The Crisis Facing Small Business Owners — And What Comes Next 

Introduction 

If you run a small business in the UK right now, you’ll already feel it: the pressure is building. 

Costs are up, margins are down, and optimism is fading. Behind the statistics lies a simple truth — small business owners are carrying the weight of an economic system that no longer works for them. 

In this post, I want to cut through the noise and look at what’s really happening. Why so many businesses are closing. Why confidence is evaporating. And what small firms can do to survive the next few years. 

A Tough Year for Small Businesses 

The UK is home to around 5.5 million small and medium-sized enterprises (SMEs) — 99.9% of all businesses. Together, they generate almost half of private-sector turnover and provide around 60% of private-sector jobs. 

But the tide has turned. 

According to ONS data, more UK companies closed than opened in 2022 — the first time that’s happened since 2010. Around 345,000 businesses shut their doors, compared to 337,000 new starts. 

There was a modest rebound in 2023, with new company births edging ahead of closures. Yet the total number of active firms still fell by 54,000, leaving around 2.9 million trading. In plain English: one in nine UK businesses disappeared in 2023. 

The pattern has continued into 2024 and 2025. Business “births” in the second quarter of 2025 were down 4.2% year on year, while closures remained stubbornly high — around 74,000 in a single quarter, equivalent to one in 13 firms shutting down. 

That’s not just a statistic. It’s tens of thousands of livelihoods — and entire communities — affected. 

Why It’s Happening 

It’s easy to blame “the economy” in general. But this crisis has roots in specific policy choices and compounding costs that hit smaller firms hardest. 

1. The Cost of Employment

The 2024 Autumn Budget raised employer National Insurance contributions from 13.8% to 15%, while cutting the threshold from £9,100 to £5,000. According to Treasury data, that change alone will hit nearly a million small employers. 

Yes, the government expects to raise around £20 billion from the increase — but most of that revenue will come from the smallest firms. Large corporations will absorb it. Micro-businesses will not. 

2. Business Rates Shock

From April 2025, the 75% rates discount for retail, hospitality and leisure businesses disappears. The average small shop will see bills more than double, from roughly £3,500 to £8,600 per year. 

Trade bodies have called it “the final straw” for many high street operators. When fixed costs rise faster than footfall, it’s not inefficiency — it’s mathematics. 

3. Wages and Utilities

Mandatory rises in the National Living Wage, combined with persistently high energy prices, have pushed costs up across every sector. 

For low-margin businesses — cafes, salons, trades, and local retailers — there’s simply no room left to absorb those pressures. 

Add insurance hikes, supply-chain inflation, and new regulatory reporting costs (like the forthcoming Companies House ID verification rules), and the cumulative load becomes unbearable. 

The Human Cost 

Small business closures aren’t just numbers on a spreadsheet — they represent jobs, families, and communities. 

SMEs employ around 16 million people in the UK. When those businesses fail, the ripple effects are immediate and local. 

Retail 

The Centre for Retail Research estimates that 170,000 retail workers lost their jobs in 2024 as over 13,000 stores closed. The vast majority — 84% — were small independents with fewer than five outlets. 

Walk through any high street, from seaside towns to suburban centres, and you’ll see the result: “To Let” signs where local shops once stood. 

Hospitality 

The picture is no brighter in hospitality. Since late 2024, around 84,000 hospitality jobs have vanished. The British Beer & Pub Association predicts nearly 380 pub closures in 2025, costing a further 5,000 jobs. 

When a pub or restaurant closes, it’s more than lost income — it’s the loss of a community space. As the BBPA put it, each closure “deprives communities of their heart and soul.” 

Regional Decline 

Outside London, the damage runs deeper. In towns across Greater Manchester, Lancashire, and Cheshire, SMEs form the backbone of local employment. ONS data shows small firms in disadvantaged regions are shedding jobs faster than anywhere else in the country. 

According to the Federation of Small Businesses (FSB), 27% of small firms expect to shrink or close in the next 12 months, while just one in four expect to grow. A fifth have already cut staff this year. 

This is not a temporary blip — it’s a structural issue. 

What’s Ahead: 2026–2027 Outlook 

The near-term outlook offers little comfort. 

• The British Chambers of Commerce (BCC) forecasts GDP growth of just 1.2% in 2026 and 1.5% in 2027. 
• The EY ITEM Club is even gloomier, projecting 0.9% growth in 2026. 
• Business investment is expected to rise by only 1.9% in 2026 and 3% in 2027, as firms hold back on expansion. 

The Centre for Retail Research expects 17,000+ store closures in 2025, while hospitality trade groups anticipate hundreds more pubs and venues lost as business rate relief is withdrawn. 

Three in ten small businesses now expect to shrink or exit entirely over the next two years. If that pattern holds, the UK could lose another quarter of a million small firms before the next election cycle. 

What This Means for Greater Manchester, Cheshire, and Lancashire 

Locally, we’re already seeing the effects. 

• Rochdale, Oldham and Bury: independent retailers and trades are under intense pressure from rates, utilities, and staff costs. 
• Manchester city centre: hospitality turnover has fallen, even as wages and rents rise. 
• Cheshire and Lancashire: professional and construction SMEs are delaying investment, hiring freezes are spreading, and business confidence has dipped sharply. 

For many owners, the conversation has shifted from “how to grow” to “how to survive.” 

Building Resilience in a Fragile Environment 

The numbers make grim reading, but there are still ways small firms can adapt — even in this climate. 

1. Tighten Cashflow Discipline

Weekly cashflow forecasting is no longer optional. Map out upcoming bills, renewals, and tax payments. If you can’t measure it, you can’t manage it. 

2. Reprice and Reframe

Many owners haven’t reviewed pricing in years. Revisit margins, review supplier contracts, and don’t be afraid to charge appropriately for your value. 

3. Strengthen the Balance Sheet

Avoid unnecessary borrowing, but if you must take on finance, choose fixed-rate, short-term products. Pay down expensive debt first. 

4. Rethink Staffing and Structure

Use flexible contracts, cross-train staff, and consider outsourcing non-core functions. Keep your core team strong but agile. 

5. Take Tax Planning Seriously

From capital allowances to R&D claims, every legitimate relief matters. The right advice can free up cash when you need it most. 

At CCM, we’ve helped dozens of small businesses across the North West stabilise, refinance, or restructure through difficult trading cycles. The earlier the conversation starts, the better the options. 

A Hard Truth 

There’s no easy fix. Rising taxes, falling confidence, and stagnant growth make this one of the hardest operating environments in decades. 

But while Westminster argues, local business owners are getting on with it — cutting costs, pivoting, innovating, and keeping people employed. 

They deserve more support and less red tape. 

Because without small businesses, there is no recovery. 

Call to Action 

If your business is feeling the pressure — from cashflow strain, rising rates, or tax complexity — you’re not alone. 

At CCM | Carter Collins & Myer, we work with small business owners across Greater Manchester, Cheshire, and Lancashire to stabilise finances, plan tax efficiently, and build resilience for whatever comes next. 

Let’s talk about how to strengthen your position before the next storm hits.