Confidence among UK small business owners remains strong in 2025, despite persistent cost pressures and economic uncertainty, according to new research from SumUp.
The study, which surveyed 750 small business owners and decision makers across the country, offers a snapshot of the resilience, challenges, and priorities driving the UK’s SME sector.
Almost half (43%) of those surveyed reported stronger business performance this year compared to 2024, although overall optimism has dipped slightly. One in five (20%) described themselves as very confident about the year ahead—a small drop from 24% last year—while 32% said they felt somewhat confident, also down from 36% in 2024.
Despite these marginal declines, the number of business owners who are not confident at all has significantly decreased, falling from 9% in 2024 to just 3% in 2025. Meanwhile, those feeling somewhat concerned dropped from 10% to 5%. Notably, 40% of respondents described their outlook as neutral or uncertain, citing fluctuating consumer demand and market conditions.
Rising costs continue to dominate the concerns of small business owners. Nearly half (47%) said that increased prices for raw materials, supplies, and products were the most significant challenge, making it harder to maintain healthy profit margins.
The cost of energy, rent, and utilities was highlighted by 40% of respondents, while a further 40% cited broader economic instability, such as inflation and reduced consumer spending. More than a third (36%) have noticed a drop in customer spend, while 33% said that retaining customer loyalty is becoming more difficult. Competition is also intensifying, with 30% struggling to keep pace and 27% fearing customer losses to cheaper alternatives.
A growing number of businesses have observed increased price sensitivity among customers, with 22% reporting higher demand for discounts and promotional offers.
In response to these pressures, nearly nine in ten (88%) UK SMEs have made strategic changes to remain resilient. For more than a third (38%), this has meant introducing cost-saving measures across their supply chains, such as switching to lower-cost suppliers or streamlining logistics.
Around 29% have switched service providers—such as energy or broadband companies—to reduce operational expenses. Pricing strategies have also shifted: 25% have raised their prices to protect margins, while 24% have lowered prices to retain customers.
Elsewhere, 23% of businesses have boosted their digital presence through website development or increased social media activity. Loyalty programmes have been improved by 16% of respondents, and 10% have sought external funding or investment to shore up cash flow.
Looking ahead, the top priority for UK small businesses in 2025 is improving profit margins, identified by 42% of respondents. This is followed by efforts to diversify income streams, such as launching an online shop, opening a physical location, or exploring platforms like TikTok Shop (34%).
Debt management and cost reduction remain a focus for 33% of SMEs, while 19% intend to seek new funding or investment. Other growth goals include launching new products or services (20%), improving operational efficiency (20%), and preparing for further economic uncertainty (15%).
Commenting on the findings, Corin Camenisch, Product Marketing Lead at SumUp, said: “As champions for small merchants, we conducted this survey to better understand the confidence levels of UK small business owners, the challenges they face, and where they need support.
Overall, confidence remains high. This positive outlook suggests that small merchants are prepared to navigate uncertainties and continue to thrive.”
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UK small business confidence holds firm despite cost challenges, SumUp report reveals