A new report from SumUp, the leading global fintech company, reveals the current confidence levels of UK small business owners and decision makers.
The findings reveal key challenges SMEs are currently facing, their top growth priorities for the next 12 months, and how their confidence levels stack up against last year.
Almost half (43%) of small business owners reported a stronger performance this year compared to last, including growth across key areas.
Running a small business in the UK is no easy task. From supply chain disruption, shifting consumer demand, and fluctuating inflation levels, business owners are navigating an unpredictable environment.
With this in mind, SumUp surveyed 750* UK business owners and decision makers within small UK businesses to see how confident they feel about the state of the current UK market, their top growth priorities for the next 12 months, and how their confidence levels stack up against last year.
Confidence levels among UK SMEs: 2024 vs 2025
With almost half (43%) of business owners reporting a stronger business performance this year, compared to last, including growth across key areas, we asked how confident they feel about the year ahead. Overall, small business owners remain broadly confident about the year ahead, despite a slight dip in optimism compared to 2024.
A fifth of respondents (20%) described themselves as very confident about the next 12 months, expecting their business to experience strong growth and success. This figure is a slight decline from 24% in 2024.
A further third (32%) said they feel somewhat confident, identifying opportunities for growth, while recognising potential challenges. This also reflects a 4% year-on-year decline in optimism.
Despite a dip in optimism, small business owner concerns have eased overall. Just 5% of respondents said they are somewhat concerned about their business, anticipating potential challenges, which is down from 10% in 2024. Those who said they are not confident at all have also fallen sharply, from 9% in 2024 to only 3% in 2025.
Notably, two-in-five (40%) report feeling neutral or uncertain about their business prospects, saying that they expect their business to remain steady with no significant growth or decline or are unable to predict due to continuous changes in consumer demand and market conditions.
Current challenges faced by UK SMEs
Almost one in five (19%) small business owners reported weaker performance compared to last year. When asked about what the current challenges were among business operations, rising costs continue to pose the biggest concern for small businesses across the UK.
Nearly half of respondents (47%) identified the increased cost of raw materials, supplies, and products as the most significant challenge to their business. These necessary investments are making it harder for many small businesses to maintain healthy profit margins.
In addition, 40% said the rising costs of energy, rent, and utilities is a major concern, whilst a further 40% pointed towards wider economic instability, reporting concerns about fluctuations in inflation rates and reduced consumer disposable income.
In relation to customers, over a third (36%) reported that customers are spending less, with a noticeable drop in average purchase value and overall spending habits. Customer retention is also becoming more difficult, with a third (33%) of small business owners saying it’s harder to keep customers engaged and loyal.
Competition is another growing challenge, with 30% struggling to keep up with competitors, while 27% fear losing customers to rivals offering cheaper alternatives. In addition, 22% have observed that customers are becoming more price-sensitive, expecting discounts and promotions.
How SMEs are staying on top of current concerns
Nearly 9 in 10 small business owners (88%) have made strategic changes to navigate current challenges and remain resilient.
For over a third (38%), this has involved making cost-saving measures across their supply chains and professional services, including switching to more affordable suppliers, streamlining logistics, or bulk-buying to secure better rates. Similarly, 29% have switched service providers such as energy or broadband companies to cut ongoing costs.
When it comes to pricing strategy, small businesses are taking different approaches. A quarter (25%) have increased prices in order to protect profit margins, while 24% have lowered their prices to help customer retention.
Other adjustments UK SMEs are making include boosting their digital presence through launching a website or posting more frequently on social media (23%), improving customer loyalty programmes to encourage repeat purchasing (16%), and seeking external funding or support to strengthen cash flow (10%).
Priorities for growth over the next year
When it comes to growth priorities, UK small businesses are focused on strengthening their financial foundations, whilst exploring new opportunities for expansion.
The top priority for nearly half of respondents (42%) is improving profit margins, reflecting a strong focus on financial resilience amid ongoing cost pressures. Alongside this, a third (34%) are prioritising diversifying their income streams, such as launching an e-commerce site, opening a physical store, or selling through social platforms like TikTok Shop.
Furthermore, cost reduction and debt management remain front of mind for a further third (33%), whilst 19% look to seek funding or investment.
Other priorities for small businesses include launching new products or services (20%), improving operational efficiency (20%), and preparing for economic uncertainty (15%).
Corin Camenisch, Product Marketing Lead at Sumup commented on the survey: “As champions for small merchants, we conducted this survey to discover the confidence levels of small business owners and decision makers in the UK to better understand the challenges they face, gauge their optimism about their future, and identify areas where support for SMEs might be needed.
“Overall, confidence levels of small business owners and decision makers across the UK are high. This positive outlook suggests that small merchants are prepared to navigate potential uncertainties and continue to thrive.
“We have provided tips off the back of our findings for those just starting out in business, or who are looking to deal with unexpected market fluctuations on our full campaign page.”
