Small Business Statistics 2024: the full report

Do you dream of starting a small business? Our list of small business UK statistics will help you to understand what today’s landscape is like.

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2023 presented a turbulent backdrop for the UK economy.

The ongoing war in Ukraine cast a long shadow, disrupting supply chains and pushing energy prices higher, impacting both consumers and businesses. The lingering effects of the COVID-19 pandemic continued to weigh on some sectors, while rising interest rates aimed at curbing inflation also presented challenges.

Fast forward to 2024 however, and there’s good news. While the overall number of employing businesses saw a slight dip, small businesses stepped up in a big way, creating a remarkable 300,000 new jobs. In fact, over the past 25 years, small businesses have been responsible for 2 out of every 3 jobs created.

So what are the most crucial things you need to know to set yourself up for success as a small business owner this year? Where are the most failures occurring? Which industries are poised for growth? Below, we’ll examine UK businesses on a sector-by-sector basis, as well as identifying the main barriers and opportunities for new startups and SMEs.

Key SME statistics and their impact in 2024:

  • There are currently 5.51 million small businesses in the UK, indicating potential for new ventures. However, careful planning and execution remain crucial in today’s competitive market.
  • On average, almost 20% of new businesses fail in their first year. Thorough market research, dedicated financial planning, and adaptability will be key for SMEs to overcome these initial challenges in 2024.
  • SMEs account for 99.2% of the UK’s business population. This fact highlights the significant contribution SMEs have on the economy, and emphasises the need for continued government support and tailored resources to empower their success.
  • SMEs account for an estimated 61% of employment (16.3 million) and 52% of turnover in the UK private sector. However, inflationary pressures and rising costs could pose challenges in 2024, requiring innovative strategies and cost-efficiency measures.

UK small business statistics

Small business UK statistics 1

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The outlook remains cautiously optimistic. Inflation continues to be a concern, potentially impacting consumer spending and business costs, but the job market shows signs of strength, which could be good news for hiring needs. 

How many small businesses are there in the UK?

The number of small businesses in the UK is currently at 5.51 million. In total, the most up-to-date government figures show a total of 5.58 million SMEs currently active in the UK. 

1,415,980 of UK small businesses have employees, while 4,174,920 have none at all – this is likely due to the 46% of people in the UK who are sole traders or who have started a side hustle.

Business typeSize (number of employees)Number% of all businessesTurnover (millions)

How does the number of UK SMEs compare to previous years?

When records began in 2000, the overall number of private sector businesses stood at 3.5 million. Overall, the UK has still enjoyed a 77% increase in SMEs over the past 23 years.

How many new businesses were launched in the UK?

2023 started with a 19.5% rise in new businesses (39,966 businesses), which represents a 6.5% increase compared to the same period in 2022. This growth is particularly noteworthy considering the more modest 2% year-on-year increase in overall incorporations last year (778,219 in 2022).

While challenges remain, this strong start to 2023 could signal a sustained increase in business creation in 2024. However, the true picture will emerge in March when Companies House releases data for the latter half of 2023. 

Additional points:

  • ⬆️ There has been a 1.2% increase in non-employing businesses, driven by a 2.9% rise in unregistered businesses.
  • ⬆️ Employment within small businesses amounted to 12.9 million (48% of total) with a turnover of £1.6 trillion (36%). 
  • ⬇️ There has been a 0.2% decrease in employing businesses.

How many UK business failures are there?

  • ⬇️Around 316,310 UK businesses stopped trading in 2023, according to the latest data from the Office for National Statistics (ONS). This translates to a business death rate of almost 11%.
  • ⬇️ Business closures decreased slightly from 324,000 from 2022, but still represent a significant number.

In better news, 65.3% of small businesses were profitable in 2022. Early 2023 reports showed signs of recovery in external finance usage by small businesses, potentially fueling further profitability. Based on these trends, some sources like Small Business Trends estimate that the percentage of profitable small businesses might even be higher in 2023-2024, potentially reaching 70%.

What kind of firms make up the UK’s business population?

According to the 2022 Business Population Estimates by the Office for National Statistics (ONS), construction had the highest number of businesses in the UK, with 914,000 firms operating in 2022. While the 2023 data isn’t available yet, construction consistently shows a high number of businesses in official ONS reports. 

The same ONS report shows 865,000 businesses operating in administrative and support services sectors like recruitment, accountancy, and business administration. Some sources, like the Federation of Small Businesses, also consider this sector will be the largest this year based on their calculations.

