Initially, 68% of small enterprises expressed optimism for 2024, according to the ‘How to Start & Restart’ report. However, over three quarters (78%) indicated that their success hinged on the UK's economic performance, specifically avoiding a recession. With the latest figures from the Office for National Statistics showing a contraction in the UK economy at the year's end, this development is expected to temper the previously growing confidence among small businesses.

Emma Robson, founder at Stort Valley Gifting outlined her concerns: “Although it's a fairly shallow recession, the concern for us as a small business, is the impact on consumer confidence.”

“We try to remain optimistic that falling inflation will offset that, but with people still hurting from the cost-of-living crisis, this may cause people to tighten their belts further. Hopefully the next quarter will show some growth and restore some confidence going into our busier periods over the summer and towards Christmas which, as a hamper and gifting company, is our peak time.”

The recently released 'How to Start & Re-start' report, which examines the journey of small businesses from inception to growth, reveals a cautiously optimistic perspective for 2024 amidst pressing economic challenges and the imperative to adapt to future developments such as AI and sustainability.

The study advocates for a 're-set' among the UK's 5.5 million small businesses and calls for enhanced support for the burgeoning number of startups, aiming to ignite growth in 2024. It offers practical advice to help businesses weather current economic storms and equip themselves for upcoming challenges and opportunities.

“In recent years we have seen businesses navigating crisis after crisis, and the news that the UK is now technically in recession will sadly be another dent to confidence,” said Michelle Ovens CBE, founder of Small Business Britain.

“Many of those businesses are really exhausted, but hopefully the recession will be swift and mild. In the meantime, we need to find ways to help our nation’s small business through and to ‘re-start’ and rediscover that entrepreneurial zeal again to spark new opportunities.”

Adeel Hyder, Business Banking Director at TSB Bank said: “As 2024 unfolds, there are still grounds for guarded optimism that the conditions for small businesses to thrive are slowly beginning to take hold.

“While the economy has now been found to be in recession in the second half of 2023, it is still expected to grow by 0.9% in 2024. The outlook is not without ongoing risk and uncertainty. In particular, interest rates are higher than we have been used to in recent years, and their future path is unclear. But small businesses are continually proving their resilience and adaptability, and I firmly believe this will be the case again.”

The latest study reveals that 42% of small businesses are seeking additional assistance in business planning, while over half (53%) require support in sales and marketing. Furthermore, 32% of these firms are looking for help with finance and 34% with digital proficiency. A significant shortfall in startup skills and support was also highlighted, with only 23% of new enterprises receiving guidance on business planning and a mere 16% accessing financial advice. Instead, a striking 76% attribute their success to their personal skills, and 31% to 'luck'.

In addition to overcoming current economic hurdles, the report emphasizes the importance of AI and sustainability as crucial areas for small businesses to leverage for growth, advising startups to prioritise these aspects from the beginning. For instance, although 38% of small enterprises did not initially consider sustainability, 89% are now taking steps towards sustainable practices.

“The UK economy has seen a phenomenal number of businesses starting up, triggered not least by the downturn,” continues Michelle Ovens. “Our research shows more needs to be done to support these tiny businesses to grow strategically and drive the economic growth our country so badly needs.”