Small Business Survey 2024: panel report
Published 25 September 2025
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1. Headline findings
This edition of the Longitudinal Small Business Survey (LSBS) is the 10th Wave completed since 2015. The report covers a broad range of topics that offer insights into small and medium enterprise (SME) performance and the factors influencing it. It presents selected findings from a panel of businesses that participated in the LSBS in 2021, 2022, 2023, and 2024.
The longitudinal data provided by the LSBS panel is interesting because it shows how the same businesses’ attitudes, behaviours and performance have changed over the four-year period. Importantly, it also allows us to see associations between these attitudes and business behaviours and subsequent business performance which in some cases are likely to be lagged.
The four years covered by this report include the latter part of the Coronavirus (COVID-19) pandemic. The 2021 survey took place towards the end of the trading restrictions period and while some sectors’ businesses were still operating under social restrictions. The 2022 and 2023 surveys were carried out amid sharply rising costs and interest rates higher than recent years. By 2024, cost inflation had decreased somewhat, but interest rates remained high.
The key findings presented below relate to the group of firms that responded to the 2021, 2022, 2023, and 2024 surveys and cover only a selection of the variables included in the LSBS. More details on other aspects of the survey are provided in the related 2024 reports on businesses with and without employees. We examine the panel of businesses looking at the drivers of growth and productivity before looking at performance.
Looking in more detail at the panel of businesses suggests:
- the proportion of firms reporting either product or service innovation was 30.4% in 2021 and has decreased year-on-year to 24.1% in 2024
- in 2021, 19.4% of firms in the panel reported exporting either goods or services. This proportion has steadily decreased to 18.1% in 2022, 17.5% in 2023, and 17.2% in 2024
- around four-fifths (81.1%) of businesses in the panel had no imports from either EU or non-EU countries in 2021. Around nine out of ten of these businesses (88.9%) continued to have no imports in 2024
- external finance (excluding any COVID-19 related grants, loans or support from the Coronavirus Job Retention Scheme) was used by 8.2% of businesses in the longitudinal panel in 2021, rising to 12.6% in 2022, 13.3% in 2023, and 15.9% in 2024
- around a quarter (27.3%) of the longitudinal sample sought business support in 2021. This figure decreased slightly to 25.3% in 2022 and increased marginally again to 27.3% in 2023 and 26.2% in 2024
- 42.6% of the panel of SMEs reported investing in employee training. This proportion increased to 47.5% in 2022 before slightly decreasing to 46.8% in 2023 and 45.8% in 2024
- firms that undertook innovation in 2021 and accessed external capital in the same year consistently outperformed those that did not. Training also generally correlated positively with improved performance outcomes in terms of both employment and turnover compared to businesses that did not report providing training
- there is little consistency in the relationship between growth and exporting. In some years, non-exporting firms outperformed exporting businesses. Firms that made use of business support generally performed better than those that did not in terms of turnover and employment growth
- the proportion of firms that increased employment decreased from 32.9% in 2021 to 21.7% in 2024. Employment growth varied widely between regions
- the proportion of businesses reporting increased sales rose from 2021 (42.1%) to 2023 (59.6%) before a fall to 2024 (41.2%)
- nearly half (47.0%) of the businesses that expected employment growth in 2022 achieved this in the following year. Expected growth was realised in around half (50.1%) of the businesses that reported such expectations in 2023 (50.1%) and in 2024 (44.5%)
- the panel data confirm that sustained growth is uncommon. Only 14.6% of firms achieved sustained growth over all four years
- panel businesses have been less likely to report exporting and innovating each year since 2021. However, the proportions of firms offering training and accessing capital slightly recovered in 2023 and 2024
2. What you need to know about these statistics
The statistics in this report cover the period from 2021 to 2024 and track a panel of 1,484 businesses across the UK. These businesses have participated in all four waves of the Longitudinal Small Business Survey conducted during this period.
The survey covers all industries and the full range of Small and Medium Enterprise (SME) sizes, including unregistered businesses that are often excluded from official surveys, as well as all other businesses employing up to 249 people. Three large businesses with 250 or more employees are included in this panel because they were SMEs in 2021. Since the survey is explicitly designed to facilitate longitudinal analysis, many questions are repeated across different years.
In this report, when we refer to business size, this is defined entirely in terms of number of employees. Levels of turnover or assets are not part of our definition, though there are definitions of business size which include these.
