Small businesses step up growth plans despite challenging outlook

Two-thirds of UK small businesses are working on initiatives to secure future growth, despite the proportion forecasting expansion falling to a 12-year low over the summer, according to new research from Novuna Business Finance.

The study found that 66% of small business owners are pursuing measures to strengthen their prospects, with a growing focus on controlling costs, improving cash flow and tackling late payments.

Some 62% are focusing on keeping fixed costs down, up from 58% last year, while 34% are prioritising cash flow improvements, compared with 31% in 2025. The proportion working to manage late payments has increased from 24% to 26%.

Other growth initiatives include investment in new equipment and expansion into overseas markets, both cited by 16% of businesses. Some 15% are looking to recruit new staff, while 13% are reassessing their funding arrangements.

The research also points to increased efforts among businesses that have experienced more difficult trading conditions. Of the small businesses that forecast contraction between July and September, 69% are now working on plans to support future growth – the highest proportion recorded in four years.

This compares with 57% in 2025 and 53% in 2024 and comes despite just 24% of small businesses predicting growth over the summer, the lowest level in 12 years.

Manufacturing SMEs lead growth push

Manufacturing businesses are the most likely to be pursuing growth initiatives, with 84% doing so, up sharply from 69% a year ago.

They are followed by media and marketing businesses at 75%, up from 61%, and construction at 73%, compared with 70% last year. Retail stands at 71%, while 70% of businesses in both transport and distribution and finance and accounting are working on growth projects.

Novuna said there had been a year-on-year increase in the proportion of businesses pursuing future growth initiatives across the sectors covered by its research.

Jo Morris, Head of Insight at Novuna Business Finance, said:

“After a very challenging summer trading period, which saw small business growth outlook fall to a record low, this research may offer hope of improving business confidence heading into the autumn months.

“The data conveys a real sense of resilience across the SME community. Even at a time when market conditions have been challenging, two in three are taking steps to strengthen their business for the future. The fact that so many businesses experiencing contraction over the summer are investing time and resources to improve their outlook presents a basis for confidence for the months ahead.”

“Many small businesses are focusing on measures to manage late payments and to protect cash flow, whilst others are investing in new machinery and looking at efficiency gains that can help improve profitability,” Morris added.