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UK Small Businesses Focus on Growth as Optimism Reaches Two-Year High

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More than 80% of small businesses in the UK are planning growth-focused initiatives for 2025, according to a new study by Novuna Business Finance. The findings reflect increased optimism among UK enterprises, with a two-year high in growth projections reported.

Key priorities for businesses include boosting new sales, with 43% of firms aiming to increase revenue, while 24% are focusing on reducing fixed costs. Additionally, one in five small businesses is prioritizing the diversification of their business models and the development of new products or services.

However, despite these growth ambitions, recent changes to National Insurance appear to have dampened hiring plans. Only 7% of SMEs are focusing on hiring senior staff, and just 9% plan to recruit young talent in the coming year.

Regionally, businesses in London are leading the charge, with 94% of firms in the capital prioritizing growth initiatives. This is followed by the West Midlands and North East, where 83% of businesses are similarly focused on expansion. Sectors such as media (92%) and manufacturing (90%) are among the most likely to drive growth in 2025, suggesting strong momentum in these industries.

The optimism is further evidenced by the fact that 35% of small businesses reported growth in the past three months, the highest figure in two years. Despite concerns over the Autumn Budget and ongoing economic uncertainty, many SMEs are ending 2024 on a high note.

Joanna Morris, Head of Insight at Novuna Business Finance, commented on the findings, saying, “The percentage of enterprises predicting growth has been at a two-year peak since July. A significant proportion are already prioritizing growth projects for the year ahead. We are committed to helping businesses realize their potential and build on the resurgent confidence seen this year.”

While growth remains the top priority, financial prudence is also a key theme. Many small businesses are working to manage fixed costs and build financial reserves, ensuring they remain resilient in a rapidly changing economic environment.

The study underscores the determination of UK small businesses to drive forward and position themselves for sustained success in 2025 and beyond, even in the face of challenges.

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AI Poised to Revolutionise UK Careers Advice, Helping Bridge Resource Gap

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As the debate around artificial intelligence (AI) focuses on job displacement, one sector stands ready to harness the technology for good: careers advice. Far from replacing human advisers, AI has the potential to enhance career guidance services, making them more personalised, timely, and accessible, while addressing the strain on resources in the UK.

Funding for careers advice has significantly decreased in recent years. The Gatsby Foundation reports that spending on school pupils’ career development dropped from £159 per pupil in 2009 to just £68 today, while adult career support has also seen a decrease of nearly a third, from £35 to £26 per person. Despite these cuts, effective career guidance remains crucial to long-term employment success. Research from the Investing in Careers report shows that for every £1 spent on careers support, schools see an average return of £2.50, and unemployed adults benefit by £3.20.

This funding gap underscores the need for innovation, and AI is emerging as a powerful solution. By leveraging advanced machine learning, AI can help careers advisers efficiently guide individuals in exploring career pathways, enhancing CVs, and preparing for interviews. AI can also identify transferable skills, highlight growing industries, and adapt to shifting job markets—critical as the skills required for jobs worldwide are expected to change by at least 65% by 2030, according to LinkedIn.

Dr. Deirdre Hughes OBE, author of Careers 2035, sees a transformative role for AI in the sector. “Access to equitable AI-enhanced resources can help ensure that all individuals benefit,” she explains. “The future of career guidance must embrace innovation while breaking down barriers to ensure no one is left behind.”

AI is not meant to replace the human element of career advice, but rather to enhance it. Careers advisers remain essential for providing personal contact, empathy, and an understanding of individual circumstances. AI tools can allow them to make better use of their time, supporting more people and offering guidance that is more tailored to each person’s needs.

Chris Glennie, chief executive of Morrisby, one of the UK’s leading career guidance platforms, argues that advisers will remain central to the process. While acknowledging the challenges faced by the profession, including low pay and a significant turnover rate, he sees AI as an opportunity for advisers to shape the future of the industry. “AI can become a trusted ally,” Glennie says, allowing advisers to play an active role in refining the technology and ensuring its accuracy.

For schools, AI could help fill gaps in careers guidance. Many secondary schools are required to offer career advice from Year 7 to Year 13, yet 11% of students still miss out on one-to-one meetings with qualified advisers by the end of Year 11. AI could provide initial insights into students’ interests and strengths, freeing advisers to focus on more in-depth, personalised support.

As career paths evolve rapidly, AI systems that provide up-to-date information will help advisers stay abreast of industry changes. With the right approach, AI can bridge the resource gap, improving careers advice services and ensuring that all individuals, regardless of background, have access to the guidance they need to build successful careers.

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UK Businesses Embrace AI and ESG Priorities as They Navigate 2025 Challenges

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As the UK business landscape enters 2025, companies are focusing on two key priorities: accelerating artificial intelligence (AI) adoption and preparing for incoming environmental, social, and governance (ESG) regulations. These trends reflect broader efforts to enhance efficiency, stay competitive, and comply with regulatory shifts.