We have survey weights that can be used in analysis of the panel which make the weighted panel representative of the UK SME population in 2021, though this will be representative in terms of business size, country and broad industrial sector only, and not necessarily in terms of behaviours and performance.
In this report, some of the analysis is based on the unweighted data, and in any event the panel should not be thought of as representative of the wider business population, especially when looking at changes in certain variables over time.
The unweighted panel is described as ‘balanced’ in this report, to remind you that the distribution of business sizes is fairly even within the panel – there are comparable numbers of panellists in each size category, even though in the actual SME population smaller businesses are more common.
3. Introducing the LSBS Longitudinal Sample
3.1 Introduction
In this report, we provide an overview of data collected over the most recent four years of the Longitudinal Small Business Survey (LSBS). In line with the overall aim of the LSBS - to explore the causal factors influencing small businesses’ growth and performance - we analyse both key trends in the data and the relationships between business growth and some of its determinants.
We explore whether businesses that expressed significant growth expectations subsequently achieved them. We also briefly consider the factors associated with sustained growth.
For this report’s analysis, it is important to note that in each table, we consider the responses of the balanced panel of 1,484 businesses participating in the survey in each of the years 2021, 2022, 2023, and 2024. In practice, it is possible to analyse panels covering different numbers of years.
This report is based on a panel spanning just four years. This approach offers several advantages; notably, the panel is larger and therefore more reliable than it would be if a longer period had been used.
LSBS aims to represent the SME population, with each cross-sectional survey weighted accordingly to produce representative results. Achieving this representativeness annually is more difficult when using the longitudinal sample here, as different weights would need to be applied to each observation in each year.
While this method is feasible, it could distort year-on-year comparisons of behaviours or performance within our business panel. Therefore, we have opted to weight the balanced panel to reflect the SME population in 2021 and have maintained those weights for 2022, 2023, and 2024. As a result, any annual changes in behaviour or performance observed are due to differences in businesses’ responses rather than changes in weighting.
Table 1 compares key performance indicators for the panel sample of businesses - those that responded in all four LSBS waves (2021, 2022, 2023, and 2024) - with the non-panel sample, which includes businesses that were interviewed in the first year (2021) but did not respond consistently in subsequent years.
Panel firms differ from non-panel firms in three main ways. First, panel firms are significantly more likely to aim to grow their business over the next three years. Second, panel firms are more likely to be exporting. Third, panel firms were more likely to access business support in 2021.
The proportions of women-owned businesses and MEG-owned (minority ethnic group-owned) firms are very similar between the panel and non-panel groups. These comparisons suggest that panel results may not be fully representative of the entire business population, but rather focus on the year-to-year experiences of the panel businesses. More representative results for the SME population are available in the 2024 reports on businesses with and without employees.
Table 1: Key differences between the panel and the overall SME population 2021
| Non-panel firms | Firms in the longitudinal panel | |
|---|---|---|
| Population of firms: | N=7,816 | N=1,484 |
| Aiming to grow turnover (3 years) | 76.2*** | 80.9 |
| Women-owned firms | 21.7 | 20.2 |
| MEG-owned firms | 4.6 | 4.3 |
| Exporting firms | 20.2*** | 24.9 |
| Innovating firms | 34.8 | 34.1 |
| Accessing business support | 26.6*** | 33.4 |
| Accessing external finance | 8.8 | 9.6 |
| Providing training | 56.3 | 55.0 |
Notes for Table 1: comparison relates to firms inside and outside the longitudinal panel in 2021.
*** indicates significant difference at the 1% level
Observations are unweighted and are therefore unrepresentative of the population of firms.
Businesses in the LSBS panel sample are noteworthy for several reasons. These businesses allow us to observe how their attitudes, behaviours, and performance have evolved over the four-year period. Furthermore, we can identify associations between these attitudes and behaviours and their subsequent, potentially delayed, effects on business performance.
The group is distinctive, both in terms of their survival and their willingness to respond to repeated requests for information. Their survival might mean that our respondent businesses are, in some sense, ‘stronger’ than the average business. It is difficult to determine exactly how response bias might influence businesses’ responses. In any case, the panel sample provides valuable insights into how businesses adapt to changes in a dynamic economic environment, whereas data from cross-sectional surveys can only offer snapshots.
