A third of small businesses have not grown in 5 years, but 76% expect to by 2020

Optimism outweighs reality for many small and micro businesses, but 58% lack a business plan to grow.

One in three small and micro businesses have failed to grow in the last five years, according to new research.

In a study of 1,000 small and micro businesses in the UK, by AAT, 33% had failed to experience growth in revenue, and 31% hadn’t grown profits since 2010.

When asked what factors have been holding their companies back from expanding, business owners cited a lack of capital to expand, too much red tape, and a lack of support from bank.

When asked what they think will help their businesses grow in future, ahead of the Autumn Statement set to take place next Wednesday, 31% said more effective marketing, PR or a stronger web presence.

One fifth (19%) of respondents said expansion into new marks, while 16% cited more support from the government, such as funding, tax breaks or training opportunities. One in ten (9%) called out for a more simplified tax process.

Despite the gloomy five-year reviews, the respondents were far more optimistic with their forecasts. Three quarters (76%) said they expect an increase in revenue and 78% predicted profits to rise over the next five years.

But despite the confidence, a staggering 58% of small and micro business owners admitted to not having a business plan to help them grow, with 10% saying they wish they have one but do not know how to put one together.

The sectors with the most small businesses citing no growth in the last five years were IT and telecoms (43%), the arts (39%), construction (34%), retail (30%) and professional services (33%).

‘Growing your company can be one of the hardest stages in the life of a business but with the right skills it can be done,’ said Mark Farrar, chief executive of AAT.

‘Growth can put pressure on cash flow which is why many businesses fail when they’re expanding. Having the necessary financial skills and a clearly defined business plan are essential tools to help firms expand successfully.’

Further reading on business growth for small businesses

More small businesses staying the course than three years ago

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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