18 January 2024 – Optimism is at an all-time high with small businesses in the UK! According to new research, the majority have a positive outlook for the upcoming year despite skyrocketing interest rates and a less-than-ideal 2023. The majority even expects to increase profits in the new year.
It revealed that surprisingly, 80% of small businesses are confident in reaching target profits in 2024.
Meanwhile, 91% expect to increase profits within the next twelve months.
The survey also highlighted how business owners are claiming 2024 as the best time for catching up on growth. 75% of the respondents rated profitability, followed by cash flow with 72%, as the biggest priority for this year.
To achieve these goals, small businesses are mainly turning to two things: manpower and new technology.
SMEs will prioritize increasing the workforce
For this survey, Moore UK invited 500 business directors with an annual turnover between £1m and £30m as participants.
Out of those, 49% are planning on expanding their workforce in the next few months. Another great news is that only 6% are planning to have layoffs.
Despite the current economic landscape, it seems that small businesses are addressing shrinking manpower as a primary concern for 2024.
It may be due to the fact that the labour shortage caused an increased workload for existing staff for 41% of the respondents.
Another 26% attributed the lack of skilled personnel as the main reason for missing their growth targets.
It’s promising to see that reducing headcount is far from the minds of many, even with a lot of economic black clouds still present. The coming year will see staff recruitment and retention remain a key priority as businesses continue to invest heavily in their talent.Maureen Penfold, Chair of Moore UK
AI as a new tool for increasing profitability
Aside from manpower, SMEs are now tapping into one of the most effective tools to increase profits.
Based on Moore UK’s survey, 44% of owner-managed businesses will surely integrate AI into their daily operations. On the other hand, 39% are still mulling it over.
Lately, generative AI such as ChatGPT and chatbots are gaining popularity among business owners. These software are geared towards raising productivity, introducing automation, and improving the customer service experience.
However enticing this new technology is, 17% are still hesitant and currently have no plans to utilise it to increase profits.
This reluctance may be attributed to the logistics of adopting these tools into practice. Most SMEs have limited knowledge to effectively implement these AI-powered tools. This may also be due to a lack of managerial and employee expertise in the matter.
Furthermore, small businesses may not have the funding to support this new technology. From investing in industrial internet to acquiring the software itself, organizations with tight cash flow may not find this option worthwhile, according to a study from 2022.
In fact, implementing new technology is cited as one of the major challenges businesses will have to overcome in the following months— third only to costs and interest rates.
Over the past year, AI has become a game-changer across the business landscape. Smaller companies are now recognising its immense potential to streamline workflows, boost efficiency and act as a powerful marketing tool. 2024 will only see this trend continue to gain momentum.Maureen Penfold, Chair of Moore UK
In light of all the optimism, it’s important to note that SMEs have not forgotten the challenges they faced in the past months. Realistic approaches to increase profits and growth for 2024 are deeply rooted in rigid cash flow management, some degree of AI adoption, and manpower retention.
This new survey shows once again that the UK’s small businesses are resilient. Despite the headwinds they have faced in 2023, they are looking positively into 2024.
As a small business ourselves, we know how scary the current economic situation can be. And while having concerns for the future is not a bad thing, we also need optimism. Because it will keep us going.
Embracing new technologies like AI will be vital in 2024, we believe. Used correctly, it can be a great tool to increase profits and grow your business.
AI has been in the news a lot lately, mostly in a negative light. And while there is no doubt that this new technology needs regulating, and quickly, its potential for small businesses is immense.
From automation to marketing, it can help make many tasks easier and quicker. There are already many tools available without breaking the bank that can make a difference.
Of course, they will still need human input and control, but their capabilities will grow quickly in the next few years. And small businesses who shy away from them are at risk to be left behind. Embracing AI could be a game-changer for many small businesses.