34+ UK Small Business Employment Statistics

Small businesses are the UK’s single largest source of private sector employment. They employ more people than large corporations, operate in every corner of the country, and absorb a significant share of the national workforce through both direct hiring and self-employment. Understanding the employment picture across UK small businesses helps owners benchmark their own situations and helps policymakers understand where the labour market is most under pressure.

This article pulls together the most reliable UK small business employment statistics available, drawing on the Department for Business and Trade (DBT) Business Population Estimates, the Longitudinal Small Business Survey 2024, the Government Employer Skills Survey 2024, and the DWP Employer Survey 2024. For broader context, see our UK small business statistics overview.

Key Figures at a Glance

How Much of the Workforce Do Small Businesses Employ?

UK small and medium-sized enterprises employed 16.6 million people at the start of 2024, according to the DBT Business Population Estimates. That represents 60% of all private sector employment in the UK, with large businesses (250+ employees) accounting for the remaining 40%.

Breaking that figure down further:

• Small businesses (0–49 employees) employed 13 million people, or 47% of all private sector jobs.
• Medium businesses (50–249 employees) employed a further 3.7 million people, or 13% of the private sector workforce.
• Large businesses (250+ employees) employed 11.1 million people, roughly 40%.

Put simply, nearly one in every two private sector jobs in the UK is based in a small business. The number of small businesses employing staff has grown by 27% since 2000, reflecting the long-term expansion of the business population overall.

Employing vs Non-Employing Businesses

One of the most striking features of the UK’s business landscape is how many businesses have no employees at all. Of the 5.5 million private sector businesses in the UK at the start of 2024, around 4.1 million (74%) had no employees. These are sole traders, freelancers, and owner-operators running entirely on their own.

Only 1.4 million businesses had at least one employee on their books. Of those:

• Businesses with 1 to 9 employees (micro employers) numbered around 1.1 million.
• Businesses with 10 to 49 employees (small employers) numbered around 211,000.
• Businesses with 50 to 249 employees (medium employers) numbered around 37,800.

The number of non-employing businesses grew by 6.1% between 2024 and early 2025, the fastest growth of any size category. This reflects a broader trend toward solo self-employment that has been running for more than two decades and shows no sign of reversing.

Hiring Trends Among UK Small Businesses

The DBT Longitudinal Small Business Survey 2024 gives the clearest picture of recent hiring activity among employing SMEs.

Source: DBT Longitudinal Small Business Survey 2024

The 2024 data marks a clear shift. The proportion of SME employers growing their headcount fell by five percentage points compared to 2023, while the proportion cutting jobs rose by five percentage points. This was largely driven by the rising cost of employment — particularly the increases to the National Living Wage and employer National Insurance Contributions that came into effect from April 2025.

The forward-looking picture was more optimistic. Survey data from late 2024 found that for every one SME planning to reduce its headcount, 2.5 were planning to take on new staff. Concerns about staff retention also fell year on year, suggesting that where businesses did have staff in place, they were managing to hold on to them.

Skills Shortages and Recruitment Difficulties

Finding people with the right skills remains one of the most persistent challenges for small businesses across the UK. The Government Employer Skills Survey 2024 recorded 250,500 skill-shortage vacancies across all employers in the UK. While that is less than half the 531,200 recorded in 2022, it is broadly in line with pre-pandemic levels of around 226,500 in 2017.

Importantly, skills shortages are a much bigger problem for smaller businesses than the headline figure suggests. While 6% of all employers had a skill-shortage vacancy in 2024, 42% of vacancies at micro businesses were skills-shortage related. The equivalent figure for large companies (100+ employees) was just 19%. Small firms have less flexibility to absorb skills gaps, less resource to invest in training, and less attractiveness as employers compared to larger competitors.

Source: Government Employer Skills Survey 2024

The DWP Employer Survey 2024 adds further detail. Of employers who had recruited in the previous 12 months, 53% were unable to find a suitable candidate for at least one role. The main reasons given were a low number of applicants with the required skills (58%) and applicants who lacked the right attitude or motivation (45%).

