Small businesses in the UK are displaying resilience in the face of concerns about high interest rates, reporting the highest levels of confidence in their outlook since the lockdowns in 2021, according to the Owner Managed Business Pulse Survey by Moore UK, a prominent accountancy network.
The survey reveals that 80% of UK businesses express confidence in meeting their profit targets for 2024, and an impressive 91% anticipate an increase in profitability in the coming year. Maureen Penfold, Chair of Moore UK, notes that small business owners are optimistic about the economic landscape in 2024, overcoming concerns about interest rates.
Half of the surveyed businesses (49%) plan to expand their workforce in the next three months, while only 6% anticipate layoffs. Penfold emphasizes the positive trend, stating that the focus on reducing headcount is minimal, with many businesses prioritising staff recruitment and retention despite economic challenges.
Recruitment and retention challenges have impacted existing staff, as reported by 41% of owner-managers, leading to increased workloads for employees and, in some cases, missing growth targets.
As businesses look forward to the next year, the survey identifies profitability (75%) and cash flow (72%) as the primary areas of focus. Penfold emphasizes that while optimism is on the rise, businesses remain aware of the challenges and recognize that improved profits require meticulous cash flow management.
The survey indicates a significant shift toward the adoption of artificial intelligence (AI) tools among smaller businesses in 2024. Forty-four percent of owner-managed businesses plan to use AI tools such as ChatGPT and Chatbots in their daily operations, with an additional 39% considering it. Only 17% express no intention to leverage this technology. Penfold underscores the increasing recognition of AI’s potential to enhance workflows, improve efficiency, and serve as a powerful marketing tool among smaller companies.
The survey, based on responses from 500 directors of UK businesses with an annual turnover between £1 million and £30 million, emphasises the pivotal role of technology adoption, ranking it as the third-largest challenge for businesses over the next three months, following interest rates and costs. Penfold anticipates a continued momentum in the adoption of AI throughout 2024.