Talk of recession alone can have a significant impact on small business confidence. In our new report with TSB Bank, How to Start and Restart, we found that while two thirds of small firms were feeling optimistic about 2024, over three quarters said success would depend on whether the UK goes into recession.
To ensure that the nation’s 5.5 million small businesses do succeed, we need to support the recent wave of start-ups (many triggered by the downturn), and those existing businesses who persevered (many exhausted). This means helping firms navigate current economic difficulties and prepare for future opportunities and risks like AI and sustainability.
In many cases inspiring a small business ‘restart’ in mindset to rediscover that entrepreneurial zeal can be a helpful approach. Rather than slugging away at a tired business model, businesses have the opportunity to reinvent, reinvest, and restart their beloved business and make 2024 the most exciting year yet.
In How to Start and Restart, we look at the lessons small businesses can learn from each other, whether they are starting-up or starting-over. Even family businesses, handed down for generations, can learn much from the new entrepreneurs – much as the new starters can benefit from the wisdom of experience, especially in the face of fallout from economic instability of the past few years.
First, many entrepreneurs do not know how much free help and support is out there, communities to engage with, free mentoring, and support with their key need – sales and marketing.
There is huge value in looking into external sources of help as early as possible in a business’ lifetime, especially on the financial side—there is low inclination for debt at the start, with a massive 73% relying on personal funds to get going. At 10%, the next biggest funder is friends and family, where perhaps the risk feels lower than going to a bank. As time goes on, business owners become more willing to embrace risk, but there is much to be said for the value entrepreneurs could unlock by including external funding in their business plan.
Financial investment, of course, is not everything. 75% of businesses tell us that personal skills are the key driver of success at the start. Those skills that each entrepreneur brings to their venture are a core part of what makes them, and their business, unique and necessary. However, small businesses move away from focusing on what they bring and begin to allow the impact of external forces to take over. As an entrepreneur, you are arguably your business’ biggest asset—this must be nurtured from day one, and as you scale.
Another huge area of opportunity for entrepreneurs is sustainability, one that should be grasped particularly in the early stages of starting up. We found that 38% of small businesses did not consider sustainability when starting out, but 89% now take some form of action. By getting ahead of the game this way, you are building a solid foundation for the future. You are better preparing your business to overcome future challenges, such as being obligated to share your sustainability plan, or weathering storms in the form of energy crises.
Finally, embracing technology like AI needs to be a key priority. We heard from many experienced business owners that they wished they had automated earlier. Many hours and days and weeks are lost when a business is starting out doing things the long way. But now, there is a new and unique way to shortcut the learning curve and save money and time along the way, through tools like ChatGPT and Design.AI. This speeds up processes, such as writing copy for products or marketing, or creating images, but it also opens up capacity and opportunity.
Small businesses are, of course, going to need help to understand and maximise the impact. Most entrepreneurs know this technology will change the business world, even if they do not know exactly how. There is a growing sense that it can offer opportunities, and a tangible sense of excitement about those opportunities.
Indeed, being positive about future opportunities can be a great antidote to current gloom. We must remember that the UK is still a fantastic place to start and grow a business, despite the many economic challenges over the last few years. We remain part of an extremely entrepreneurial society, a nation that supports the dreams and goals of small business owners, and a low-regulation, low-tax, and low-barriers to entry world for small business.
In 2024 be open, be honest, and be curious. Most of all, be brave and be bold. There is still every reason to be confident.