Training Investment

The UK’s declining investment in workplace training is a significant factor behind the persistent skills gap. According to data from the Government Employer Skills Survey 2024, total employer investment in training stood at £53 billion in 2024, down from £59 billion in 2022 (adjusted for 2024 prices). That represents an 18.5% fall since 2011.

On a per-employee basis, training spend fell from £1,960 in 2022 to £1,700 in 2024, a 29.5% fall since 2011. Small businesses face a structural disadvantage here. They typically lack the dedicated HR or training functions that larger organisations use to plan and deliver development programmes, and the direct cost of taking staff off productive work for training is felt more acutely when teams are small.

That said, 69% of SME employers were using technology or web-based software to sell to customers or manage their business by 2024, up from 50% in 2022. Investment in digital tools is, in many cases, replacing investment in traditional staff training as the primary route to productivity improvement.

Labour Costs as a Barrier to Employment Growth

Rising labour costs are the most commonly cited barrier to growth among UK SME employers with 10 or more staff. The combination of increases to the National Living Wage and changes to employer National Insurance Contributions has added meaningful cost pressure for small businesses that rely heavily on relatively lower-paid or part-time workers.

The DBT Small Business Survey found that 33% of businesses with 10 or more employees identified the cost of labour as their primary barrier to growth. For businesses in retail, hospitality, social care, and construction — all sectors with a high proportion of minimum-wage or near-minimum-wage roles — the impact has been particularly acute.

Despite this, the overall employment picture remains positive. The majority of SME employers (54%) reported no change in headcount in 2024, and the balance of those planning to hire versus those planning to cut jobs remained in favour of net hiring going into the following year.

Diversity in SME Employment and Leadership

The diversity picture within UK small business employment has changed slowly over time. The most recent data from the DBT Longitudinal Small Business Survey 2024 and the House of Commons Library shows the following.

Sources: DBT Longitudinal Small Business Survey 2024; House of Commons Library Business Statistics

The industries most likely to be majority-led by women are health and social work (35%), education (34%), and other services (20%). The sectors least likely to have women in senior leadership are construction and primary industries. Minority ethnic-led SMEs are most common in finance and real estate (15%) and information and communications (12%).

Workforce Growth Plans

Among SME employers with plans to grow their business, the two most commonly planned activities related directly to people. 62% planned to increase workforce skills, and 47% planned to recruit new staff in the UK. These figures highlight that people investment, whether through training or hiring, remains central to how small businesses think about growth.

However, delivery of those plans has been disrupted. Of SMEs with growth plans, 57% reported that rising costs had affected their ability to carry them out, up two percentage points on the previous year. The most commonly cited cost pressure, as in prior years, was costs other than energy (cited by 81% of those affected).

The use of technology as a growth enabler is rising fast. By 2024, 69% of SME employers were using technology or web-based software to sell to customers or manage the business, up from 61% in 2023 and 50% in 2022. Businesses that adopted technology for internal management grew even faster, from 45% in 2022 to 65% in 2024.

What This Means for Your Business

Whether you are a sole trader thinking about your first hire, or a small employer managing a team of ten, the data points to a few consistent conclusions.

Skills shortages are not going away. The improvement between 2022 and 2024 in skill-shortage vacancies is welcome, but the underlying structural problem remains. Per-employee training investment is still falling, and the digital skills gap in particular is widening. Businesses that invest in developing their existing people — even at a modest level — are building a real competitive advantage.

Rising labour costs require a revenue response. If the cost of each employee is going up, the return that employee generates needs to go up with it. For many small businesses, the most direct route to that is more customers, more consistently. A website that generates steady enquiries is one of the most cost-efficient ways to achieve that. Our small business website design packages are built for exactly this purpose.

Digital tools are becoming a baseline expectation. The jump from 50% to 69% of SME employers using technology to sell or manage their business in just two years is significant. Businesses without an online presence or digital sales channel are increasingly the exception rather than the rule. For local businesses in particular, being findable and credible online directly affects the volume and quality of enquiries you receive.

Sole traders are the fastest-growing part of the business population. If you are currently self-employed with no employees, the data shows you are in good company. The non-employing business population grew by 6.1% in the most recent period. If you are at the stage of building a professional presence to win more clients, a WordPress website is one of the most practical and cost-effective investments you can make.