SME success in 2025
Happy New Year to you all! Wishing you the very best for 2025.
Our CEO, Martin Brown shares his reflections on 2024 and looks ahead to how SMEs can achieve success in 2025
Reflections on 2024 for Small to Medium Enterprises (SMEs)
2024 brought many challenges and opportunities for SMEs. Here are my five key takeaways:
- Economic Pressures
Inflation, supply chain disruptions, and struggles to adapt through efficiency and innovation continued to impact various sectors. - Digital Growth and AI Adoption
We saw significant growth in digital technologies and the adoption of practical AI solutions. Businesses also increasingly focused on purpose-driven strategies and the environment, social, and governance (ESG) agenda. - Access to Finance
Obtaining finance remained difficult due to high interest rates and tight lending practices. This posed challenges for SMEs looking to grow or survive short-term pressures. - Talent and Labor Shortages
Recruitment remained a significant issue, particularly in hospitality and healthcare. Wage demands also increased, adding to the pressure on businesses. - Political and Fiscal Changes
A change in government in July brought fiscal policies aimed at supporting SME growth. However, these policies arguably had a detrimental effect, creating more uncertainty in the market.
2024 by Quarter
Quarter 1
The year began with cautious optimism. Despite economic and geopolitical pressures, SMEs in technology, digital, and purpose-driven sectors found growth opportunities. Government support through tax and low-interest loans provided some relief, but high interest rates and limited access to finance held many businesses back. Innovation stalled as many SMEs waited to see how the year would unfold.
Quarter 2
Sustainability and digital transformation became key themes. Businesses recognized the importance of aligning with the ESG agenda. However, labor shortages and high operating costs, particularly in healthcare and hospitality, persisted. Consumer demand remained relatively strong, and the government continued to push digital adoption.
Quarter 3
Resilience became the focus amid significant economic headwinds. Sectors like IT, FinTech, and healthcare showed strong performance despite rising energy prices and global supply chain issues. A change in government shifted expectations, but fiscal policies introduced challenges, making the UK market harder to navigate.
Quarter 4
The impact of new fiscal policies became clear. Moderate economic growth was seen in some sectors, such as professional services, with investments in SaaS, AI, and sustainable practices gaining traction. However, increases in the national minimum wage, National Insurance, and changes to capital gains tax created financial pressures. Many businesses shifted their focus from growth to cost-cutting, emphasising innovation and self-reliance to navigate these challenges.
Key Trends for SMEs in 2025:
- Digital Growth: Businesses leveraging AI, automation, e-commerce, and other tech solutions will see significant opportunities.
- Purpose-Driven Strategies: Genuine sustainability efforts (not greenwashing) will be crucial for long-term success. Keep on top of environmental regulations too.
- Talent Challenges: Recruitment and retention will remain pressing issues. Prioritise training, flexible working balance, and automation.
- Financial Pressures: High interest rates and rising operating costs will continue to strain margins, especially for SMEs unable to pass costs onto customers.
- Mergers & Acquisitions (M&A): Increased M&A activity is expected as SME leaders seek exits or strategic collaborations, driven by changes in capital gains tax and operational challenges.
- Valuations and Exits
Business valuations are under pressure due to market volatility and fiscal changes. However, now is an opportune time to prepare for exits by building value and addressing financial challenges.
Take Action – if you have a good business and you want to pursue an exit strategy, now is the good time to start preparing for that journey and making sure you drive value into your business that outweighs all of the challenges outlined
elephants child in 2024 and 2025
2024 was one of our most challenging years in over two decades of operation. The broader business context was difficult, but we embraced the challenges and opportunities. On a personal level, I’ve focused on balance—choosing fewer, more meaningful relationships and prioritising positive personal results.
Notably, the government change in July aligned with our strategic pivot, resulting in a strong end to the year. November and December were among our best months, driven by renewed energy and focus.
Looking ahead, we expect 2025 to be an exceptional year, building on the successes of 2024. Whether your goals are commercial, charitable, or community-based, there’s never been a better time to seek good advice. Every business needs a clear path to growth, funding, and eventual exit.
My advice:
- Start planning now.
- Yesterday’s strategies won’t deliver tomorrow’s results.
- Seek guidance to navigate the challenges and seize opportunities ahead.
Thank you to our team, clients, and stakeholders for an incredible year. We look forward to working together to achieve great things in 2025.
Happy New Year! Here’s to a year of challenges, opportunities, and success.