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Photo Courtesy of Matt Lloyd Travis

Small businesses in the UK encountered various challenges in 2024. Will 2025 offer some relief and fresh opportunities? Let's explore the key trends to watch out for.

1. A Struggle to Preserve the UK High Street?

To address the decline of the high street, the government is empowering local councils with new authority to prevent long-term vacancies in shops. They can auction leases, aiming to revitalise the high street with 'right to rent' commercial spaces for businesses and community organisations.

This initiative seeks to stop landlords from keeping properties vacant for more than 365 days within 24 months. After this period, councils can intervene and auction leases from one to five years. The government also provides funding, with £1 million allocated to support the auction process. The effectiveness of this measure remains to be seen, but it presents an intriguing opportunity to potentially attract more new shops.

2. The emergence of experiential retail?

Focusing on the high street, another approach to rejuvenation is through experiential retail. Research indicates that shoppers spend more time in stores and make additional purchases when engaging in unique experiences.

For instance, a clothing store could feature interactive displays that allow customers to try out different styles and receive personalised recommendations based on their shopping history. While this may require significant investment from independent retailers, it's an opportunity worth considering. Establishing a stronger connection between online and offline shopping, alongside investing in data and analytics, will also be crucial for success.

3. Increasing costs for business owners?

The government has taken steps to enhance workers' rights by proposing the elimination of zero-hour contracts and banning fire-and-rehire practices. These changes will affect small businesses that rely on flexible staffing.

Additionally, the National Living Wage is set to increase by 6.7% to £12.21 per hour in April 2025, ahead of the Autumn Budget. While these measures benefit workers, many businesses must reassess their hiring strategies and workforce management. Furthermore, business rate relief for hospitality, retail, and leisure sectors will decrease from 75% to 40% starting in April 2025, potentially raising business rate bills significantly.

4. A more favourable time for small business exports?

Since Brexit, small businesses have faced rising export fees and disrupted supply chains. To address these issues, the government aims to eliminate specific barriers related to importing and exporting goods from the UK by collaborating with the EU to enhance efficiency. The objective is to broaden market access for British exporters while establishing new regulatory frameworks.

Earlier this year, the Labour government pledged to partner with the Federation of Small Businesses to form a small business export taskforce. This task force will provide improved guidance and simplify the exporting process. This initiative is especially crucial given reports that some UK businesses have completely halted sales to Northern Ireland due to Brexit-related trade regulations.

5. A resolution to the energy bill crisis?

As part of the Small Business Manifesto ahead of the 2024 election, SMEs have requested that a new government take further action to lower their energy bills. In 2025, business owners will seek the government to fulfil its commitment to prevent energy bills from soaring to unprecedented levels again. Their plan includes:

  • Investing in clean and renewable energy through the Green Prosperity Plan aims to provide small businesses with low-cost energy.
  • Supporting British manufacturers to enhance their competitiveness against European counterparts.
  • Investing in energy-saving initiatives, such as loft insulation.
  • Establishing Great British Energy, a public entity dedicated to reducing energy costs.

6. Will it pay to become more eco-friendly?

An increasing number of consumers and the government are advocating for greener practices. Embracing this approach is beneficial for the environment and can also enhance business profitability.

For instance, retailers selling electronic products in UK stores must contribute to waste management and recycling costs. Now, online sellers will be subject to the exact requirements as the government aims to minimise the number of low-quality electronic goods ending up in landfills. This means online marketplaces and international sellers must also participate in collecting and managing waste electronics sold in the UK.

This initiative will provide additional funding for recycling these products and ideally reduce waste—plus, if communicated effectively to customers, it could enhance your brand image.

7. Will AI make launching a business easier?

Online marketplaces such as Etsy and eBay have simplified the process for individuals to connect with customers globally, and this trend shows no signs of slowing down. With AI now capable of managing various basic administrative tasks and beyond, it has become easier for anyone to start their own small business—setting up and reaching a wider audience is more accessible than before.​

Written by Matt Lloyd Travis

Matt Travis has been involved in business funding for over a decade. Initially starting as a finance broker covering fintech start-ups, Matt developed his skills in business finance. Supporting over 6000 UK small and medium-sized businesses access funding when the UK banks said no. Matt continues to expand his desire to help the UK economy by providing a platform for businesses to apply for instant working capital. You can connect with Matt on LinkedIn and apply for funding through Bounce.