UK small business finance statistics

The ONS Business Impact of COVID-19 Survey (BICS) found that around 45% of SMEs saw turnover fall by at least 20% post-COVID. As a result, data sources show that smaller SMEs suffered more financial repercussions from COVID-19 than larger businesses.

How many UK small businesses use external finance?

On average, 56% of SMEs have sought external finance in the last three years, as found by the British Business Bank 2021 SME Finance survey.

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In 2023, the “cautious funding trend” began, where investors scaled back in the UK due to financial uncertainty. It picked up again in October 2023 however, when a report revealed that venture capitalists were once again offering new growth prospects remotely, but the process was leading to burnout (in the form of Zoom fatigue) among entrepreneurs.

In the first half of 2023, the total capital raised amounted to £4.6 billion, representing a stark 70% decrease from the £15.3 billion raised during the same period in 2022. 

According to our exclusive Startups data, companies are exploring different ways to get funding depending on their industry.

  • ⬆️Tech companies are boldly seeking money, with 54% actively looking for investors.
  • ⬇️ Construction companies are being more cautious, choosing their funding wisely.
  • ⬇️ Uncertainty in tourism and hospitality makes it hard for businesses to plan their funding.
  • ⬆️ Rising costs (for example business electricity costs) are pushing 63% of businesses to consider getting more money from outside sources.

How many UK businesses have used private debt?

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Private debt typically refers to loans made by non-bank lenders to firms. It is also sometimes referred to as direct lending or private credit.

According to Deloitte’s “Private Debt Deal Tracker Winter 2023 Update,” 1,823 private debt deals were completed in the UK in 2023. This represents a significant decrease compared to 2022, which saw 2,706 deals.

The UK private debt market saw a significant decline in 2023, with the total deal value dropping from £54.3 billion to £44.4 billion compared to 2022. While the average loan size also dipped slightly to £19 million, healthcare, business services, and technology sectors remained the most active sectors for private debt financing.

  • ⬇️ Total deals in 2023: 1,823
  • ⬇️ Change from 2022: -26.0%

Although this information is specific to the data provided by Deloitte and might not represent the entire UK private debt market, it’s a good place to start when trying to understand private debt figures.

How many small businesses are financed by venture capital?

Typically, small businesses in the UK only get a small slice of the venture capital (VC) pie.

This is because VC is usually targeted by larger companies with over 100 employees. VC deals usually take a number of years to complete (typically five to seven), with the aim of only making a return once a company has grown.

There were 57 venture capital trusts (VCTs) in the UK in 2021. This is a significant drop from ten years ago, when there were 128.

However, the amount of funds raised by VCTs has been on a rising trend in recent years and has more than doubled from 2009 to 2010.

Venture capital is still largely a boys’ club. According to data from private market data company Pitchbook, of VC deals made in 2017:

  • Less than 1% went to entirely female teams
  • 10% went to teams with mixed genders
  • 89% went to entirely male teams

What alternative finance options can small businesses use?

Small business UK statistics 4

In addition to equity and debt, the UK boasts a plethora of alternative finance options to fund a startup or drive business growth.

Small business crowdfunding 

Back in 2011, crowdfunding websites backed just eight deals in the UK. In 2020, this has ballooned to 433 successful campaigns. However, crowdfunding seems to have slowed as a result of the COVID-19 pandemic.

In the first semester of 2020, the UK crowdfunding market collected £103 million in total – a 25.4% fall compared to 2019.

Small business asset finance 

The BBB Small Business Finance Markets 2022 report shows that the SME asset market increased by 25% in 2021, giving it a total value of just under £20 billion.

This new growth follows a fall of 21% in 2020.

As the BBB report notes, such a noticeable market recovery means the annual new business level in 2021 was only 1% below 2019 (its pre-COVID peak).

Peer-to-peer small business lending 

Peer-to-peer lending, also abbreviated as P2P lending, is the practice of lending money to individuals or businesses using specialist digital platforms.

Data from the Cambridge Centre for Alternative Finance shows that peer-to-peer business lending is the funding method with the lowest volume. Still, it has been growing steadily since 2012, and was valued at £4 billion in 2020.

How has Brexit impacted small business investment?

Following the 2016 Brexit referendum, data from the Bank of England (BoE) shows that around 45% of businesses rank Brexit as one of the top sources of uncertainty for their business. Businesses with a higher level of Brexit uncertainty also enjoyed less investment growth post-referendum than those with lower Brexit uncertainty.

