Do you run a small business? If so, you’re in good company, because more than 99% of the total UK business population is in this segment. Starting your own business can be a little daunting, requiring hard work, and some luck, to succeed, but what can the statistics around British small businesses tell us about the current landscape?

The vast majority of UK businesses are considered ‘small’

There were just under 5.5 million registered businesses in the UK at the end of 2024, with 5.45 million of those being considered ‘small’ (0-49 employees). This includes non-employers and ‘micro’ businesses (one to nine employees).

Despite the ONS data showing a drop of approximately 57,000 in the number of small businesses between 2023 and 2024, compared to a 1,000 increase in the number of medium-sized businesses, it’s clear to see that it’s the small businesses that continue to drive the UK economy.

The total number of private sector businesses has been falling since 2020

There were approximately 1 million more businesses in 2024 compared to 2010, a 23% increase, but the estimated number of private sector businesses is down 8.1% compared to 2020.

There are two significant macro factors to consider here:

1. The Covid-19 pandemic
2. The UK officially leaving the European Union

Both of these events had a significant effect on the economic landscape, particularly for small businesses, with the majority of business births and deaths involving small businesses.

The number of small businesses fell from 5.97 million in 2020 to 5.49 million in 2024, but the number of medium-size companies (50-249 employees) actually increased by 2,000. The number of large businesses (250+ employees) remained the same at approximately 8,000.

While it should be no surprise that small businesses are more vulnerable to economic turmoil than larger companies, it’s a crucial lesson in the importance of building resilience where you can. Whether that is ensuring you’re operating in the most tax efficient way possible, taking advantage of the various tax relief schemes open to you, or not overstretching yourself when it comes to investment in new products or extended overheads.

Small business consumers want to support the local community

According to a 2024 Forbes Advisor poll, 57% of people who prefer to shop with small businesses do so because they want to spend their money within the local community. Quality of service and trustworthiness were also important metrics, with these factors being cited by 43% and 37% respectively.

With these statistics in mind, if you’re a small business owner you need to think about how your values are communicated effectively to your customers or clients.

Business administration and support services are booming

The percentage changes in businesses opening by sector across the UK were typically between one and five percent, except in the Business Administration and Support Services industry. Here we saw a massive 43.8% increase in 2024 compared to a year earlier. The next largest year-on-year increase was Finance and Insurance which was up 4.6%.

This suggests the greatest opportunities for start-ups and entrepreneurs is in this industry, which includes a variety of activities and functions that support general business operations. So, if you’re employed in this sector and have been considering starting out on your own, it might be a great time to do so.

How Warr & Co can help

At Warr & Co, we understand the challenges of running and growing a small business because it’s a journey we’ve been on ourselves.

We also understand that every small business is different, which is why you need an accountancy partner that goes beyond one-size-fits-all solutions.

• We offer a wide range of accounting services that are specifically tailored for small businesses across all sectors and industries, including:
• Assisting with start-ups and business formation
• Advising on the available and most appropriate legal structures
• Preparation of business plans
• Tax planning and accounts preparation

Want to find out more about how we can support your small business? Book your free small business consultation today.