Home Business NewsBusinessBusiness Growth News Almost 60% of SMEs fear stagnation in 2024 despite many reporting growth

Almost 60% of SMEs fear stagnation in 2024 despite many reporting growth

by Amy Johnson LLB Finance Reporter
24th Jan 24 8:01 am

New research by productivity platform, Slack, and business productivity charity, Be the Business, reveals the internal and external barriers to growth UK small and medium businesses (SMBs) face in 2024.

With growing concerns around the UK becoming a ‘Stagnation Nation’, the research uncovers the hopes and fears of UK SMBs – as well as ‘growth gateways’ that will enable them to thrive.

Even growing UK SMBs fear stagnation

Despite a challenging economic environment, nearly two thirds (63%) of SMBs report growing in 2023.

However, more than half (53%) of those growing businesses fear stagnation over the next 12 months.

This fear points to a lack of long-term confidence – even from successful SMBs – in their ability to thrive, and the figure rises further to 58% among UK SMBs as a whole.

UK firms find the most challenging stage of growth is when they reach more than 25 employees and go beyond £100,000 revenue.

Action is needed to sustain growth beyond this – and companies point to a range of internal and external conditions that would help them achieve it.

Cultivating an environment that nurtures SMB growth

Inflation and the cost of living is highlighted as the biggest barrier to growth in the data – selected by over half (55%). This was followed by competitors (31%), and the ongoing impact of Brexit (26%) – showcasing the wide range of SMB concerns.

Turning to solutions that would help the UK become a better place for growing SMBs, decision-makers highlighted both policy and cultural shifts:

  • Tax cuts – 46%
  • Strong training/education/upskilling programmes – 43%
  • Better work life balance – 40%

These provide potential focus areas for both businesses themselves and wider stakeholders to drive growth, for example, by addressing the demand for investment in skills that will help the SMB community to thrive. However, the research also reveals areas in which SMBs can take internal action to stimulate growth.

From collaboration to AI: SMB growth gateways in the UK

SMBs also identified several internal issues that stymie growth – and these are where savvy leaders can take action to build their own growth gateways.

Poor management was the top internal barrier to growth, highlighted by over four in ten (45%). This was followed by:

  • Poor communication and lack of collaboration – 38%
  • Lack of motivation – 36%
  • Employee burnout – 33%

These barriers are likely connected: poor management and communication fuels a lack of motivation and employee burnout. In contrast, bolstering collaboration and communication skills, and deploying tools that support better engagement, can improve growth prospects.

In fact, the relation between communication and growth is clear: 88% of organisations that rate their communication as ‘excellent’ felt optimistic about growth prospects – compared to just 47% who rate their communication as ‘poor’.

Meanwhile, 85% of all SMBs agree that when scaling their business, communicating clearly is vital to successful growth.

One business leader who has carefully looked at the methods her teams use to communicate is Kerry Watkins, Founder and Managing Director of Social for Good.

She said, “We work a four-day week – so if I’m paying my team 100% of their salaries for 80% of the hours, I don’t want them spending 5% of their week sitting in their email. I want us to use email as little as possible.”

Alongside improving collaboration, a further gateway to growth lies in deploying automation and AI, according to UK SMBs. Almost a quarter (23%) say that they will invest time and/or money in AI to stimulate growth in the year ahead – showcasing the appetite SMBs have for using new technologies to supercharge their work.

Louis O’Connell-Bristow, CEO & Co-Founder of Homemove, for instance, explains his team built an AI-powered assistant to coach the sales team with Slack messages. “It shows the amount of sales we have, what our targets are, and then says something like ‘come on guys, let’s get to 7k today!’ By adding some humour, it’s building a culture that drives the sales people forward.”

Vanessa O’Mahony, Head of Small and Growth Businesses, EMEA at Slack said, “SMB growth is crucial to the prosperity of the UK. Yet this research suggests that the engine room of the UK economy is in danger of stalling.

“There will always be some aspects outside of a business owners’ control, but by prioritising the internal levers that have the greatest impact, they can set themselves on a path for sustainable growth. That means doing everything they can: investing in skills, bolstering productivity with platforms that drive stronger communication, motivating teams, and embracing AI’s potential.

“We know these are the ingredients for growth. If we get the recipe right, both individual businesses, and the country, will thrive.”

Anthony Impey, CEO of Be the Business added, “The UK’s small and medium-sized businesses are some of the most impressive, hard-working and resilient in the world.

“They make a huge contribution to the economy and society and there is enormous potential to turn around the UK’s flagging productivity by supporting leaders to make small changes.

“We know that improved leadership and management skills and tech adoption are key drivers of productivity, and can be transformative in achieving growth. That’s why we believe in the power of taking advice – from a mentor or advisory board, for example – to help leaders identify and capitalise on those growth gateways.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]