Back to Blog
9 in every 10 businesses in the UK are SMEs. Small and medium businesses are the lifeblood of the economy, playing a tangential role in providing affordable access to much-needed products and services. The small business trend isn’t letting up, according to a 2024 Forbes Advisor poll, which revealed that 4 in every 10 Brits want to start their own small business someday.
This year, however, SMEs will be influenced by a unique mix of economic trends as they plot and follow roadmaps to growth and sustainability. There is increased adoption of contactless payments and GenAI, and while these are major parts of the equation, they do not represent the whole picture.
There is a corresponding rise in cybersecurity concerns, taxation adjustments, and funding competitiveness, which SME owners must balance appropriately to sustain growth. Combined, the trends play a key distinctive role in deciding which SMEs stand out and for how long.
Small business trend 1: Decline in small business population
A disquieting trend that has repeated itself in the last 4 years is the decline in the number of UK small businesses and a reduction of business purchasing power. The highest rate of increase in the population of SMEs (6.8%) in the UK happened between 2013 and 2014. However, after that time, the SME business population has steadily decreased in growth rate (UK GOV).
Then covid-19 happened, leading to the greatest reduction (6.5%) in the number of businesses recorded so far. Between 2020 and 2021, 408,000 businesses shut down because of the crippling economic realities of covid-19.
The trend has continued so far, with more than 53,000 SMEs closing down between 2023 and 2024 – making for an alarming precedent for SME performance and growth. To combat this, businesses must ensure their systems can predict and adapt speedily to customer demands and leverage tools like AI and GoSolo to keep in step with the shifting economy and stay ahead of the SME shutdown curve.
How to win:
-
Diversify revenue streams with subscriptions, digital products, or B2B services.
-
Use Google Analytics & Power BI to track trends and optimise pricing.
-
Apply for government grants, SME loans, and alternative financing options.
Small business trend 2: Rise in use of AI’s most promising tools for small businesses
Tools like ChatGPT, Claude, and other AI tools are no longer the aliens they once were. Now, businesses use agentic AI tools like Google Cloud AI to handle complex business workflows.
In 2025, incorporating AI assistance into business operations will be key for SMEs not only to attract and retain customers but also to secure funding from VCs. AI-specific funds will additionally require businesses to make genAI an integral part of product strategy and business operations as a driver for more efficient work and astronomical productivity.
SMEs will increasingly select vendors based on AI leverage. They will choose to transact with companies that use AI to deliver sharper services and produce greater results faster than those who do not.
However, as AI adoption accelerates over the next 3 years, it will shift from being a core differentiator to becoming a basic requirement for every SME. 2025 and the next 2 years will be pivotal for businesses to position themselves as tech-enabled leaders. Striking a balance with AI adoption will draw the line between businesses that stay top of mind and those that fade into oblivion from the customer’s mind.
How to win:
-
Automate customer interactions with AI chatbots like Drift AI or ChatGPT to enhance support.
-
AI-powered tools like Zapier and HubSpot AI can automate workflows.
-
Use Jasper AI and other marketing tools to generate high-quality content for websites and social media.
-
Use AI-driven security solutions like Darktrace to prevent cyber threats.
Small Business Trend 3: Access to Finance Becomes More Competitive
SMEs will no longer be able to rely on traditional bank loans as their primary funding source. Banks are reducing loans to small businesses by using stricter lending criteria and raising interest rates. 2025 will see many SMEs look at alternative financing solutions like peer-to-peer lending, fintech-based credit solutions, and crowdfunding platforms that offer business owners more flexibility.
Still, competition for these funds is growing, and businesses that lack a strong financial foundation may struggle to secure capital when they need it most.
Investors and lenders are looking for data-driven business strategies, clear revenue models, and effective risk management before approving funding. Therefore, it is imperative to refine business plans, maintain strong financial records, and explore multiple funding options to stay ahead.
How to win:
-
Explore alternative financing like peer-to-peer lending, crowdfunding, and fintech loans.
-
Develop a strong financial strategy with clear business models.
-
Apply for government grants like SME loan schemes, R&D tax credits, and local business incentives.
-
Improve creditworthiness using tools like Experian or Equifax to monitor your business credit score.
Small business trend 4: Rise of contactless payments
70% of business owners using GoSolo now use its Tap to Pay feature, signalling a marked increase in the volume of contactless checkouts. More businesses want to dispose of weighty, clunky POS machines and collect payment for products anywhere, both online and offline.
