Tax cuts and upskilling programmes top SME wishlist for 2024

New research by productivity platform, Slack, and business productivity charity, Be the Business, reveals the internal and external barriers to growth UK small and medium businesses face in 2024. With growing concerns around the UK becoming a ‘Stagnation Nation’, the research uncovers the hopes and fears of UK SMEs – as well as ‘growth gateways’ that will enable them to thrive.

Even growing UK SMEs fear stagnation

Despite a challenging economic environment, nearly two thirds (63%) of SMEs report growing in 2023. However, more than half (53%) of those growing businesses fear stagnation over the next 12 months. This fear points to a lack of long-term confidence – even from successful SMEs – in their ability to thrive, and the figure rises further to 58% among UK SMEs as a whole.

UK firms find the most challenging stage of growth is when they reach more than 25 employees and go beyond £100,000 revenue. Action is needed to sustain growth beyond this – and companies point to a range of internal and external conditions that would help them achieve it.

Cultivating an environment that nurtures SME growth

Inflation and the cost of living is highlighted as the biggest barrier to growth in the data – selected by over half (55%). This was followed by competitors (31%), and the ongoing impact of Brexit (26%) – showcasing the wide range of SME concerns.

Turning to solutions that would help the UK become a better place for growing SMEs, decision-makers highlighted both policy and cultural shifts:

  • Tax cuts – 46%
  • Strong training/education/upskilling programmes – 43%
  • Better work life balance – 40%

These provide potential focus areas for both businesses themselves and wider stakeholders to drive growth, for example, by addressing the demand for investment in skills that will help the SME community to thrive. However, the research also reveals areas in which SMEs can take internal action to stimulate growth.

From collaboration to AI: SME growth gateways in the UK  

SMEs also identified several internal issues that stymie growth – and these are where savvy leaders can take action to build their own growth gateways.

Poor management was the top internal barrier to growth, highlighted by over four in ten (45%). This was followed by:

  • Poor communication and lack of collaboration – 38%
  • Lack of motivation – 36%
  • Employee burnout – 33%

These barriers are likely connected: poor management and communication fuels a lack of motivation and employee burnout. In contrast, bolstering collaboration and communication skills, and deploying tools that support better engagement, can improve growth prospects.

In fact, the relation between communication and growth is clear: 88% of organisations that rate their communication as ‘excellent’ felt optimistic about growth prospects – compared to just 47% who rate their communication as ‘poor’. Meanwhile, 85% of all SMEs agree that when scaling their business, communicating clearly is vital to successful growth.

Alongside improving collaboration, a further gateway to growth lies in deploying automation and AI, according to UK SMEs. Almost a quarter (23%) say that they will invest time and/or money in AI to stimulate growth in the year ahead – showcasing the appetite SMEs have for using new technologies to supercharge their work.

Vanessa O’Mahony, Head of Small and Growth Businesses, EMEA at Slack said: “SMB growth is crucial to the prosperity of the UK. Yet this research suggests that the engine room of the UK economy is in danger of stalling. There will always be some aspects outside of a business owners’ control, but by prioritising the internal levers that have the greatest impact, they can set themselves on a path for sustainable growth. That means doing everything they can: investing in skills, bolstering productivity with platforms that drive stronger communication, motivating teams, and embracing AI’s potential. We know these are the ingredients for growth. If we get the recipe right, both individual businesses, and the country, will thrive.”

Anthony Impey, left, CEO of Be the Business added: “The UK’s small and medium-sized businesses are some of the most impressive, hard-working and resilient in the world. They make a huge contribution to the economy and society and there is enormous potential to turn around the UK’s flagging productivity by supporting leaders to make small changes. We know that improved leadership and management skills and tech adoption are key drivers of productivity, and can be transformative in achieving growth. That’s why we believe in the power of taking advice – from a mentor or advisory board, for example – to help leaders identify and capitalise on those growth gateways.”