The UK business confidence report: 2024
If you’re running a small business owner or a decision maker within a small UK business, then we’re sure you’d agree that the uncertainty of the UK market over the last few years hasn’t exactly left you and your colleagues brimming with confidence – and for good reason.
With the lingering effects of the pandemic only now starting to vanish, and the unforeseen turbulence caused by disruption in the UK political scene taking far longer than expected to settle – not to mention the recent recession and cost of living crisis sparked by wider world events – it’s safe to say that the UK market hasn’t exactly been thriving.
However, that’s all started to change as of 2024!
Despite a rocky start to the year, 2024 is already seeing inflation dropping towards record lows, and with consumer confidence finally on the rise, it’s looking like UK businesses are once again in a position to start thinking about future expansion and growth.
But, just how widespread is this growing confidence, and is it perhaps a false summit on the way up to the top?
To find out, we conducted a survey of 750 small UK business owners and decision makers within small UK businesses to see how confident they feel about the state of the current UK market, whether or not they think the upcoming UK election willwith have an impact, and if their current confidence levels extend to future expectations.
Take a look below to see exactly what we discovered.
How confident are business owners in the future of their business?
First off, let’s look at the direct confidence levels UK business owners are feeling towards their business’s success over the next 12 months. Has confidence spiked high or are many owners still favouring a more subtle and cautious optimism?
Well, as it turns out, it appears to be a mix of both, as 35.9% of respondents we spoke to said that they were confident that their business would perform well in the coming months and overcome any challenges they might face.
And this confidence is further reflected by the 23.9% of small business owners who stated they were very confident in their business’s ability to grow significantly as the UK market recovers.
However, that’s not to say all business owners are outright confident in the success of their business, with a further 21.5% of owners from our survey commenting that they were uncertain whether their business would grow or decline, especially given recent market fluctuations.
But what is it that is still causing this more cautious confidence level in UK small businesses, and is it something they should truly be worried about?
What are the main factors influencing business confidence in 2024?
It goes without saying that the number one factor that appears to still be impacting business confidence in 2024 is the potential for rising inflation and slowing economic growth, a concern held by a whopping 42.5% of business owners we spoke to!
Even though inflation has been falling as we move further into 2024, inflation itself is inherently unpredictable and has a direct impact on whether or not a country’s economy will grow or shrink. Thus, it’s entirely understandable that UK business owners would see this as the biggest danger to the future growth of their business.
However, inflation and the economy were not the only major factors that were flagged as confidence concerns by small UK business owners. Another substantial threat appears to be the cost of bills and essential business investments affecting the cost of business overheads, a factor highlighted by another 41.5% of respondents to our survey.
Again, this factor should also come as little surprise given the recent, and arguably still ongoing, cost of living crisis, which has substantially impacted businesses and homeowners alike when it comes to paying their bills. And with costs still high, it remains to be seen just how long this particular problem will continue to affect the UK in general.
Overall, however, besides these two factors, the remaining factors on our survey impacting UK business confidence appear to be the typical factors you’d expect to see in any healthy market, with the third biggest concern being staying ahead of local competition (22.5%), followed by customer retention (19.9%).
What steps are UK businesses taking to overcome current challenges?
Even though certain aspects of running a business, such as rising inflation and the impact of external factors, cannot be controlled by business owners directly, that’s not to say that UK businesses aren’t prepared to take the steps necessary to keep their business afloat.
In fact, practically every business we spoke to said that they had some form of plan in place to help offset the impact of a poorly performing economy, with the majority of business owners (33%) stating that they’d already created a cost-saving plan around mitigating the potential increase of costs to their supply chain and professional services.
On top of this, a further 29.3% of business owners stated that their cost-saving plan also included plans around changing their service providers for overheads, such as energy, gas, Wi-Fi, etc., in order to get a better price deal. While another 24% said that they were willing to lower prices to boost customer retention.
Interestingly, and perhaps reflecting the increased confidence many UK businesses are now feeling, a further 21.2% of those who responded to our survey mentioned that they were considering expanding into new product and service markets in order to reach new customer groups – something not typically considered when looking to save on costs.
And this enhanced confidence is only hinted at further by the 17.6% of business owners who are willing to invest in new technology and digital upgrades to support business growth, which in the modern digital age is certainly a step worth taking.
But just how important is technological development to UK businesses?
