Small businesses in the UK have faced a range of challenges in 2024. Will 2025 bring relief and new opportunities? We look at some of the trends you need to know about.
In 2025 will we see:
1. A battle to save the UK high street?
We all know that high street businesses are struggling. Faced with increased competition and rising costs, recent Simply Business research found that independent newsagents, clothes shops, and even pubs and bars could become completely extinct by 2038.
To combat the decline of the high street, the government is giving local councils new powers to prevent shops from staying empty long-term. They’ll be able to put the leases up for auction, hopefully boosting the high street with ‘right to rent’ commercial lots for businesses and community groups.
The move aims to prevent landlords from having empty properties for more than 365 days in a 24-month period. After this point, councils can step in and auction a one-to-five year lease.
The government is going to help fund this too, offering £1 million to support the auction process. How much this helps remains to be seen, but it’s an interesting suggestion that will hopefully encourage more new shops to open.
2. The rise of experiential retail?
Sticking with the high street, another way it could be invigorated is through experiential retail. Studies show that shoppers are more likely to spend extra time in – and buy more – in stores that offer engaging experiences. This could be a clothing shop with interactive displays that lets customers experiment with styles, and offers personalised recommendations based on their previous shopping habits.
This would be a big investment for independent retailers, but worth keeping in mind. Creating a stronger link between online and offline shopping for your small business and investing in data and analytics will be important here too.
3. Even higher costs for business owners?
The government has made steps to improve workers’ rights by proposing to remove zero-hour contracts and ban fire-and-rehire practices. This will impact small businesses who only need to employ extra staff on an ad-hoc basis. They also raised the National Living Wage ahead of the Autumn Budget, announcing that it will increase 6.7 per cent to £12.21 an hour in April 2025.
While beneficial for workers, many businesses will need to rethink hiring plans and review their workforce because of these changes.
Many will also see their business rates bill rise by thousands when business rates relief for hospitality, retail, and leisure businesses falls from 75 per cent to 40 per cent in April 2025.
4. An easier time for small business exports?
Since Brexit, small businesses have seen an increase in export fees and disrupted supply chains.
To try and change this, the government is looking to remove some of the barriers associated with importing and exporting goods from the UK, by working with the EU to make things run more efficiently.
The goal is to expand these markets for British export businesses, while shaping new regulatory frameworks.
In their manifesto earlier this year, the Labour government promised to work with the Federation of Small Businesses to create a small business export taskforce, creating better guidance for small businesses and finding ways to make the process easier.
This is particularly important in light of news that some UK businesses have had to stop sales to Northern Ireland completely because of Brexit-related trade rules.
Read more on GPSR and how it will impact your business in our guide.
5. An end to the energy bill crisis?
As part of our Small Business Manifesto, ahead of the 2024 election, SMEs asked that a new government would do more to reduce the cost of their energy bills.
In 2025, business owners will hope to see the government making good on their promise to stop energy bills rising to unprecedented levels once again. Their plan includes:
- investing in clean and renewable energy through their Green Prosperity Plan, providing small businesses with low-cost energy
- supporting British manufacturers so they can compete with their European equivalents
- investing in energy saving measures like loft insulation
- establishing Great British Energy, a public entity focused on lowering costs
6. Will it pay to become more eco-friendly?
A rising number of consumers and even the government are pushing for greener practices. Tapping into this strategy is not only good for the planet but can be good for business too.
For example, retailers selling electronic goods in UK stores already need to pay towards waste management and recycling costs. Now online sellers will have to do the same, as the government attempts to reduce the amount of low quality electronic goods making their way to landfill.
This means that online marketplaces and overseas sellers will also have to contribute to the collection and management of waste electronics sold in the UK. This will mean more funding for recycling these products and hopefully less waste – and if you can communicate this practice to customers, it could boost your brand.
7. Will AI make launching a business easier?
Online marketplaces like Etsy and eBay have made it easier for one person to reach customers worldwide, and it doesn’t look like this is changing any time soon. In fact, with AI now capable of handling many basic admin tasks and more, it will make it easier for anyone to become a small business owner – it’s not as difficult to set yourself up and reach more customers than ever before.
What are your small business predictions for 2025? Let us know in the comments below.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry-specific professionals who may better understand your business’s needs. Read our full disclaimer