Macroeconomic conditions and the policy environment during each survey may influence businesses’ responses, particularly indicators of ambition or anticipated growth. The 2021 survey took place towards the end of COVID-19 pandemic when some trading and social restrictions were still in place. The 2022 and 2023 surveys were carried out amid sharply rising costs and interest rates higher than in recent years. By 2024, cost inflation had decreased considerably, but interest rates remained high relative to the pre-pandemic period see Input and Output producer price index values.
Other firm-specific aspects of our longitudinal sample of businesses are more stable, especially those related to the ownership background of the businesses. For instance, 20.3% of our longitudinal sample of companies were women-owned in 2021. However, this proportion varied considerably by sector: in 2021, 32.6% of ‘other services’ businesses were women-owned, compared to only 11.5% of businesses in Production and Construction. These proportions remain consistent across the period covered by this report.
Another aspect of the longitudinal sample worth considering is whether some year-on-year differences are due to the maturing process in the respondent businesses. In 2021, 57.7% of the businesses in the longitudinal sample had been established for more than 20 years, and only 5.0% were less than five years old. By 2024, these proportions were 65.4% and 1.5%, respectively. None of the retained sample of businesses in 2024 can be less than four years old, although the overall age structure of panel businesses closely reflects that of the general population of small firms.
4. Structure of the report
The LSBS contains a wide range of data on SME characteristics and performance, and this report provides a selective overview of the movement and interaction of some of the key indicators.
Each table is based on the same group of businesses in the longitudinal sample, thus providing insight into changing strategies, business behaviours, and performance within that group.
Additionally, the analysis highlights associations - though not necessarily proof of causality - between business behaviours and subsequent performance.
The sections are as follows:
- trends in the drivers of SME growth: which focuses on a range of variables which previous research studies have linked to business growth and productivity including exporting, innovation, training, use of business support and access to finance. The section considers how these changed during the 4 years of the longitudinal sample
- growth and expected growth: what proportion of SMEs seek and anticipate growth? Are these expectations realised? How do the factors considered in the previous section influence whether businesses are able to sustain growth from year to year?
- ambition and future growth plans: focusing on businesses’ growth ambitions over a longer horizon
- detailed tables: with weighted estimates for some key measures for the panel using our longitudinal weights
5. Trends in the drivers of SME growth
5.1 Introduction
This section examines how various factors traditionally thought to influence business performance compare with the actual experiences of the panel businesses. Specifically, we explore key aspects of SMEs’ growth trajectories related to innovation, export performance, securing external finance, utilising business support, and employee training.
The four-year period available for observing the 1,484 UK SMEs in the LSBS balanced panel provides valuable insights into their behaviours and strategic choices during a period that covers the aftermath of the coronavirus (COVID-19) pandemic and the subsequent phase of rising costs and interest rates.
5.2 Innovation
In the LSBS, businesses are asked a series of questions about their innovation activities, including their adoption of product or service innovations.
This question is aligned with the UK Innovation Survey and the OECD Oslo Manual and asks about businesses’ innovation activity in the 3-year period prior to the survey. The proportion of firms reporting either product or service innovation was 30.4% in 2021 and has fallen year-on-year to 24.1% in 2024 (see Figure 1). It is worth noting here that this represents a fall in the level of innovative activity among the same group of firms.
Figure 1: Percentage of firms reporting product or service innovation over the period 2021 to 2024
Note for figure 1: responses are weighted.
5.3 Exporting
The weighted survey data indicates that in 2021, 19.4% of firms in the panel reported exporting either goods or services. This proportion has steadily decreased to 18.1% in 2022, 17.5% in 2023, and 17.2% in 2024.
Figures 2 and 3 show that most SMEs in the panel that reported exports in 2021 continued exporting in 2023 (82.1%) and in 2024 (90.8% of the 2023 proportion). It is quite interesting to note that of the 66 businesses (17.9%) that stopped their exporting activities in 2023, around a quarter (24.2%) had resumed exporting by 2024.
Figure 2: Exporters persistence for the period 2021 to 2024
Notes for Figure 2: using businesses that exported in 2021 as the starting point. Arrows indicate year-to-year transitions between groups. Darker boxes indicate businesses continuing to export, lighter ones indicate non-exporting businesses. 2022 has been omitted for presentational purposes. Based on unweighted data.
Figure 3: Exporters and non-exporters for the period 2021 to 2024
Notes for Figure 3: using all panellists as the starting point. Based on unweighted data.
5.4 Imports
Complementary to exporting activities, imports amongst UK SMEs present an interesting pattern of change (see Figure 4).
