More than 1.5 million small businesses in the UK say it is normal for their revenue to double or halve in during certain months of the year, according to Direct Line for Business.
The insurer said these huge fluctuations make it extremely difficult for businesses to manage their cash flow.
Controlling employee numbers is one way to manage these fluctuations as business scale staff up and down to cope with changes in demand and income at different points of the year. Twenty-three per cent of small businesses have had to employ more staff because of rapid expansion.
However, these uncertainties don't seem to be putting off entrepreneurs as the UK's small and medium-sized enterprise (SME) industry continues to grow. In the past year, 53% have reported an increase in revenue, with one in 20 experiencing growth of more than 50%.
There has been a 23% growth of VAT registered SMEs in the last five years, with 2.7 million now operating in the UK. This has been driven by the 25% increase in the number of microbusinesses, which stands at 2.4 million.
Jazz Gakhal, managing director at Direct Line for Business, said: "Small company owners and operators are amongst the most resilient and adaptable business leaders in the UK. Fluctuating revenues and demand can be difficult to manage, but British SMEs continue to thrive. It's important, however, that if revenues and employees fluctuate, that businesses ensure they have appropriate insurance cover and are making updates to their policies as needed to prevent them being under or over insured. With some insurers, this can be expensive because they charge admin fees to make changes to the policy."