No growth

Five Years of Standing Still, Say a Third of SMEs

A new study of 1000 SMEs across the UK has found that one in three of them have failed to grow in the last five years.

33% of small and micro businesses said they hadn’t achieved revenue growth, while 31% said they hadn’t seen an increase in their profits since 2010.

Struggling Sectors

The research, undertaken by AAT (the Association of Accounting Technicians), revealed that the worst hit sectors were:

  • IT and Telecoms, where 43% of businesses reported no growth
  • Arts, where 39% of businesses reported no growth
  • Construction, where 34% of businesses reported no growth
  • Retail, where 30% of businesses reported no growth
  • Professional Services, where 33% of businesses reported no growth

What’s going wrong?

While 56% of the businesses surveyed were able to identify the factors they believe are preventing growth, which may seem positive, these factors are issues that are largely out of their hands:

  • A lack of capital to expand
  • Too much red tape
  • A lack of support from banks
  • Uncertain global economic conditions

But is it also the lack of a business plan? A worrying 58% of small and micro business owners admitted they didn’t have a business plan for growth, with 10% saying they would like one but don’t know how to go about it.

“Having the necessary financial skills and a clearly defined business plan are essential tools to help firms expand successfully,” says Mark Farrar, Chief Executive of AAT.

“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. Growth can put pressure on cash flow, which is why many businesses fail when they’re expanding. One of the most important things growing companies need is to ensure cash flow is effectively managed and the company has a robust but agile business plan. Whilst a strong sense of direction is important, it’s also necessary to develop contingency plans should market conditions or the competitive landscape change.”

What can make things right?

Despite concerns over progress in the last five years, most small and micro business owners were optimistic about the next five years, with 76% expecting an increase in revenue and 78% predicting an increase in profits.

So what could help these SMEs achieve these targets? When asked, 31% of businesses admitted they needed better marketing, PR and web skills, citing it as the most important factor that would help them grow their business. 19% believed that expansion into new markets is the key, while 16% wanted more support from the government, such as funding or tax breaks, and 9% believed a more simplified tax process was the answer.

It seems many of them would be helped by writing one of Mark Farrar’s ‘robust and agile’ business plans, too…


Kara Copple
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.