Of the 6.0% of businesses in the panel that reported imports exclusively from EU countries in 2021, over a third (37.5%) continued to import goods and services only from the EU in 2024, while 6.3% of them had diversified and sought goods and/or services from both within and outside the EU by 2023. Around four-fifths (81.1%) of businesses in the panel had no imports from either EU or non-EU countries in 2021. Around nine out of ten of these businesses (88.9%) continued to have no imports in 2024.
Figure 4: Import persistence for the period 2021 to 2024
Notes for Figure 4: arrows indicate year-to-year transitions between groups. Dark blue boxes relate to imports from the EU only; mid-dark to imports from outside the EU only; mid-light to imports from the EU and externally; and light blue no imports. Figures for 2024 relate to the cohort of firms (N=166) asked the importing question in 2021. Figure 4 is based on unweighted data.
5.5 External finance
External finance – whether debt or equity – is often linked to business growth and performance. In the LSBS, respondents are asked whether they have sought external finance, whether it was debt or equity (excluding any COVID-19 related grants, loans or support from the Coronavirus Job Retention Scheme) in the 12 months before the survey.
The weighted proportion of firms in the panel using external finance varied somewhat between 2021 and 2024. Specifically, 8.2% of businesses in the longitudinal panel acquired external finance in 2021, rising to 12.6% in 2022, 13.3% in 2023, and 15.9% in 2024.
Figure 5 shows the reasons businesses give for not seeking external finance. The relative importance of these factors remains fairly stable throughout the period up to 2024. Uncertainty and risk remain the most significant factors influencing businesses’ decisions not to seek external finance.
The proportion of SMEs in the panel reporting that they do not want to take on additional risks fell from 46.6% in 2021 to 36.0% in 2022, and 25.6% in 2023, before rising to 38.0% in 2024.
Figure 5: Main reasons for not seeking external finance, 2021 to 2024 - percentages
Notes for Figure 5: unweighted estimates, each year’s percentages based on number of panellists not seeking finance that year
5.6 Business support
Another important theme in LSBS is business support. Respondents are asked whether, in the last 12 months, they have sought ‘external advice or information’ on matters affecting their business that involved more than a ‘casual conversation’.
The panel data reveals some variation in the proportion of SMEs using business support programmes between 2021 and 2024. Weighted data indicates that approximately a quarter (27.3%) of the longitudinal sample sought business support in 2021. This figure decreased slightly to 25.4% in 2022. Numbers increased marginally again to 27.4% in 2023 and 26.3% in 2024 (Figure 6).
Figure 6: Percentage of firms accessing external business support over the period 2021 to 2024
Notes for Figure 6: responses are weighted.
5.7 Training
Employee training is regarded as a key driver of productivity improvements and business growth. In 2021, the weighted survey data indicate that 42.6% of the overall panel of SMEs reported investing in employee training. This proportion increased to 47.5% in 2022 before slightly decreasing to 46.8% in 2023 and 45.8% in 2024. These fluctuations may be linked to the impact of COVID-19 disruptions and changing work patterns.
Most firms offering training in 2021 continued in 2023 (79.6%), and over four-fifths of them (86.4%) persisted into 2024. However, 20.4% of those who provided training in 2021 did not do so in 2023, but nearly half (49.1%) of this group did so in 2024 (see Figures 7 and 8).
Figure 7: Training investment commitment for the period 2021 to 2024
Notes for Figure 7: using businesses that provided training in 2021 as the starting point. Arrows indicate year-to-year transitions between groups. Darker boxes indicate businesses continuing to provide training. Lighter boxes indicate a firm not providing training. 2022 has been omitted for presentational purposes. Based on unweighted data.
Figure 8: Training investment commitment for the period 2021 to 2024
Notes for Figure 8: using all panellist employers in 2021 as the starting point. Based on unweighted data.
5.8 Associations between business behaviours and future performance
Table 2 shows how firms in the panel that reported various business behaviours generally linked to growth in 2021 performed in terms of employment and turnover growth in 2022, 2023, and 2024.
For each of the five behaviours considered, the performance outcomes in firms that reported these behaviours in 2021 are compared to those in firms that did not report such behaviours in that year.
