The retail sector expressed supply chain concerns.
Nearly three in five (56 per cent) small businesses reported in late September 2024 that they were not concerned about climate change’s impact on their operations. Despite this, many businesses continue to take practical steps to reduce their carbon footprint:
- 30 per cent have switched to LED bulbs.
- 20 per cent have adjusted heating and cooling systems.
- 17 per cent have installed smart meters.
However, there’s been a slight rise in businesses reporting a lack of action to reduce emissions (39 per cent), up four per cent since June 2024.
AI Adoption on the rise
Artificial intelligence (AI) continued to grow in popularity. One in seven small businesses (15 per cent) reported using some form of AI technology in late September 2024, up 5 per cent from the previous year. The most common was text generation using large language models, adopted by 7 per cent of companies.
About one in 10 businesses planned to adopt AI within the next three months, despite barriers. Six per cent of businesses cited difficulty identifying business use cases, a lack of AI expertise and cost concerns.
Focus on supply chain vigilance
Supply chain remained an area of concern, with one in five (21 per cent) businesses worried about the next 12 months. This jumped to 27 per cent for businesses with 10 or more employees. The wholesale and retail trade sector was most affected, with 34 per cent reporting supply chain concerns, followed closely by manufacturing at 33 per cent.
Supply chain resilience remains a key focus, with businesses across sectors working to mitigate risks and adapt to a changing global trade landscape.
Increased barriers to trade, shipping disruption and international conflicts were of equal concern. This was expected to impact smaller businesses through:
- Increased costs of sourcing materials (36 per cent)
- Higher transport expenses (28 per cent)
- Rising labour costs (16 per cent)
Meanwhile, larger businesses (250+ employees): were more focused on technology, with 30 per cent using AI, up 12 percentage points from September 2023.
These findings suggest that UK small businesses are demonstrating caution with costs and supply chains but adopting technology to benefit operations.
Despite these worries, only 8 per cent of trading businesses reported stockpiling goods and materials, a slight decline from June 2024.
Small businesses are also preparing for larger employment costs, with 24 per cent planning on raising prices and 18 per cent reporting they would absorb extra costs within profit margins. For businesses with 10 or more employees, this rose to 40 per cent and 31 per cent respectively.
Business numbers declineÂ
The number of VAT and/or PAYE businesses as of March 2024 declined to 2.725 million. Through COVID, the number of businesses remained fairly steady and this has largely continued. Overall, growth has slowed since 2018 compared with the period from 2012 to 2018.
