UK small and medium-sized enterprise leaders are maintaining confidence in their own businesses despite growing unease about the broader economic outlook, according to new research from Rathbones.
A survey of more than 1,000 SME founders, owners and senior executives found that 68% feel confident about their business outlook for the year ahead, with almost one in three describing themselves as very confident.
However, sentiment towards the wider economy is notably weaker, with 37% expressing pessimism and a quarter believing the government is not doing enough to support those looking to build and grow businesses.
Faye Church, senior financial planning director at Rathbones, said: “Entrepreneurs are clearly backing themselves, even if they don’t feel backed by the system around them.
“The gulf between business level confidence and national economic optimism shows how hard business owners are working to maintain momentum amid tax pressure and rising costs.
“This resilience is encouraging, but it also highlights the need for policies that unlock investment and restore long-term confidence.”
CONFIDENCE TEMPERED BY COST PRESSURES
While overall confidence remains relatively strong, the findings suggest that operational fatigue is beginning to emerge among business leaders.
Some 60% of respondents said they remain motivated, but 29% reported feeling neutral and 12% said they are unmotivated. Earlier research indicates that more than one in five SME leaders laid off staff last year as a result of rising costs, including increases in business rates and national insurance contributions.
Church said: “In our recent conversations with business owners, one theme keeps coming up: in a world of rising costs, shifting tax rules and continued economic uncertainty, people want clarity.
“Our clients want to know which financial decisions matter most right now and what practical steps they can take to protect and grow their personal wealth while running a successful business.”
FOCUS SHIFTS TO FINANCIAL PLANNING
With confidence in the wider economy lagging behind business-level optimism, many SME leaders are turning their attention to areas within their control, particularly financial planning.
Rathbones highlights the importance of separating business and personal wealth, noting that an overreliance on company value can expose owners to unnecessary risk in the event of a downturn.
Tax planning also remains a key consideration, particularly in light of reduced dividend and capital gains tax allowances. Business owners are being encouraged to review how they extract profits and make use of pension contributions where appropriate.
The management of excess cash is another area of focus. While holding cash can provide stability, inflation can erode its value over time, prompting consideration of alternative strategies such as reinvestment, short-term cash management solutions or longer-term extraction.
Succession planning is also rising up the agenda, with early preparation seen as critical to achieving favourable outcomes, whether through a sale, management buyout or family transition.
Finally, the research underlines the importance of building a personal financial plan that extends beyond the business, helping owners to plan for retirement, protect wealth and retain flexibility over future decisions.
Despite the challenges, the findings suggest that SME leaders continue to take a pragmatic approach, focusing on resilience and long-term planning while navigating an uncertain economic environment.