Table 2: Business behaviours and subsequent performance
| Year | 2021 | 2021 | 2022 | 2022 | 2023 | 2023 | 2024 |
|---|---|---|---|---|---|---|---|
| Description | Number of businesses | Increased employment % | Increased turnover % | Increased employment % | Increased turnover % | Increased employment % | Increased turnover % |
| Innovation | 505 | 31.2 | 60.3 | 30.4 | 47.2 | 26.1 | 45.0 |
| No innovation | 979 | 24.5 | 59.3 | 28.4 | 41.3 | 19.7 | 39.5 |
| Accessed capital | 143 | 29.6 | 60.2 | 33.7 | 54.9 | 28.8 | 45.0 |
| Did not access capital | 1333 | 26.3 | 59.5 | 28.6 | 42.0 | 20.9 | 41.0 |
| Provided training | 814 | 33.8 | 56.7 | 46.6 | 60.3 | 28.8 | 42.8 |
| Did not provide training | 665 | 21.2 | 61.8 | 40.4 | 51.7 | 16.4 | 40.1 |
| Exported | 369 | 24.0 | 56.0 | 37.0 | 45.9 | 21.1 | 39.2 |
| Did not export | 1115 | 27.2 | 60.5 | 27.1 | 42.4 | 21.8 | 41.7 |
| Used business support | 492 | 31.9 | 62.1 | 32.9 | 47.7 | 25.8 | 45.8 |
| No business support | 984 | 24.7 | 58.7 | 27.6 | 41.4 | 20.1 | 39.5 |
Firms that undertook innovation in 2021 and accessed external capital in the same year consistently outperformed those that did not.
Training also generally correlated positively with improved performance outcomes in terms of both employment and turnover compared to businesses that did not report providing training.
Throughout this period, there is little consistency in the relationship with exporting. In some years, non-exporting firms outperformed exporting businesses. Firms that made use of business support generally performed better than those that did not in terms of turnover and employment growth.
6. Growth and expected growth
6.1 Introduction
A key theme in the LSBS is business growth, measured by employment and sales. In this section, we profile the growth performance of our longitudinal sample of businesses over the period 2021 to 2024.
We then examine how their growth expectations have evolved and finally assess whether their growth expectations were actually met.
One of the strengths of the longitudinal data available through the LSBS is that it allows for linking businesses’ aspirations and expectations of growth with their subsequent performance outcomes. It is also important to recognise that this analysis is based on a balanced panel of respondents and may be subject to biases arising from survival and non-survival, or patterns of non-response.
6.2 Profiling SME growth
The LSBS inquires about employment levels and turnover, and whether these have changed over the year prior to the survey. We analyse each measure individually.
Detailed tables are provided later in the report. Clearly, the 2021 data must be interpreted in the context of the challenging conditions created by the coronavirus (COVID-19) pandemic.
Many businesses in our longitudinal sample report no change in employment each year (see detailed data Table 8). This proportion increased from 46.1% in 2021 to 50.2% in 2022 and then remained similar for the rest of the period (48.6% in 2023 and 49.8% in 2024). Over the same period, the proportion of firms that increased employment decreased from 32.9% in 2021 to 21.7% in 2024.
There are notable regional differences in the proportions reporting growth. For example, 28.3% of businesses based in Yorkshire and the Humber reported employment gains in 2024, compared with just 14.0% in the North East (see detailed data Table 12).
LSBS inquires similarly about the change in turnover of businesses over the year before the survey and asks businesses whether their sales have increased, decreased, or remained the same (see detailed data Table 11).
Overall, there is a marked rise in the proportion of businesses reporting sales growth from (42.1%) in 2021 to (59.6%) in 2023 before a fall to (41.2%) in 2024 (see detailed data Table 11).
This pattern remains relatively consistent across different business sectors (see detailed data Table 13).
Once again, notable spatial differences are observed. For instance, Wales and Yorkshire and the Humber report particularly low proportions of businesses experiencing turnover growth in 2024 compared to other regions (see detailed data Table 12)
6.3 Expected growth over the next year
The LSBS also asks businesses about expected changes in their employment and turnover over the next 12 months. The response to this question inevitably reflects the respondent’s own assessment as well as the broader context within which the firm operates.
In 2021, 27.2% of businesses in the panel expected to increase the number of employees over the coming year (see detailed data Table 16). In 2022, this proportion was slightly lower at 23.6% (see detailed data Table 17) and 19.2% in 2024 (see detailed data Table 18)
In terms of turnover, the proportion of businesses anticipating growth has fallen steadily from 47.1% in 2021, 33.4% in 2022, 32.2% in 2023 and 27.5% in 2024 (see detailed data Table 14). The proportion of businesses anticipating an increase in sales was highest in medium-sized businesses (see detailed data Table 14).