AI has moved beyond its experimental phase, with businesses increasingly investing in the technology. A recent report from Capterra shows that over three-quarters of UK businesses plan to boost their software budgets in 2025, including significant investment in AI. Nicky Tozer, SVP EMEA at Oracle NetSuite, highlighted that AI is becoming a central focus for companies seeking to improve operational efficiency and gain a competitive edge.

While AI adoption among UK small businesses has been relatively slow — only 20% were using the technology as of March 2024, according to the Federation of Small Business — that is set to change. Data from Capterra reveals that AI is now emerging as a priority, alongside IT security, as businesses seek to avoid missing out on its potential. Forrester reports that in 2025, business leaders will shift focus from experimentation to driving bottom-line results through AI, with an emphasis on return on investment (ROI).

One area where AI is expected to have a major impact is in Enterprise Resource Planning (ERP) systems. Leading ERP vendors are rolling out AI features embedded in workflows to help businesses improve decision-making and enhance performance. This shift is reflected in the growing understanding of how to maximize the value of AI, particularly by connecting and standardising data across business lines.

However, to fully reap the benefits of AI, businesses must ensure that employees across all departments are onboard with the technology. According to Capterra, 57% of UK companies that implemented software solutions in the past year also introduced learning management systems (LMS) to support employee onboarding. As AI adoption spreads, business leaders are prioritizing intuitive design and adaptability to ensure that workers can interact with the technology effectively. Natural Language Processing (NLP) is expected to play a key role in enabling more intuitive interactions with AI systems, reducing the need for specialized training.

Alongside AI, businesses must prepare for new ESG regulations. Starting in 2025, the EU’s Corporate Sustainability Reporting Directive (CSRD) will require companies to report on their environmental and social impact. This regulatory shift is part of a broader trend toward increased transparency, with stakeholders — including investors, customers, and employees — demanding more accountability from businesses. Deloitte’s 2024 research revealed that 74% of public companies plan to invest in ESG reporting tools, underscoring the importance of technology in meeting these new requirements.

As businesses navigate 2025, the convergence of AI adoption and ESG compliance will shape their strategies, driving efficiency, transparency, and long-term sustainability in a rapidly evolving market.

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Business

UK Businesses Embrace AI and ESG Priorities as They Navigate 2025 Challenges

Published

on

By

As the UK business landscape enters 2025, companies are focusing on two key priorities: accelerating artificial intelligence (AI) adoption and preparing for incoming environmental, social, and governance (ESG) regulations. These trends reflect broader efforts to enhance efficiency, stay competitive, and comply with regulatory shifts.

AI has moved beyond its experimental phase, with businesses increasingly investing in the technology. A recent report from Capterra shows that over three-quarters of UK businesses plan to boost their software budgets in 2025, including significant investment in AI. Nicky Tozer, SVP EMEA at Oracle NetSuite, highlighted that AI is becoming a central focus for companies seeking to improve operational efficiency and gain a competitive edge.

While AI adoption among UK small businesses has been relatively slow — only 20% were using the technology as of March 2024, according to the Federation of Small Business — that is set to change. Data from Capterra reveals that AI is now emerging as a priority, alongside IT security, as businesses seek to avoid missing out on its potential. Forrester reports that in 2025, business leaders will shift focus from experimentation to driving bottom-line results through AI, with an emphasis on return on investment (ROI).

One area where AI is expected to have a major impact is in Enterprise Resource Planning (ERP) systems. Leading ERP vendors are rolling out AI features embedded in workflows to help businesses improve decision-making and enhance performance. This shift is reflected in the growing understanding of how to maximize the value of AI, particularly by connecting and standardising data across business lines.

However, to fully reap the benefits of AI, businesses must ensure that employees across all departments are onboard with the technology. According to Capterra, 57% of UK companies that implemented software solutions in the past year also introduced learning management systems (LMS) to support employee onboarding. As AI adoption spreads, business leaders are prioritizing intuitive design and adaptability to ensure that workers can interact with the technology effectively. Natural Language Processing (NLP) is expected to play a key role in enabling more intuitive interactions with AI systems, reducing the need for specialized training.

Alongside AI, businesses must prepare for new ESG regulations. Starting in 2025, the EU’s Corporate Sustainability Reporting Directive (CSRD) will require companies to report on their environmental and social impact. This regulatory shift is part of a broader trend toward increased transparency, with stakeholders — including investors, customers, and employees — demanding more accountability from businesses. Deloitte’s 2024 research revealed that 74% of public companies plan to invest in ESG reporting tools, underscoring the importance of technology in meeting these new requirements.

As businesses navigate 2025, the convergence of AI adoption and ESG compliance will shape their strategies, driving efficiency, transparency, and long-term sustainability in a rapidly evolving market.

Continue Reading

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