Fall in percentage of UK small businesses working on new initiatives to unlock future growth
The percentage of small businesses working on new initiatives to power future growth has fallen to a four-year low (65%) and is significantly down on the start to the year (71% for Q1 2025), according to research from Novuna Business Finance.
The tracking study of a representative sample of 1,000 small business owners also revealed significant sector falls compared to Q1 2025 in manufacturing (down from 83% to 69%) transport and distribution (down from 76% to 73%), real estate (from 72% to 44%), and media (falling from 86% to 61%).
Significantly, over the last decade, the Novuna Business Finance data has revealed that low-points in small business growth forecasts were usually offset by resilience for the longer term, with enterprises usually working on longer-term initiatives to secure future growth. This quarter, and for the first time, there are falls on both counts. Following Novuna data earlier in the month, which revealed a four-year low in the percentage of enterprises currently forecasting growth (26%), the number of small businesses working on initiatives to secure future growth for the longer term is also down, hitting a four-year low.
Of those businesses working on initiatives to unlock future growth potential, the most common steps taken were largely defensive measures to control costs and cash flow. Initiatives backed included: keeping fixed costs down (58%), improving cash flow (31%) and tackling late payment (25%).
The expansive initiatives that UK small businesses were most likely to be working on included: hiring more people (17%), investing in new machinery and equipment (16%) and expanding into new overseas markets (16%).
- Keeping fixed costs down -58%
- Improving cashflow -31%
- Tackling late payment -25%
- Hiring more people 17%
- Investing in new machinery and equipment -16%
- Expanding into new overseas markets -16%
- Reassessing finance commitments – 13%
- Streamlining supply chain 9%
Joanna Morris, head of insight at Novuna Business Finance commented: “After the surge in small business confidence this time last year, there has been a slide in the percentage of business owners predicting growth for the last four quarters. In parallel, the fall in the percentage of small businesses offsetting this by working on new projects to unlock future growth potential is a concern. We have seen from our research over the last 12-months that geo-political uncertainty is impacting small business confidence, together with concern over high running costs and fears over tax rises later this year.”
“One positive take from this quarter’s findings is an upturn in the percentage of small businesses that are using this uncertain period to reassess their finance commitments to free up working capital – a trend that is up across six industry sectors this quarter. At Novuna Business Finance, we provide flexible, tailored financial solutions to help established small businesses plan for long-term growth and transformation– enabling them to turn the corner and realise their full potential.”