By region, there is also significant variation in the proportion of longitudinal respondents expecting turnover growth. For example, in 2024, these proportions ranged from 19.3% in the East of England to 36.8% in Wales (see detailed data Table 15).
6.4 From expected to achieved growth in employment and turnover
One of the key benefits of having longitudinal data is the ability to track firm growth over time. Here, we assess whether businesses in the longitudinal sample that predicted employment and turnover growth for the following year were able to meet these forecasts. This comparison is important because the research literature indicates that business owners and entrepreneurs tend to be overly optimistic about these changes.
A word of caution is relevant when considering these results. Overall, the subset of businesses in the longitudinal sample that expected employment growth over the next 12 months in 2021 is only 554 businesses. Breaking this sample down further, for instance by region, reduces sample sizes, meaning that some caution is necessary when interpreting regional and business size differences.
As shown in Table 3, in 2021, 27.2% of all businesses in the longitudinal sample expected employment growth over the next twelve months. In 2022, this was slightly lower at 23.6% (2024, 19.2%) of businesses in the panel.
In practice, most of the panel businesses did not fulfil their employment growth expectations. In 2022, employment remained steady in a third (33.6%) of those businesses that had expected growth in 2021. Similar patterns were observed in 2023 and 2024.
Nearly half (47.0%) of the businesses that expected employment growth in 2022 achieved this in the following year. Expected growth was realised in around half (50.1%) of the businesses that reported such expectations in 2023 (50.1%) and in 2024 (44.5%).
In 2022, 2023, and 2024, panel businesses were somewhat more likely to report achieving expected turnover growth than they were for expected employment growth (see Table 4). About two-thirds (68.3%) of the panel businesses predicting turnover growth in 2022 reported achieving this. This proportion fell in 2023 (60.2%) and 2024 (52.0%).
Table 3: From anticipated employment growth to outcomes in the next year
| Expected Growth | % Firms anticipating growth | Employment Declined | Employment Stable | Employment Increased |
|---|---|---|---|---|
| 2022 | 27.2 | 19.4 | 33.6 | 47.0 |
| 2023 | 23.6 | 20.3 | 29.7 | 50.1 |
| 2024 | 19.2 | 23.9 | 31.6 | 44.5 |
Table 4: From anticipated turnover growth to outcomes in the next year
| Expected Growth | % Firms anticipating growth | Turnover Declined | Turnover Stable | Turnover Increased |
|---|---|---|---|---|
| 2022 | 47.1 | 17.1 | 14.6 | 68.3 |
| 2023 | 33.4 | 18.5 | 21.4 | 60.2 |
| 2024 | 32.2 | 26.5 | 21.5 | 52.0 |
6.5 Achieving continuous growth
LSBS enables us to consider what proportion of businesses can sustain growth in either employment or turnover and also to compare the characteristics of businesses in each group. Here, we focus on the group of businesses in the longitudinal sample with 10 or more employees and their record of sustained job growth.
Figures 9 and 10 illustrate the continuity of growth over the four years of this LSBS survey for the 568 businesses in the longitudinal panel which reported growth in the year preceding the 2021 survey. Of these, around two-fifths (43.3%) had sustained growth in 2023 and a third (33.7%) of these businesses sustained growth in 2024. Taken together these transitions mean that overall, only 14.6% of firms (83 of the original 568) achieved sustained growth over all four years.
It is notable that the probability of experiencing growth in jobs in subsequent years is only weakly related to prior growth. For example, nearly two-fifths (37.0%) of those businesses that had experienced a reduction in their employee numbers in 2023 subsequently increased employment in 2024 (Figure 9).
Figure 9: Employment growth trajectories of businesses over the previous 12 months, 2021 to 2024
Notes for Figure 9: using businesses who showed employment growth in 20201 as the starting point. Arrows indicate year-to-year transitions between groups. Dark blue boxes indicate businesses continuing to grow employment in each year. Light blue indicates employment declines and mid blue no change in employment. 2022 has been omitted for presentational purposes.
Figure 10: Employment growth trajectories of businesses over the previous 12 months, 2021 to 2024
Notes for Figure 10: using all panellists in 2021 as the starting point. Based on unweighted data.