In its May 2021 Decision Maker Panel survey, the BoE asked business members how they thought the UK’s decision to leave the EU had affected investment. Businesses reported that in 2020, investment was 5.5% lower than it would have otherwise been.

UK business sectors

Which sector has the most UK businesses?

According to the Office for National Statistics (ONS) data from March 2023, the professional, scientific and technical activities sector holds the largest number of VAT and/or PAYE-registered businesses, with 15.2% of the total (2.727 million). This broad category includes diverse areas like IT, accounting, legal services, and research & development.

Which UK business sector employs the most people?

While definitive data for 2024 isn’t available yet, the UK business sector employing the most people in 2024 is likely to be Health and Social Care, a sector that employed 2.9 million people in 2023 according to the UK Office for National Statistics (ONS).

Unfortunately, 2024 didn’t start well in terms of job security in other areas, particularly in the tech industry – for reasons not yet clear – with over 34,000 employees losing their jobs across more than 140 companies, according to 

Even established giants haven’t been immune, including major names like Snapchat, Zoom, PayPal, Salesforce, Microsoft, eBay, TikTok, Wayfair, Google, Discord, Audible, and Rent the Runway.

A survey conducted this year also found that London is currently the worst region for job security in the UK right now.

Additional information:

  • ⬆️ There has been a 1.7% increase in small business employment from 2022, adding 300,000 new jobs.
  • ⬆️ 16.7 million people are currently employed by small businesses, representing 61% of all private sector jobs – and a 1.7% increase compared to the 2022 average.
  • ⬆️ There are currently 1.4 million employing businesses and 4.1 million non-employing businesses.
  • ⬆️ SMEs account for three-fifths of the employment and around half of turnover in the UK private sector.

Which UK sectors have grown over time?

Several sectors witnessed positive trends from 2022 to now when it comes to the fastest-growing industries, according to IBIS World:

  • Non-alcoholic beer production: this niche market experienced a significant 40.5% revenue growth in 2024, reflecting changing consumer preferences and health-conscious trends.
  • Corporate travel services: with business travel resuming post-pandemic, this sector saw a 31.5% revenue growth in 2024.
  • Language learning software developers: the ever-growing demand for language learning led to a 22.4% growth in this sector’s revenue in 2024.

Other promising sectors:

Immersive technology: encompassing virtual and augmented reality, this sector exhibits potential for significant growth across various industries.

Fraud detection software developers: as cyber threats evolve, the demand for security solutions is increasing, driving growth in this sector.

Social media platforms: despite challenges, social media platforms remain popular, with a projected 20.1% growth in UK revenue for 2024.

Online men’s clothing retailers: benefitting from the online shopping shift, this sector is projected to grow 19.0% in 2024.

Tour operators: with travel restrictions easing, the tourism industry is seeing a rebound, leading to a projected 17.8% growth for UK tour operators in 2024.

There is also the ever-present and unstoppable rise of artificial intelligence (AI) to consider. According to our exclusive Startups data, 61% of businesses think AI will disrupt their industry, with: 

  • ⬆️ Highs of 32% believing it will cause “high disruption” in the tech industry
  • ⬆️ Highs of 75% in the transportation industries citing they are “not sure what the impacts of AI will be at this time”
  • ⬇️ Lows of 59% and 57% in the professional services and leisure industries respectively.

Barriers to UK business

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In 2020, we collected expert research between January and March 2020.

In 2024, the answers are a little different. The main concerns currently are:

Economic instability

UK businesses and entrepreneurs are feeling nervous about the future, with our recent exclusive Startups’ survey revealing that 24% of respondents see economic instability as their biggest concern

This worry seems to be impacting business confidence as well, with a majority (57%) of small businesses believing a change in government would be beneficial.

The ongoing conflicts between Ukraine and Russia, as well as Israel and Palestine, can have indirect yet significant impacts on small businesses in the UK. Firstly, these conflicts can lead to economic instability globally, affecting trade relations and causing fluctuations in currency exchange rates, which may impact the cost of imports and exports for UK businesses

Additionally, heightened tensions can result in increased uncertainty among investors, potentially leading to reduced consumer confidence and spending, which can directly affect small businesses relying on local consumer demand.

Employee retention

Despite employee salaries and benefits being their biggest expense (25%), 71% of UK startups are optimistic about meeting employee pay expectations in 2024, according to our exclusive Startups research. 

