporate policy’ of the business. The Office for National Statistics follows international guidance to determine whether something is in the public sector, and have more information on their process here. Note that the private/public sector distinction is not the same as the market/non- market distinction, and in particular note that charities and social enterprises can be in the private sector (in fact the majority of these are). The ONS page has more detail on this.
R&D	This stands for ‘research and development’ and in this survey is usually referred to in the context of ‘R&D spending’, meaning spending on creative and systematic work to increase the stock of knowledge or to devise new applications of existing knowledge. The international manual on collecting data about R&D is known as the Frascati Manual.
Red tape	This is an informal term used to refer to regulations or requirements that are imposed on a business or person. In this survey it is sometimes cited by businesses as an obstacle. Different businesses may have different ideas as to what counts as red tape, and the ultimate source of regulations that are perceived as red tape could be governmental or non- governmental.
Registered business	In our survey we use ‘registered’ businesses to mean those that are registered for PAYE (and so are employers) or registered for VAT (and so have an annual turnover above a certain threshold set by the UK Government). In either of these cases such businesses ought to be included in our sampling frame for registered businesses, the IDBR. Some unregistered businesses do appear in the IDBR, but we use a separate sampling frame for unregistered businesses which has better coverage of them.
Sector	In this report businesses are classified into one of a number of non- overlapping sectors. We use the Standard Industrial Classification but have combined some of the categories to make them more practical for our survey. See the ‘sector definitions’ section of this report for more detail.
SIC 2007	This is the specific version of the Standard Industrial Classification that is used for this survey, in common with most official statistics in the UK. This is a useful page from the Office for National Statistics website for more detail on SIC 2007.
Small business	A business which has between 10 and 49 employees (whether they are full-time or part-time). In some contexts, people use the term ‘small business’ to refer to all businesses that are smaller than large and medium- sized businesses (in other words all businesses with fewer than 50 employees) but in the LSBS we always use the narrower definition when referring to small businesses specifically.
SME	This stands for ‘Small and Medium Enterprises’, but this is commonly meant to refer to all businesses, firms and enterprises that have fewer than 250 employees, including those that have no employees at all. This means that in the LSBS ‘SMEs’ actually comprise business with no employees, micro businesses, small businesses and medium-sized businesses.
Surplus	Our survey includes not-for-profit enterprises and for many of these it is more appropriate to use the term ‘surplus’ to refer to an excess of revenue (money coming in, from all sources) over expenditure (money going out, for all reasons).
Trade credit	Trade credit is typically used to refer to when a business receives goods or services from another business but does not pay for it in full at the time of delivery. We ask about it in the survey in the section on finance, but we do not treat it as a form of external financing – rather, it is contrasted with late payments, so it is better thought of as a form of agreed delayed payment, with late payments a delayed payment that has not been agreed.
Turnover	In the LSBS this term is usually synonymous with ‘sales’. Although for the purposes of preparing accounts ‘turnover’ may be defined differently from ‘revenue’ or ‘sales’ we do not specify a particular definition in our questionnaire and assume that respondents interpret it to mean revenue from sales which do not take account of costs.
VAT	Value-added tax is tax which businesses are liable to pay if their annual turnover is above a certain threshold. Businesses which are registered for VAT with the UK tax authorities are considered to be ‘registered’ businesses for this survey and ought to be included in our sampling frame for registered businesses, the IDBR.
Women-led business	Women-led businesses are defined as those majority-led by women, that is controlled by a single woman or having a management team of which a majority are women. ‘Majority’ here means more than 50%.

16. Further information

16.1 Future updates to these statistics

The Department for Business and Trade (DBT) intends to continue the survey for at least one further wave. The delay to field start date that occurred in 2020 due to the coronavirus (COVID-19) pandemic has impacted on fieldwork dates since then. Fieldwork has begun in October and run up until the end of April each year, but there was an extension to the fieldwork period up to 16th May 2025 for the 2024 survey, to meet a higher sample requirement than previously.   Interviewing for the 2024 survey took place between the 18th of October 2024 and the 16th of May 2025. We anticipate that the field dates for the 2025 survey will be similar to those of 2024.

16.2 Related statistics

The publication of statistics relating to businesses with no employees derived from the same survey is on the same day as this publication. Also, we will publish a panel report on the same day which focuses on businesses that have taken part in several waves of this survey and associated longitudinal analysis. The associated technical report which will include the questionnaire used for the 2024 survey, will be published in Autumn 2025.

