SME growth under threat? One third plan to downsize or close

Recent figures from the Federation of Small Businesses (FSB) have delivered a stark warning: nearly one in three small UK firms expect to shrink, sell up or close over the next 12 months. It’s one of the toughest outlooks in years, and a clear signal that SME growth is under real pressure.

The findings, reported by City AM and SME WEB, show that confidence among small and medium-sized enterprises has fallen sharply:

• 30% of SMEs plan to downsize or close within a year.
• Only 18% expect to grow.
• 55% saw falling sales in the past three months, while just 21% reported an increase.
• Late payments continue to plague two-thirds of small businesses – and 34% say the problem has worsened.
• Access to finance is another sore point: more than half describe it as poor.

It’s a sobering picture for the small business community. Yet we believe that, even during challenging times, there are clear and practical steps you can take to protect and stimulate growth.

Why SME growth is slowing

The slowdown in SME growth has several familiar causes. Energy and wage costs, stubborn inflation and continuing interest-rate uncertainty are all squeezing margins. Add in supply-chain problems, late customer payments and complex tax and reporting changes, and it’s easy to see why confidence is faltering.

But within that uncertainty lies opportunity. Businesses that tighten their finances, invest wisely, and adapt early are far more likely to emerge stronger when the economy stabilises.

How SMEs can beat the trend

The current climate doesn’t mean you should abandon plans for growth – but it does mean keeping focused on financial strategies. Here are four steps you can take to strengthen your position:

1. Take control of your cash flow
   For sustainable SME growth, cash flow management is essential. A rolling 12-month forecast can highlight pressure points before they turn into problems.
2. Stay on top of performance
   Regular management accounts show how your business is really performing – and where you can make improvements.
3. Address late payments quickly
   With many SMEs struggling to get paid on time, proactive credit control is essential for keeping growth plans on track.
4. Plan for long-term growth
   Successful SMEs think beyond the short term. See below for how THP can help you plan for long-term growth.

How THP Supports SME Growth

For decades, THP Chartered Accountants has helped businesses across London, Surrey, Essex grow and beyond grow with confidence – even during uncertain times. Our support goes beyond compliance as we can also help you plan for growth.

Our business accounting services include:

• Business accounting basics such as annual accounts, bookkeeping, VAT returns and payroll outsourcing.
• Business profitability services including Corporation Tax planning and management accounts.
• Business innovation help such as R&D tax relief advice and grant audits.
• Audit for firms needing a competitively priced statutory audit.
• Other services tailored to your business goals, such as cloud accounting software, business exit planning and help with financial due diligence.

Staying resilient

The FSB’s data suggests that SME growth in the UK is at risk. But forecasts aren’t destiny. With expert financial guidance and smart planning, small and medium-sized businesses can turn caution into opportunity – and position themselves to grow when confidence returns.

If you’re concerned about your business outlook, talk to THP today. We’ll help you make sense of the numbers, identify practical steps and help you build a plan for sustainable SME growth.