Small business confidence across the UK remains strong in 2025, with many entrepreneurs reporting improved performance despite rising operational costs and ongoing economic uncertainty, according to new research released by financial technology company SumUp.
The survey, which polled 750 small business owners and decision-makers nationwide, found that 43% of respondents saw improved business performance compared to 2024. While overall optimism has dipped slightly, the number of owners expressing no confidence at all has dropped significantly—from 9% in 2024 to just 3% this year.
One in five (20%) respondents described themselves as very confident about the year ahead, compared to 24% the previous year, while 32% said they felt somewhat confident—down from 36%. Meanwhile, 40% reported a neutral or uncertain outlook, pointing to fluctuating consumer demand and unstable market conditions.
Cost pressures continue to weigh heavily on small business operations. Nearly half (47%) identified rising prices for raw materials and supplies as their biggest challenge. Energy bills, rent, and utility costs were cited by 40%, while another 40% pointed to broader economic instability, such as inflation and lower consumer spending.
Customer behavior is also shifting. Over one-third (36%) of businesses reported a decline in customer spending, and 33% noted increasing difficulty in maintaining customer loyalty. Increased competition and growing demand for discounts are also being felt, with 30% and 22% of businesses respectively affected.
Despite these headwinds, many SMEs are taking proactive steps. According to the survey, 88% of small businesses have adopted new strategies to stay resilient. These include cost-cutting across supply chains (38%), switching service providers to reduce overheads (29%), and adjusting pricing models—either raising prices to protect margins (25%) or lowering them to retain customers (24%).
Digital transformation has also gained traction, with 23% of businesses investing in their online presence. Loyalty programmes were upgraded by 16% of respondents, while 10% sought external funding to support operations.
Looking ahead, improving profit margins remains the top priority for 42% of business owners in 2025. Other focus areas include diversifying income streams (34%), managing debt and cutting costs (33%), and launching new products or services (20%). Some 19% of respondents also plan to seek new investment.
Commenting on the findings, Corin Camenisch, Product Marketing Lead at SumUp, said: “As champions for small merchants, we conducted this survey to better understand the confidence levels of UK small business owners, the challenges they face, and where they need support. Overall, confidence remains high. This positive outlook suggests that small merchants are prepared to navigate uncertainties and continue to thrive.”
