A small business community in transition and facing persistent hurdles

Enterprise Nation's latest Small Business Barometer paints a nuanced picture of the UK's small business sector.

While cautious signs of recovery are emerging – particularly in digital engagement and appetite for funding – several critical challenges remain, with the ambition to export significantly dropping after recent tariff increases.

Digital businesses and the digital gap

The report reveals the shift toward digital operations remains consistent, with 43% of UK small businesses now considering themselves to be digital businesses, about the same as in 2024.

The digital gap between male and female-led firms has significantly decreased, with 42% of female founders adopting digital technology compared to 46% of male founders. In 2024 the gap was 15%.

Around half (47%) of small businesses say they plan to seek external funding over the next 12 months to fuel growth plans.

Although this figure reflects a cautious rebuilding of confidence, recovering from a mid-2024 dip at 45%, the outlook remains mixed with huge regional disparities.

Demand peaks in the North East (67%) and London (59%), while areas such as the East of England and East Midlands report significantly lower interest, at 24% and 27% respectively.

It is still lagging behind funding ambitions in 2022 by 11%.

Confidence has taken a hit, with 31% of early-stage businesses saying they were likely to expand in the next 12 months, down two percentage points.

The appetite for exporting and international trade

On the export front, only 16% overall currently export, the same as last year, but the appetite to export has slightly declined, now only 23% say they want to export, compared with 26% last year.

Regions like Yorkshire and Humber (38%) and Northern Ireland (33%) lead current activity, even as a contrasting desire to explore exporting emerges in London (37%), 11% above the national ambition.

Late payment challenges and growth expectations

Late payment challenges persist, with pronounced challenges in the Wales and the West Midlands where 61% and 42% respectively say they are often paid late, further straining the resilience of SMEs.

Meanwhile, sector-specific growth expectations vary; technology businesses display strong confidence with a quarter (25%) expecting stability or growth, whereas general retail was the least likely to grow (6%) reflecting wider economic uncertainties.

Roughly 43% of SMEs originally began as side hustles, with female founders (48%) and younger entrepreneurs (40% among those aged 18 to 24) overwhelmingly representing this trend.

Staffing intentions remain diverse, with a significant portion of businesses planning cautious headcount increases, particularly among technology and North East-based companies.

The dynamic workspace trend sees a majority (over 60%) favouring remote operations, with slight gender variances in office space and high street engagement.

Despite the importance of government support, only 25% of SMEs currently qualify for business rates relief, roughly half of those that qualify to pay them. Interestingly 54% said they don't pay business rates.

Aaron Asadi, CEO of Enterprise Nation, says:

"This snapshot of our small business community reflects an ecosystem in transition. While it's heartening to see early signs of recovery, especially in areas like funding and digital engagement, we can't ignore ongoing challenges especially in the appetite to export.

"The persistent issue of late payments and the stark regional and gender disparities in digital adoption highlight where we must focus our support.

"We urge targeted measures that enhance funding awareness, bridge the digital divide with tailored training and bolster export capabilities, particularly in regions showing latent intent.

"It's essential that we also refine business rates to better serve small firms. By taking these steps, we can ensure that every small business has the environment it needs to succeed."

Read the full Small Business Barometer for Q3 2025