The Scottish Government usually produces its own publication based on the same data but focused on Scottish businesses Small Business Survey Scotland: 2023 to 2024

DBT publishes the Innovation Survey which covers the topic of innovation in much greater detail, and covers large businesses (which the LSBS excludes) but not micro businesses and non-employers (which the LSBS includes). Also the National Survey of Registered Businesses (NSRB) which covers business sentiment around exporting and trade. The survey focuses on businesses with a turnover over £500,000 or more due to their higher potential to export.

As outlined elsewhere in this report DBT publishes the Business Population Estimates (BPE) which details the structure of the UK’s business population (and which the LSBS uses for determining sample sizes and for weighting). The BPE contains information about employment and turnover in different sectors and includes information at regional level as well as nationally.

The Office for National Statistics conducts many surveys of businesses, many of which cover topics that the LSBS examines too. A good starting place is the Annual Business Survey, which does not cover all the sectors of the economy but has very good coverage of large businesses.

The Department for Culture, Media and Sport (DCMS) publishes Social Enterprise  Market Trends, which takes a deeper look at the social enterprises that are identified in the LSBS. BEIS and DCMS worked to improve the survey questions used to identify social enterprises, with the new questions being used in the 2017, 2019, 2021 and 2023 surveys.

The Department for Education (DfE) conducts the Employer Skills Survey. The 2024 Employer Skills Survey was published in July 2025 Employer Skills Survey , Calendar year 2024 - Explore education statistics - GOV.UK

16.3 Uses of these statistics

As a wide-ranging survey of SMEs, the LSBS is of interest to many government departments and agencies. Department for Energy Security and Net Zero makes use of the questions on energy use by SMEs to develop policies on business energy such as non-domestic smart meters. Statistics are used by the Government Equalities Office to monitor rates of women-led businesses in the SME population. The figures for MEG-led SMEs are published by the government’s Race Disparity Unit as part of its  Ethnicity Facts and Figures service. DBT utilises LSBS data to analyse the export and import behaviours of UK SMEs, as well as the operation of the UK internal market. These insights also helped to inform the Small Business Strategy, as outlined in Backing your business: our plan for small and medium-sized businesses - GOV.UK

As mentioned above DCMS makes use of the social enterprises data and the Scottish Government uses the data for evidence and analysis on a broad range of policy areas.  

In the past the Department for the Environment, Food and Rural Affairs (Defra) has analysed rural SMEs, and the Low Pay Commission has looked at what businesses say about the National Minimum Wage and National Living Wage. HM Revenue and Customs has sponsored questions looking at SME preparedness for the Making Tax Digital Programme. Innovate NI looks at Northern Irish companies and their innovation activities. The British Business Bank makes use of the data on access to finance.

The LSBS is increasingly widely used in the academic and research community, in the UK and abroad. We will run a mini competition later in 2025 for research teams to apply for small grants to conduct research using the latest LSBS data. Previous research papers are available here Longitudinal Small Business Survey Research Showcase event - Enterprise Research Centre.

The data will continue to be made available by the ONS Secure Research Service, and the UK Data Service for approved researchers. The Institute for Family Business makes use of the survey in its ‘State of the Nation’ reports, and the Federation for Small Businesses has used the LSBS in its research work, for example the Unlocking Opportunity report.

16.4 User engagement

Users are encouraged to provide comments and feedback on how these statistics are used and how well they meet user needs. Comments on any issues relating to this statistical release are welcomed and should be sent to business.statistics@businessandtrade.gov.uk.

The department statement on statistical public engagement and data standards sets out the department’s commitments on public engagement and data standards as outlined by the code of practice for statistics .

16.5 Statistics error and revision policy

The department statistics error and revision policy sets out the revisions policy for these statistics, which has been developed in accordance with the UK Statistics Authority Code of Practice for Statistics.

16.6 Pre-release access to statistics

Principle T3 of the Code of Practice for Statistics requires that access to official statistics before their public release is limited to certain individuals. This includes those involved in the production of the statistics and the preparation of the release, and those involved for quality assurance and operational purposes. Pre-release access may only be granted in accordance with the rules and principles set out in the Pre-release Access to Official Statistics Order 2008. In addition, the order requires that records are published of those who have access prior to public release.

Below is the list of roles for people who received pre-release access to Longitudinal Small Business Survey 2024:

• Secretary of State, Department for Business and Trade (DBT)
• DBT Parliamentary Under Secretary of State
• DBT Special Advisers
• DBT Permanent Secretary
• DBT Deputy Director, Chief Statistician
• DBT Press Officers x1
• DBT SME Analyst x2
• Scottish Government Analyst x2

17. Contact

Responsible statistician: Jayshree Varsani

Email: business.statistics@businessandtrade.gov.uk

Media enquiries: 020 7215 2000

Public enquiries: 07741 703241