How important is digital technology in the growth of UK businesses?
Given the rapid boom in technological innovations in the last decade, and particularly with the rising prominence of early AI technology, it should come as no surprise that most UK small businesses see the implementation and ongoing transformation of digital technology as of some importance to their business.
Based on our survey results, roughly 40.8% of business owners agreed that digitally transforming their business was at least of moderate importance to them, with another 29.6% stating that it was very important and that they were putting it front and centre of their business model.
Of course, not all businesses require new technology to maintain business growth, and at least 15.5% and 14.1% of business owners we reached out to said that technological transformation was only either slightly important or not important at all – though it would appear that most businesses, in general, see new tech as worth the investment.
What concerns do UK businesses have around customers
Although internal changes and tweaks can go a long way towards helping any business stay afloat in trying times, all could be for nought if the customers who buy from a particular business change their spending habits. Thus, we couldn’t touch on business confidence in the UK without also asking owners about their concerns around customers.
First and foremost, it seems that the majority of small UK businesses are most worried about customers spending less in general (39.6%), a factor that’s been a consistent trend in the last year or so, and one that goes hand in hand with customer retention issues, which was also a concern flagged by another 31.5% of survey respondents.
In fact, overall, customer spending seems to lie at the heart of most businesses' customer concerns, as 23.6% also noted that fewer customer purchases were a major worry for them, alongside the continuing trend of customers switching to online shopping as a matter of convenience (18.5%).
But, with all that being said, not every business owner flagged changing customer habits as a concern, as at least 13.6% of those who answered our survey said that they weren’t concerned about their customers.
Are local UK businesses concerned about the upcoming general election?
Last, but not least, with another UK general election finally on the horizon, we thought we’d ask those responding to our survey whether or not they felt that any potential upcoming political shift might present fresh challenges to how they operate their business.
And, for the most part, opinions seem to be rather neutral, with 27.5% of owners stating that the general election would either impact their business slightly or have minimal impact overall, while a further 13.5% state that they did not expect the election to have any impact whatsoever.
However, 19.1% of respondents did say that the election had the potential to significantly impact and influence their business operations, depending on how the political scene shifts and whether or not a new party takes over and implements policy changes.
What can small UK businesses do to alleviate their concerns?
Although by no means concrete evidence, our survey would indeed suggest that UK small business confidence is once again on the rise. And while inflation and rising costs remain a concern, and their potential effects on changing competitor and consumer habits, businesses also seem confident in their ability to handle challenges posed in these areas.
But if you’re just starting a business or perhaps don’t have any firm plans in place to deal with unexpected market fluctuations in the future, what can you do to make sure your business comes out the other side unscathed?
Well, the good news is that there are plenty of things you can do to start shielding your business from economic risks going forward, including doing any and all of the following:
Plan for the future – it never hurts to sit down and make a backup plan that puts contingencies in place that you can follow to protect your business should an unexpected economic downturn hit you particularly hard.
Look to cut costs – whether this is by changing energy providers or working out bulk deals with your suppliers, it’s always worth examining your business overheads on a regular basis and looking at how you can adjust these to save money.
Diversify your portfolio – although focusing solely on producing and selling one specific product or service can position you as a leading expert in that area, diversifying your portfolio into other related markets is a great way to offset the impact of low sales should you experience a period of consumer drought.
Get online – at the end of the day, any good modern business needs an online presence, even if the service they offer has no digital element. Simply put, most customers are now using the internet to find the products and services they need, so getting online will only benefit your business in the long run.
Offer discounts – finally, even though it might impact profitability briefly, offering discounts and financial incentives or benefits to new and previous customers alike can be a great way to boost customer retention and loyalty, ensuring you make more sales in the future.
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And there you have it, that was our UK business confidence report for 2024 going forward!
It certainly seems like confidence is on the rise for businesses, and we’ll certainly be keeping an eye on things as we continue into summer, autumn, and winter, but for now, we feel confident in saying that things will only get better for local UK businesses as we enter the sunnier months of the year!
Of course, if you want to lend your business a hand right now, especially if you’re finally taking things online, then SumUp might have just what you need.
Whether it's finding a new payment solution for your website, or installing easy-to-use card readers in your store, SumUp has everything you need to streamline your customer sales interactions and empower fresh business growth.
Get in touch today to see how we can help your business reach new heights!
