Why only 15% of UK small businesses achieve sustained growth – and how yours could be one of them

New government data has revealed a striking truth about UK small businesses: while nearly a third experience growth in any given year, only 14.6% manage to sustain that growth consistently over four years. It's a statistic that highlights just how challenging — but not impossible — building a resilient, steadily growing operation really is.

The Longitudinal Small Business Survey, which tracked the same 1,484 UK businesses from 2021 to 2024, paints a sobering picture: growth spurts are common, but sustaining momentum year after year proves incredibly difficult. 

The good news? The data also highlights what helps sustained growers to succeed, providing clear, actionable strategies that any business can adopt.

A growth reality check

First, let's acknowledge that the survey period covered extraordinary challenges, including — but by no means limited to — the tail end of the pandemic, soaring costs, and historically high interest rates. 

Growing under these conditions is, understandably, tricky. Indeed, even businesses that shrank in one year often bounced back, with 37% reporting employment growth the year after a dip. However, that doesn’t mean there aren’t lessons to be learned.

What the 15% do differently

When the study’s researchers examined businesses that engaged in “growth-supporting activities” in 2021, then tracked their performance through 2024, clear patterns emerged.

• Investment in people pays off

Businesses that provided employee training consistently outperformed those that didn't, both in employment growth and turnover. In 2022, almost half (46.6%) of training providers reported increased employment, compared to just two-fifths (40.4%) of non-trainers. By 2024, trained-up businesses were still ahead: one in three (28.8%) showed employment growth versus 16.4% among businesses that skipped training.

• Finance can accelerate growth

Businesses that accessed external finance (excluding pandemic support) showed stronger performance across the board. In 2022, one-third (33.7%) of businesses that had secured funding the previous year reported employment growth, compared to 28.6% of those that hadn't. Interestingly, the use of external finance among panel businesses actually increased from 8.2% in 2021 to 15.9% in 2024, suggesting that savvy business owners know when strategic borrowing makes most sense.

• Innovation and support matter

Businesses that introduced new or improved products, services, or processes in 2021 consistently outperformed those that didn't (26.1% showed employment growth in 2023 versus 19.7% of non-innovators). Those that sought external business advice also generally saw stronger turnover and employment growth in subsequent years.

• Mindset is vital

Optimism is key for growth, but unchecked optimism can derail it. The data shows that while many firms predict expansion, only about half deliver on those expectations. The sustained growers tend to be the ones who balance confidence with cautious planning: building buffers, maintaining financial flexibility, and not over-committing to best-case scenarios.

Moving forward

Interestingly, the same businesses tracked over four years showed shifting priorities. Innovation and exporting both declined as priorities, and even training investment dipped slightly from its 2022 peak. 

Of course, this makes sense. When costs rise and uncertainty looms, businesses naturally become more cautious. But the data also reveals a clear opportunity: the sustained growers were generally those that kept finding ways to invest in training, innovation, and strategic expansion even during tough times. 

So, what's the best way to get ahead? The survey points to several strategies:

• Keep investing in your team

Training isn't just a cost – it's one of the clearest predictors of future performance. Whether that means formal courses, mentoring, or on-the-job development, businesses that develop their people often grow faster.

• Use external finance strategically

The businesses that accessed external finance consistently outperformed those that relied solely on existing resources. A well-structured business loan for equipment, expansion, or working capital can be the difference between stagnation and growth, especially when you're competing against better-resourced rivals.

• Build financial resilience

The businesses that survived and thrived through this turbulent period likely had proper financial infrastructure: business savings accounts for buffers, appropriate business insurance for risks, and flexible financing options like business credit cards for managing cash flow fluctuations.

The bottom line

Sustained growth is rare, but it's not random. The businesses that achieve it don't just get lucky – they invest in their people, secure appropriate funding when needed, and maintain strategic focus even during challenging times.

The economic headwinds of 2021-2024 tested every business. But they also revealed which strategies actually work. As we move into a more stable period, businesses that take these lessons on board have every reason to be optimistic. 14.6% may be a small percentage, but it represents tens of thousands of UK businesses that proved it can be done.