Running a small business in the UK is no easy task. From supply chain disruption, shifting consumer demand, and fluctuating inflation levels, business owners are navigating an unpredictable environment.
With this in mind, SumUp surveyed 750* UK business owners and decision makers within small UK businesses to see how confident they feel about the state of the current UK market, their top growth priorities for the next 12 months, and how their confidence levels stack up against last year.
When it comes to SMEs in Wales, what are their confidence levels and outlook for the year ahead?
Confidence levels among Welsh SMEs: 2024 vs 2025
Almost half (47%) of SMEs in Wales reported a stronger business performance this year, compared to last, including growth across key areas. Following this, we asked how confident they feel about the year ahead.
Despite a slight dip in confidence overall, the outlook remains broadly positive among Wales’ small business community.
Over a quarter (29%) of small business owners described themselves as very confident about the next 12 months, expecting significant growth and success. While this represents a drop from the 44% who felt strongly confident in 2024, overall sentiment remains upbeat.
A further third (18%) of respondents expressed confidence, though with cautious optimism. They acknowledged potential challenges but maintained a positive outlook on growth opportunities. This is a modest increase from 11% who reported similar confidence levels in 2024.
In total, 47% of Welsh SMEs expressed confidence in the year ahead, a decline of 8 percentage points in total from last year.
Only 12% of respondents said they are not confident about the future of their business. Meanwhile, 41% described their outlook as neutral or uncertain, expecting their business to remain steady without significant growth or decline.
Current challenges faced by Welsh SMEs:
While just over a third (35%) of SMEs report a stable business performance compared to last year, 12% noted a slight decline, though they remain generally stable. A further 6% said their business has experienced a significantly weaker performance. When asked about what the current challenges were among business operations, rising costs pose the biggest concern for small businesses across Wales.
Over half (59%) of respondents identified rising costs of raw materials, supplies, and products as their most significant challenge, while 41% said that the cost of energy and gas bills is putting pressure on their business. Furthermore, 35% reported the overall economy is difficult to manage, including changes in interest rates, inflation rates, and changes in disposable income.
In relation to customers, almost half (47%) reported that customers are spending less, with a noticeable drop in average purchase value. Furthermore, 29% noted that customer retention is getting tougher, expressing that it is becoming more difficult to keep customers engaged. A similar proportion (30%) also raised their concern that customers are taking longer to determine whether they will purchase or not, with 18% afraid customers will start purchasing from competitors.
Other concerns for SMEs in Wales include finding or retaining skilled employees (29%), competitors offering cheaper alternatives (24%), and customers are more price-sensitive than before, often expecting discounts, promotions, or lower-priced alternatives, which is impacting profit margins.
How SMEs are staying on top of current concerns:
Over four fifths (82%) of SMEs in Wales have made strategic changes in the past six months to navigate current challenges and remain resilient, which have resulted in a positive impact on their business performance.
A number of cost-saving measures have been put in place by SMEs. This has involved changes across their supply chains and professional services, including over a third (41%) of SMEs who have switched to more affordable suppliers, streamlining logistics, or bulk-buying to secure better rates. Similarly, 24% have switched service providers such as energy or broadband companies to cut ongoing costs.
When it comes to pricing strategy, SMEs are taking different approaches in response to current market conditions. A quarter (24%) report a positive impact on their business performance by lowering prices to help line up with consumer spending habits, while the same proportion (24%) have had success in increasing their prices to help improve profit margins.
Other adjustments UK SMEs have made, reporting a positive outcome, include introducing a new product or service (24%), upskilled existing staff or hired new talent (18%), and enhanced their digital presence through their website or social media (18%).
Priorities for growth over the next year.
When it comes to growth priorities, SMEs are focused on strengthening their financial foundations, whilst exploring new opportunities for expansion.
The top priority for over half of SMEs in Wales (59%) is to reduce costs or debt, while 41% are aiming to improve their profit margins.To do this, 24% are focused on diversifying income streams, whether by opening a physical store, expanding into e-commerce, or exploring sales through social media platforms like TikTok. Meanwhile, 18% are looking to launch a new product or service and 6% hope to secure funding or investment.
Other priorities for small businesses include improving operational efficiency (24%), investing in marketing and building a wider brand awareness (12%), and preparing for economic uncertainty (12%).
Corin Camenisch, Product Marketing Lead at Sumup commented on the survey:
“As champions for small merchants, we conducted this survey to discover the confidence levels of small business owners and decision makers in the UK to better understand the challenges they face, gauge their optimism about their future, and identify areas where support for SMEs might be needed.
“Overall, confidence levels of small business owners and decision makers across the UK are high. This positive outlook suggests that small merchants are prepared to navigate potential uncertainties and continue to thrive.
“We have provided tips off the back of our findings for those just starting out in business, or who are looking to deal with unexpected market fluctuations on our full campaign page.”