6.6 Changes in business behaviours and performance
In this section, we consider changes in business behaviours and performance during the period between 2021 and 2024. Note that these comparisons relate to firms which were part of the survey in 2021, 2022, 2023 and 2024 and, therefore, provide an indication of how the same firms responded to changing conditions over this period.
Table 5 outlines business performance in 2021, 2022, 2023, and 2024. In 2021, employment remained steady in 46.1% of the panel businesses. This percentage increased slightly to 50.2% in 2022 and stayed similar at 48.6% in 2023 and 49.8% in 2024. The share of firms experiencing employment growth was somewhat inconsistent, declining from 2021 to 2022 before increasing slightly in 2023 and declining again in 2024.
During this period, the proportion of businesses reporting turnover growth also fluctuated, rising sharply between 2021 and 2022, then decreasing somewhat in 2023 and 2024.
These changes in performance indicate modest shifts in the percentages of respondent businesses reporting behaviours typically linked to growth. As shown in Table 6, respondent businesses reported a steady decline in exporting and innovating each year since 2021. However, accessed to capital grew consistently from 2021 to 2024, and training was highest in 2022.
Table 5: Business performance - employment and turnover (percentage of businesses)
| Year | 2021 | 2021 | 2021 | 2022 | 2022 | 2022 | 2023 | 2023 | 2023 | 2024 | 2024 | 2024 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fell | Stayed the same | Rose | Fell | Stayed the same | Rose | Fell | Stayed the same | Rose | Fell | Stayed the same | Rose | |
| Employment | 21.0 | 46.1 | 32.9 | 23.2 | 50.2 | 26.6 | 22.4 | 48.6 | 29.0 | 28.6 | 49.8 | 21.7 |
| Turnover | 30.7 | 27.2 | 42.1 | 22.5 | 17.9 | 59.6 | 30.5 | 26.5 | 43.0 | 34.5 | 24.3 | 41.2 |
Table 6: Growth related business behaviours (percentage of businesses)
| Year | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Innovation | 30.4 | 29.7 | 26.3 | 24.1 |
| Accessed capital | 8.2 | 12.6 | 13.3 | 15.9 |
| Provided training | 42.6 | 47.5 | 46.8 | 45.8 |
| Exported | 19.4 | 18.1 | 17.5 | 17.2 |
| Used business support | 27.3 | 25.4 | 27.4 | 26.3 |
7. Ambition and future growth plans
7.1 Introduction
The survey also includes questions about businesses’ growth ambition and strategic intentions over the next 3 years. These indicators, discussed in this section, indicate levels of optimism about future growth among the balanced panel of respondents.
Note here that the time horizon over which ambitions and businesses’ strategic intent is measured is three years rather than the single year asked of anticipated growth discussed earlier in this report.
7.2 Sales growth ambition
LSBS asks whether businesses aim to grow their sales over the next three years. Overall, levels of growth ambition have declined slightly in the panel of businesses over these four years, with 75.8% of businesses aiming to grow in 2021, 74.8% in 2022, 71.7% in 2023, and 69.2% in 2024.
When respondents to the LSBS survey indicate, they are aiming to grow their sales over the next three years, they are then asked by how much. The results are summarised in Table 7.
The profile of growth ambition is rather stable, with most panel businesses reporting relatively modest levels of ambition. The most common level of ambition is between 10% and 24% growth.
Table 7: Sales growth objective over the next three years (percentage of businesses with a growth ambition), 2021 to 2024
| Size of growth in sales | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| 1 to 9% | 16.1 | 17.6 | 18.2 | 21.0 |
| 10 to 24% | 46.7 | 48.7 | 49.3 | 49.4 |
| 25 to 49% | 19.4 | 19.4 | 20.5 | 16.0 |
| 50 to 74% | 9.3 | 8.1 | 5.6 | 6.5 |
| 75 to 99% | 9.3 | 8.1 | 5.6 | 6.5 |
| 100% or more | 8.1 | 5.7 | 5.6 | 6.9 |
Notes and Sources: based on longitudinal respondents’ sample who indicated an ambition to grow sales over the next three years. Responses are weighted to give representative results. Source: LSBS 2021 to 2024.
Figures 11 and 12 present the evolution of UK SME growth ambition and expectations (over the next three years) for the period 2021 to 2024.
These data suggest that three-year growth ambition tends to be persistent. Of the 1,199 businesses reporting ambition in 2021, 1040 (86.7%) retained this in 2023 and 910 businesses (87.5% of the 2023 proportion) remained ambitious in 2024.
