Study shows 33% of small and micro businesses show no growth over the last five years

One in three small and micro businesses have failed to grow in the last five years, according to latest research by AAT (Association of Accounting Technicians).

A study of one thousand small and micro businesses across the UK discovered that 33% have failed to experience growth in revenue, whilst 31% haven’t experienced an increase in profits since 2010.

When asked what factors have been holding their companies back from expanding, the reasons business owners gave are:

• A lack of capital to expand
• Too much red tape
• A lack of support from banks

Small Business (PD)

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
• 19% said expansion into new markets
• 16% said more support from the Government, such as funding, tax breaks or training opportunities
• 9% said a more simplified tax process

Despite a gloomy review of the past five years, forecasts were much more optimistic, with 76% of small firms expecting an increase in revenue and 78% predicting profits to rise over the next five years.
Yet despite the optimistic sentiment, 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.

Mark Farrar, Chief Executive of AAT said:

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. Having the necessary financial skills and a clearly defined business plan are essential tools to help firms expand successfully.”

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.”

Amongst the worst sectors where small businesses said they hadn’t grown in the last five years are:

• 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

For information on how to improve your business skills, visit www.aat.org.uk/find-a-course/aat-small-business-courses.

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