Customers are also driving this trend, with 8 out of 10 shoppers finding it easier to tap their phones or payment cards to complete checkouts.
The speed, ease, scalability, and flexibility that Tap to Pay brings to transactions are unparalleled and will be a major factor in how quickly an SME grows in 2025. Businesses that stick to less efficient payment methods that are harder to scale will find their growth slowed down significantly, while SMEs that adopt swift, contactless payment methods will accelerate their growth.
How to win:
-
Adopt solutions like GoSolo Tap to Pay for effortless transactions.
-
Offer instant online payments with Stripe or PayPal Checkout on your website.
Small business trend 5: Heightened cybersecurity scrutiny
With the rise in the use of genAI and contactless payments, there will be an increase in cybersecurity risks. Consumers will place dizzying emphasis on data privacy, prompting businesses to implement stricter data protocols for handling and sharing consumer information. A single data breach can cost an SME over £25,700, making cybersecurity a non-negotiable investment.
SMEs will be microscopically evaluated on AI ethics, data security, regulatory compliance and consumer data protection. The results will heavily influence the customer’s purchasing decisions as well as investors' funding interests.
For SMEs using GoSolo to facilitate contactless payments for customers, there is a high-level security and regulatory compliance framework already in place. Security certifications, including PCI, SOC2, and ISO 27001, added to rigorous security audits, regular compliance monitoring, and our partnership with Adyen, ensure that our SMEs’ business funds and user information never get tampered with.
How to win:
-
Consider AI-driven security tools like Cloudflare, Bitdefender, or Microsoft Defender for Business.
-
Ensure your business meets payment security standards.
-
Train employees on cybersecurity to reduce phishing risks through regular security training.
Small Business Trend 6: Time-sensitive taxation and compliance changes in 2025
Business finances will be impacted by the increasing National Insurance Contributions (NICs) and Capital Gains Tax (CGT), making strategic tax planning essential. The employer NIC rate will rise from 13.8% to 15% for some businesses, which will lead to higher payroll expenses. Also, CGT rates will increase from 10% to 18% (basic rate) and 20% to 24% (higher rate), and directly affect business owners who plan to sell assets or exit their businesses. As an SME, you will need to monitor closely cash flow, tax liabilities, and your financial structures to avoid being caught off guard.
That’s not all; VAT and PAYE compliance will face stricter penalties for late submissions, meaning SMEs will have to stay ahead of regulatory deadlines and ensure accurate record-keeping to avoid fines. Tax compliance is more time-sensitive than ever before, with businesses that fail to meet reporting deadlines losing out on financial relief programmes or even facing audits. Failing to prepare for tax changes could result in higher costs, unexpected penalties, and cash flow issues, especially for SMEs with tight margins.
How to win:
-
Factor in NIC increases and National Living Wage adjustments into your budget.
-
Plan asset sales strategically to minimise CGT liabilities.
-
Ensure tax compliance using tools like Xero, QuickBooks, or Sage to track VAT and PAYE deadlines.
-
Hire a professional to optimise tax savings and ensure compliance.
Small business trend 7: Regulatory deadlines and financial planning gain more importance
Regulatory compliance is no longer just a legal formality. It is now a survival factor and a small business trend every SME should monitor. The UK government is tightly censoring tax filings, financial reporting, and business licensing, making deadline management a critical business function. Late VAT payments, missed PAYE contributions, and incorrect annual filings can now result in hefty fines or legal scrutiny.
This implies treating financial planning as a continuous process rather than a year-end obligation. SMEs that want to ensure business stability and prevent penalties will keep meticulous records, plan for tax deadlines in advance, and conduct regular audits in 2025.
How to win:
-
Organise financial records early and keep track of your bank statements, payroll, and tax filings.
-
Conduct a year-end stock take to ensure financial statements are accurate before submission.
-
Use accounting software like Sage, QuickBooks, and Xero to automate compliance tracking.
-
Work with financial experts to handle tax filings and business planning.
Embracing AI, cybersecurity, financial planning, and regulatory compliance will strengthen SMEs to thrive and sustain growth in 2025. GoSolo’s business account has unmatched sales and business management features that give any SME the edge to overcome harsh economic conditions, structure business finance, serve customers optimally and scale with instructive insights.
Already Ltd? Manage your business account + admin in one app.
