According to the fourth Albion Growth Report nearly three quarters (73%) of small businesses with five or more employees plan to grow over the next two years.

The report, based on interviews with 1,000 small and medium-sized enterprises (SMEs), also revealed that only 5% think they will shrink or wind down, with 50% of respondents planning to grow their employee base over the next two years.

In line with this, small businesses found finding skilled staff the biggest challenge, with problems caused by red tape, regulatory change and the difficulty of accessing the single market as other prominent challenges they face.

Meanwhile, the decision to leave the EU ranked in sixth place, manufacturing companies being the most optimistic about growth and most relaxed about Brexit.

35% of those interviewed think the Brexit will help them enter new markets, while 41% expect it to be a hindrance.

The group most concerned about the effect of Brexit on their business were the under-35 ‘millennial’ business owners, 54% believing it will affect access to new markets.

Brexit concerns in business were also reflected by the regional split seen after the results of the referendum. Small business owners in Scotland ranked leaving the EU as the biggest obstacle to growth, while entrepreneurs in London ranked it third.

In contrast the group least concerned about the Brexit are sole traders; 56% of whom said it would have no effect on their potential for growth.

Patrick Reeve, managing partner at Albion Ventures, said: “Against a backdrop of profound change, one element that has remained reassuringly unchanged is the optimism underlying the UK’s small businesses.

“Firms are looking to grow their headcount and productivity is on the increase. The biggest barrier to growth, finding skilled staff, is generated by success rather than failure.”

He added: “The downside is that the economy is coming under capacity constraints at a time of considerable political uncertainty. While many of the pressures on growth we have seen in recent years have eased, the skills that enable us to compete are in short supply.”