Small Business Owners Say They’re Worse Off Than During Covid, Here’s Why

More than half of the UK’s small and medium-sized businesses say they could close if costs rise again. This is according to the Built for Bigger Things report, commissioned by financial platform Dext, which surveyed 500 business leaders from across the country. The same number of respondents also believe that the current financial climate is more unstable than what they faced during the Covid-19 crisis.

This sense of pressure is already showing. Nearly 40% of businesses have paused any plans to grow. Around 46% have faced cashflow trouble or had to turn to emergency funding. In a quarter of the businesses surveyed, hiring has been frozen or jobs have been cut.

Leaders are finding it hard to make long term decisions. The study found that 53% say they now find it nearly impossible to plan ahead, as changing costs and uncertain trade conditions make predictions less useful.

 

How Much of the Strain Is Coming from Inside?

 

It seems that it isn’t just external factors that are hurting businesses, because many are struggling with internal issues that make everyday operations slower and more stressful as well.

One of the biggest problems is admin. The report found that 27% of SMB leaders are spending between 21 and 40 hours each month on financial paperwork. That is almost an entire week lost.

This work is also taking a mental toll with 40% of respondents said they find financial admin “soul-destroying”, while 38% said it drains their energy. Another 36% admitted they have lost sight of why they started their business in the first place.

Admin is also costing them growth, as just under 40% said they spend more time on financial tasks than building their business. Around 35% said they had missed out on opportunities because of this, while 48% believed they would be stronger leaders without the weight of finance management.

 

Is Automation Helping Anyone Yet?

 

The report shows that many small businesses have not moved over to more modern financial tools. Although we are in the AI era, just 4% of businesses in the survey said they were fully automated. In contrast, 58% still handle their financial management manually.

Some firms do have formal accounting help, either in-house or through outside professionals. But 1 in 5 leaders still manage all their finances alone. 10% of respondents said they rely on friends or family instead of formal assistance.

Only a small number are actively reviewing their finances. Just 29% are modelling for recessions. Only 27% adjust decisions when new data comes in. Less than a quarter review performance regularly.

 

Where Are Businesses Coping Better Or Worse?

 

Some businesses and areas seem to be handling the pressure better than others. In sectors hit hard during the pandemic, things now feel worse than ever. Among firms in retail, hospitality, and the arts, more than 60% say today’s economy feels tougher than it did during Covid.

Yorkshire and Humber is one area standing out for a more confident outlook. In this region, 71% of business leaders say they are still prioritising growth. In Leeds, 60% say national economic pressure has not changed their decision making. That is more than double the national average.

In Manchester, only 19% have cancelled or delayed growth plans, compared to 25% nationally.

 

 

What About Age, Size and Stage Of Business?

 

Younger companies are struggling with fragility. Over 3/4 of firms that are one to two years old say planning is impossible. Around 37% of them have had to look for emergency funding. But they also seem more willing to adjust quickly, with many reviewing financial plans regularly.

Larger businesses are also feeling this.. Among companies with 100 to 249 employees, 61% said a sudden cost rise could shut them down. In the £50 to £100 million bracket, half of business leaders said they were questioning whether continuing was worth it.

Older leaders are more stressed about what’ll happen the future. Among those aged 55 and over, 63% said the current economic climate feels worse than the pandemic period.

Confidence is lower in this group too, with just 29% believing they could push their business through a recession. Among those aged 25 to 34, that number jumps to 71 percent.

 

Where Does This Leave UK’s Businesses?

 

Many small and medium-sized businesses are at risk, from inflation and taxes, as well as from outdated systems and a general sense of mental fatigue.

There are some areas that do actually show signs of resilience, but the overall mood among UK business leaders is cautious, overworked and unsure of what is to come.

Sabby Gill, CEO of Dext, said, “We’re past resilience. These businesses are stuck in survival mode, and too many are close to giving up. Without urgent support, we risk losing a generation of entrepreneurs and the backbone of the UK economy, not just to economic pressure, but to exhaustion.

“Small businesses are being pushed to the brink by macro pressures and micro inefficiencies. Without time, headroom or real-time visibility, they can’t lead confidently. Every day this continues, we lose growth potential.

“We call SMBs the lifeblood of the economy, but many are bleeding time, energy and belief,” Gill concluded. “The challenge now isn’t just survival, it’s protecting the ambition that powers this vital sector.”