This optimism aligns with the ambitious growth plans of 80% of businesses, aiming to expand their workforce. However, attracting skilled workers might be challenging due to visa issues, highlighting a potential hiring hurdle amidst these growth aspirations. 

Only 20% consider workforce expansion their top priority, suggesting a nuanced approach to growth where talent acquisition might be a key factor.

How has Brexit affected UK small business?

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More feedback from our Startup’s 2020 survey

Four years after leaving the European Union, the impact of Brexit on UK small businesses remains a complex and evolving story. While some sectors have adapted and even thrived, others continue to face challenges due to increased regulations, trade barriers, and the rapidly shifting landscape.

City AM surveyed UK SMEs in November 2021. It found that 64% of UK SMEs believe that Brexit has negatively influenced the UK economy.

  • Two in five respondents said their costs had increased since the referendum results were announced, particularly costs associated with importing goods.
  • 16% reported suffering a talent shortage as they were finding it harder to recruit staff due to stricter immigration laws.

Trade woes remain prominent

A 2024 report by Bibby Foreign Exchange found that over half (55%) of small businesses involved in international trade see Brexit as a significant challenge, impacting profitability and growth. New customs checks, tariffs, and administrative burdens have added complexity and cost, particularly for smaller firms with limited resources.

Labour shortages bite

The UK’s exit from the single market has also exacerbated pre-existing skills gaps in many sectors. A 2023 survey from the Federation of Small Businesses revealed that 45% of members struggled to hire skilled workers. This issue was further compounded by the rising cost of living, making it harder for businesses to compete for talent.

Looking ahead

The full picture of Brexit’s impact on UK small businesses is still unfolding. While the initial shockwaves may have subsided, ongoing challenges remain. Government initiatives aimed at easing trade barriers and supporting skills development are crucial, but the long-term consequences of Brexit for this vital sector will likely continue to be debated and analysed for years to come.

Further research on the potential barriers of technology from our 2020 Startups Survey

What barriers do female and minority small business owners face?

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The gender funding gap has historically been a significant barrier to women starting a business.

According to investment tracker Dealroom, female entrepreneurs’ share of the UK’s multi-billion-pound VC funding market has stayed under 2% for the past 10 years.

Startups recently carried out our own investigation into the gender funding gap. We discovered that, on average, businesses with just one male founder received seven times more investment than women-owned firms.

Racial bias is also a factor in new business success.

The same BBB report found that 18% of external finance applications from ethnic-minority-led businesses were turned down. This is compared to 10% of white-led business applications.

Research from the Black Business Network has highlighted the impact this is having on Black startup owners. Only 43% of Black entrepreneurs said they trust banks to support them with the capital to grow their businesses.

While we’d hoped 2024 would bring more progression, there was a huge roadblock regarding investment at the start of the year: Until recently, investors on angel platforms needed to earn over £100k. But in January, the investment threshold soared to £170k. The steep increase may disproportionately impact the pool of female investors in the UK, particularly in regions where women earning over £170k are scarce or non-existent.

To make matters worse, artificial intelligence may contribute to the issue rather than help to resolve it.

  • ⬆️ 79% of working women are employed in the occupations deemed most susceptible to AI automation. (UK Parliament of Science and Technology)
  • ⬇️ Women make up half of the UK population, yet only 22% of AI and data professionals are presently females (Alan Turing Institute).
  • ⬆️ Men currently constitute an average of 80% of AI professors (Alan Turing Institute)
  • ⬇️ In 2023, the pay gap among full-time employees increased to 7.7%, up from 7.6% in 2022. 
  • ⬇️ Black British and Asian employees in 2023/24 earned less (£13.53) median gross hourly pay than White employees (£14.35), which has been the case since 2012. (Office of National Statistics)

How has COVID-19 affected UK small businesses?

The COVID-19 pandemic has dealt a heavy blow to UK small businesses, leaving a lasting impact across various sectors. Lockdowns and restrictions triggered sharp sales declines, particularly in hospitality and recreation, with some businesses experiencing a staggering 57% revenue drop in April 2020

While some recovery has taken place, further waves and ongoing challenges like inflation keep the future uncertain.

Smaller businesses, often lacking reserves and operating in hard-hit sectors, faced a double whammy. They struggled to access finance due to their limited size and were disproportionately affected by closures. While government support schemes offered a lifeline, many companies accumulated debt during the crisis.

Which sectors were most impacted by COVID-19?

