Running a small business in 2024 wasn’t easy. Rising costs, hiring struggles, and a squeeze on consumer spending made it a tough year for business owners across the UK. From price hikes to cutting costs wherever possible, some small business owners even dipped into their own savings just to stay afloat.
But what does 2025 have in store? We surveyed 500 small business owners across the UK to understand some of the biggest struggles they faced in 2024 and what challenges they expect in the next 12 months. Here’s a look at the data for the small business owners in the hospitality & tourism and retail & wholesale industries.
What worried you the most from Labour’s first statement?
(the business owners could select all that applied)
Industry | Announcement 1 (% who chose this option) | Announcement 2 (% who chose this option) | Announcement 3 (% who chose this option) |
|---|---|---|---|
Hospitality & tourism | increase in employers NICs (43%) | increase to national living wage (30%) | ending of business rates 75% (30%) |
Retail & wholesale | increase in employers NICs (44%) | ending of business rates 75% (42%) | increase in stamp duty (23%) |
Nearly half (42%) of retail business owners said that the ending of the 75% business rates relief was one of their biggest concerns
30% of hospitality business owners said that the ending of the 75% business rates relief was one of their biggest concerns
“The new government’s first budget did not go down well with business owners who have had to overcome tough trading conditions over the last five years. Rising costs from things like high energy prices and rent increases are stretching small business owners, but from April it’ll cost more to hire and employ staff. And those in the retail, hospitality and leisure industries will see business rate relief cut by a third. In order to survive, business owners might have to both cut jobs and raise prices, neither of which will do much to grow the economy,” said Les Roberts, senior content manager at Bionic.
What will be the biggest challenge your business will face in 2025?
(the business owners could choose 3 options)
Industry | Challenge 1 (% who chose this option) | Challenge 1 (% who chose this option) | Challenge 1 (% who chose this option) |
|---|---|---|---|
Hospitality & tourism | inflation & rising costs (78%) | reduced consumer spending (74%) | hiring and retaining talent (39%) |
Retail & wholesale | inflation & rising costs (77%) | reduced consumer spending (44%) | supply chain & logistical disruptions (37%) |
Both hospitality and retail business owners voted that “inflation & rising costs” as the biggest challenge they will face this year, followed by a “reduction in consumer spending”
2 in 5 of the business owners in the hospitality sector said that “hiring & retaining talent” would be a challenge in 2025
What cost-cutting measures did businesses take in 2024?
(the business owners could pick any that applied)
Industry | Measure 1 (% who chose this measure) | Measure 2 (% who chose this measure) | Measure 3 (% who chose this measure) |
|---|---|---|---|
Hospitality & tourism | increasing product prices/rates (52%) | small cost-cutting measures (43%) | reducing the size of the workforce (30%) |
Retail & wholesale | increasing product prices/rates (51%) | small cost-cutting measures (33%) | reducing the size of the workforce (33%) |
Over half of business owners from both industries said that they “increased product prices/rates” to cut costs in 2024
Over a third of business owners from both industries used “small cost-cutting measures” (like turning lights off) and around a third from both industries said that they “reduced the size of their workforce” last year to save money
Do you think your business will cease trading during 2025?
Industry | Yes | No |
|---|---|---|
Hospitality & tourism | 44% | 52% |
Retail & wholesale | 28% | 63% |
4 in 10 of the hospitality business owners think they’ll go bust during 2025 – this was the highest % from all the industries in the study
“It’s saddening but not surprising that 44% of hospitality businesses think they’ll cease trading in the next 12 months. Hospitality businesses have had it tough for years since the pandemic and with reduced Business Rates Relief and the Employers’ National Insurance hike kicking in from April 6, 2025, these businesses are going to feel the squeeze even more. Are we heading into the collapse of our independent restaurant economy? In 12 months, we may see very different UK high streets – we really don’t need any more Costas,” said Laura Court-Jones, Small Business Editor.
Has your business been impacted by late invoices/overdue payments in the past 12 months?
Industry | Yes | No |
|---|---|---|
Hospitality & tourism | 48% | 52% |
Retail & wholesale | 60% | 30% |
Over half of business owners in the retail industry said they were impacted by late payments in 2024 – just over half said the same in the hospitality industry
Have you felt burnt out whilst running your business in the past 12 months?
Industry | Voted that they felt burnout to some extent |
|---|---|
Hospitality & tourism | 78% |
Retail & wholesale | 86% |
Retail and wholesale businesses reported the highest level of burnout to some extent (86%) in the study
13% of hospitality business owners voted that they were “extremely” burnt out whilst 22% said “very”
9% of retail business owners said they were “extremely” burnt out whilst 30% said “very”
“It’s clear running a small business in the current economic climate is taking its toll on the mental health of UK small business owners. It can sometimes feel like there are constant cost increases and a lack of support from the UK government, so talking to other business owners can sometimes help relieve some of these worries. Joining online communities where SMEs can discuss the highs and lows of running a business can help the pressure of feeling overwhelmed and alone. It’s also a good idea for small business owners to consider the mental health of their staff and take part in Mental health First Aid Training which could give employees the tools to help staff who may be struggling too,” said Laura Court-Jones, small business editor.
To what extent have you struggled to hire and retain talent during the past year?
Industry | Extremely difficult | Very difficult | Moderately difficult | Not at all difficult |
|---|---|---|---|---|
Hospitality & tourism | 4% | 30% | 57% | 9% |
Retail & wholesale | 5% | 28% | 37% | 23% |
The results show that hospitality businesses in particular struggled to hire & retain their workforce last year
Here’s what Roberts had to say about the results and the upcoming business relief expiration: “It’s clear from our survey of small business owners that running a small business in the hospitality and retail space during 2024 wasn’t easy. Rising costs, hiring struggles, and a squeeze on consumer spending made it a tough year for business owners across the UK and the future looks just as tough. In fact, 4 in 10 of the hospitality business owners and just under a third of retail business owners that we spoke to don’t think their businesses will survive the year. It’s no surprise that retail business owners reported the highest level of burnout in the study.
“The latest Budget was largely seen as a tough one for small business owners, especially those that employ staff. Not only will business owners need to account for an increase in the National Living Wage, those in the retail, leisure, and hospitality sector will need to contend with the decrease in business rates relief. Then there’s the higher National Insurance Contributions (NICs) to contend with. Many business owners will feel they came away from that Budget shouldering the biggest burden.
“The double-whammy of Employer National Insurance contributions rising to 15% and a lower threshold to begin paying them at £5,000 means small businesses are likely to face higher costs and hiring challenges. Although the government will increase the Employee Allowance to £10,500, it’s likely we’ll still see rising costs for consumers across retail, hospitality and leisure.
“It’s no doubt that the UK’s empty high streets are in serious need of help. The extension of business rate relief is a step in the right direction for protecting the small businesses that make up the UK economy, but it may not make much difference with other rising fixed costs for business owners. Labour’s promise of permanently reducing business rates in 2026-2027 could provide further help, but this could take a long time to roll out and this promise may not even come to fruition.”
