Publication
Understanding micro-businesses: Evidence from the Longitudinal Small Business Survey 2015-2023
Published: 4 November 2025
ERC Research Report
Associated Themes
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Business Growth -
Innovation -
Productivity and performance
Micro-businesses with 1-9 employees accounted for 81.4 per cent of all UK employer firms in 2024 and employed approximately 4.2 million people, making up 18.0 per cent of the UK’s private sector workforce. Despite their significance for jobs, growth, and innovation, micro-businesses are often excluded from official surveys. Consequently, our understanding of what happens within these businesses remains limited. For example, what challenges do micro-businesses encounter? How are they responding to climate change and managing uncertain international conditions? What skills or digital barriers do they face?
One important source of insights on micro-businesses is the Longitudinal Small Business Survey (LSBS). Conducted annually since 2015, this large-scale survey provides reliable information on the full range of firms with 1-249 employees. Annual reports are produced on firms with and without employees and cover a longitudinal panel of businesses. Both offer some evidence on micro-businesses compared to other SME size bands.
In this report, we focus on these comparisons and examine micro-businesses with 1-9 employees, small firms with 10-49 employees, and medium-sized firms with 50-249 employees. We analyse trends from 2015 to 23 and assess how broader environmental challenges – such as COVID-19 and Brexit – affected micro-businesses. Our focus remains on businesses with employees, excluding sole traders.
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