However, these findings also show that non-ambitious businesses can become ambitious. Around half (50.9%) of the businesses that reported having no growth ambition in 2023, reported being ambitious in 2024.
Figure 11: Evolution of growth ambition (turnover) for the period 2021 to 2024
Notes for Figure 11: using businesses who had an ambition to grow in 2021 as the starting point. Arrows indicate year-to-year transitions between groups. Dark boxes indicate businesses continuing to have an ambition to grow the firm’s turnover over the next three years. Light boxes indicate no growth ambition. Based on unweighted data. 2022 has been omitted for presentational purposes.
Figure 12: Firms expecting growth in the next year, 2021 to 2024
Notes for Figure 12: using all panellists in 2021 as the starting point. Based on unweighted data.
8. Technical information
We will publish a separate technical report outlining the sampling and weighting methodology for the survey, with detailed information on sample sizes and response rates, and a copy of the questionnaire in Autumn 2025.
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, 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 particular 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 (this was also published on 26 September 2024)
- a longitudinal report based on those businesses that responded in the last four 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 (this report).
Please note that the findings presented in this report relate to ‘full panellists’ only – the 1,484 businesses that have taken part in all 4 waves of the LSBS 2021 - 2024. There are a handful of large businesses included because they were SMEs in 2021 but have since become large enterprises.
9. Definitions
| Term | Description |
|---|---|
| Balanced | In this report this is used to describe the panel of firms that is the focus of the report. The panel is balanced in the sense that there are roughly equal numbers of business of each of the main size categories in the survey. This is unlike the real population of SMEs in the UK, where the larger businesses are much rarer than smaller ones. |
| Business, enterprise, firm | In this report these terms all mean the same – they are interchangeable. |
| Exports | In this report this means a UK 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 the 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. |
| Imports | In this report this means a UK 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 longitudinal analysis, and the dataset is available to approved researchers to perform their own longitudinal analysis if they wish. The dataset can also be used for cross-sectional analysis, which takes each year of data separately. |
| 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, White Irish, White Gypsy or Irish Traveller, or any other White background). 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 any White background is one of those ethnicities. |
| Micro business | A business which has between 1 and 9 employees (whether they are full-time or part-time). |
| Panel | In this report, the panel (sometimes referred to as the longitudinal panel or the full panel) means the 1,484 firms that have taken part in all four waves of the LSBS so far. As shown in Table 1 the panellists are rather different in a number of ways from the original full sample of SMEs in the 2021 survey, and they are also different from the general population of SMEs in 2021. |
| 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. |
| 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. |
| 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. |
| Weighted, unweighted | We have longitudinal weights which apply to the panel to give the businesses the same distribution as the general population of SMEs in the UK in 2021 with respect to size, industry and country. In practice this makes the smallest businesses relatively more important, since in the SME population there are far more smaller businesses than larger ones. When we refer to weighted estimates we are describing the results of calculations that give more weight to the smaller businesses. In contrast, unweighted estimates treat all members of the balanced panel equally. |
| 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%. |
10. Further information
10.1 Future updates to these statistics -update
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.
10.2 Related statistics
The related reports on SME employers and SMEs with no employees were published on the same day as this publication. DBT will publish the technical report which includes the questionnaire used for the 2024 survey) in Autumn 2025.
The Scottish Government produces its own publication based on the same data but focused on Scottish businesses Small Business Survey Scotland: 2023-2024 - gov.scot (www.gov.scot)
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.
The Office for National Statistics (ONS) 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.
10.3 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 & Net Zero (DESNZ) 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, Department for Digital, Culture, Media & Sport (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 (HMRC) 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 https://www.fsb.org.uk/resource-report/unlock.html
10.4 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.
10.5 Statistics error and revision policy
The DBT 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.
10.6 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 LSBS panel report 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 x2
11. Contact
Responsible statistician: Jayshree Varsani
Email: business.statistics@businessandtrade.gov.uk
Media enquiries: 020 7215 2000
Public enquiries: 07741 703241
DBT is an economic growth department. We ensure fair, competitive markets at home, secure access to new markets abroad and support businesses to invest, export and grow. Our priorities are the Industrial Strategy, Make Work Pay, the Trade Strategy and the Plan for Small Business.
Legal disclaimer
Whereas every effort has been made to ensure that the information in this document is accurate, DBT does not accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned.
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