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The top three sectors that were most impacted by COVID-19 in the UK are:

1. Hospitality:
  • ⬇️ Revenue decline: 57% in April 2020
  • ⬇️ Employment: Still 11% below pre-pandemic levels in October-December 2021
  • ⬇️ Challenges: Lockdowns, restrictions on gatherings, ongoing staffing shortages, and rising costs
2. Arts, entertainment, and recreation:
  • ⬇️ Revenue decline: Significant impact on cultural events, live performances, and leisure activities
  • ⬇️ Challenges: Closures, cancellations, reduced capacity limits, and ongoing consumer cautiousness
3. Retail (non-essential):
  • ⬇️ Revenue decline: Varies by subsector, but some non-essential stores faced significant drops
  • ⬇️ Challenges: Closures, limited capacity, shift to online shopping, and changing consumer behaviour

How do UK small businesses compare to the US?

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The landscapes of small businesses in the UK and US, while sharing similar aspirations, diverge in several notable areas, relevant for those businesses considering expanding into the US or seeking insights into US best practices.

  • Number of businesses: the UK boasts a higher number of small businesses per capita, with an estimated 5.6 million compared to 30.7 million in the US. However, the US has a significantly larger population, leading to a higher overall number of small businesses.
  • Size and structure: the UK leans towards sole proprietorships (56%), while the US favours employer firms (80%) (FSB, 2023; SBA, 2023). This indicates a potential difference in risk appetite and growth aspirations, with UK businesses potentially starting smaller and remaining solo-operated.
  • Funding: accessing capital differs significantly between continents. US small businesses enjoy easier access to venture capital, with the US accounting for 78% of global VC investment in 2022. UK businesses, however, rely more on bank loans and government support (British Business Bank, 2023).
  • Digital adoption: the US leads in ecommerce penetration, with 14.1% of retail sales happening online compared to 12.9% in the UK (Statista, 2023). This suggests greater digitalization among US small businesses, potentially impacting their reach and scalability.
  • Innovation: the UK currently ranks higher in the Global Innovation Index (2nd) compared to the US (3rd). However, the US generates more patents, suggesting a focus on commercialising innovations (USPTO, 2023).
  • Challenges and opportunities: both countries face similar challenges like rising costs, inflation, and talent shortages. However, the US market offers greater scale and access to capital, while the UK boasts a supportive regulatory environment and a skilled workforce.

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The UK startup scene in 2024 presents a picture of resilience. Despite economic uncertainties, the sector continues to thrive:

  • Investment: investors remain committed, with over £25 billion of new funds raised in the last 3 years (Dealroom, 2024).
  • Growth: the UK boasts the #1 tech ecosystem in Europe and #3 globally, attracting talent and fostering innovation (Dealroom, 2024).
  • Impact: climate tech, AI, and healthcare are booming, tackling critical challenges with innovative solutions (TechRound, 2024).
  • Diversity: vibrant startup hubs are emerging beyond London, empowering regional growth and innovation (Dealroom, 2024).

Examples of success from the Startups 100 2024:

  • Unitary: This AI firm revolutionises content moderation, promoting a safer online environment (, 2024).
  • Lottie: Transforming social care, Lottie helps families find the perfect care homes (, 2024).
  • Maeving: Britain’s first electric motorbike makes EVs accessible and practical for everyday use (, 2024).

Challenges remain:

  • Funding: while strong, access to funding might become more selective as economic pressures mount (Antler, 2024).
  • Talent: Attracting and retaining top talent in a competitive global market is crucial for continued success.
  • Regulation: Navigating a complex regulatory environment can hinder growth for some startups.

Overall, the UK startup landscape in 2024 is a dynamic and promising space. With continued support for innovation, talent, and diversity, the UK is poised to remain a global leader in fostering groundbreaking startups that address major challenges and shape the future.

Written by:
Stephanie Lennox is the resident funding & finance expert at Startups: A successful startup founder in her own right, 2x bestselling author and business strategist, she covers everything from business grants and loans to venture capital and angel investing. With over 14 years of hands-on experience in the startup industry, Stephanie is passionate about how business owners can not only survive but thrive in the face of turbulent financial times and economic crises. With a background in media, publishing, finance and sales psychology, and an education at Oxford University, Stephanie has been featured on all things 'entrepreneur' in such prominent media outlets as The Bookseller, The Guardian, TimeOut, The Southbank Centre and ITV News, as well as several other national publications.
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