While SME employment has fallen in the past few months, research shows that more people than ever want to start a business. However, a new survey suggests that many existing small firms are struggling.
Small business employment in the UK has fallen by 49,600 jobs in the four months since the new tax year began in April. It represents more than a 1% decline overall, according to data from the latest Intuit QuickBooks Small Business Index. There are currently 100,900 vacancies at UK small businesses - down 3% month-on-month.
However, a powerful counter-trend is emerging, according to Intuit. Its research has found that more than half of Brits (52%) have started or plan to start a business in 2025. This is backed up by a recent Enterprise Nation Survey which found that 62% of 18-30 year-olds in the UK are actively planning to start their own business in 2025.
With the outlook for hiring remaining subdued, it seems that workers are taking matters into their own hands - exploring solo ventures including side hustles and start-ups. This new entrepreneurial wave is led by younger generations and career changers, according to Intuit.
“It’s tempting to see falling employment as a purely negative sign, but something more dynamic is happening. More people are choosing entrepreneurship, taking ownership of their financial futures and turning change into opportunity. With the right support and technology, starting a business is not only possible - it's becoming a proactive response to shifting job markets.” Leigh Thomas, VP EMEA at Intuit.
Small businesses in “survival mode”
However, a worrying number of UK small businesses are potentially at breaking point, according to a report by Employment Hero. It has found that a troubling one in five businesses nationwide say they are operating in or near survival mode.
The smallest firms are facing the biggest challenges, it seems. The findings show that 39% of business owners who employ fewer than 50 people say their companies are merely surviving, not thriving. Even businesses in the capital are reporting significant strain, with 29% of London firms in survival mode.
“Our research shows just how many small businesses are operating at breaking point. The solution isn’t asking them to work harder, it’s removing the barriers that stop them working smarter. That means cutting the admin burden, closing the tech gap, and giving teams the clarity and tools they need to focus on what really drives value.” Kevin Fitzgerald, managing director, Employment Hero.
The results also suggest that small businesses aren’t taking advantage of the latest technology, leaving them floundering compared to larger rivals. Just 43% of SME leaders say they are satisfied with the technical knowledge in their business, compared to 51% in mid-sized firms (50–249 employees) and 64% in larger ones (250+).
Cost pressures mean that many firms are delaying investment in technology. Small SMEs are 50% less likely to prioritise tech investment in the next 12 months than their mid-sized counterparts, and one in ten say they’re investing less than they have in the past.
Written by Rachel Miller.