In the UK, around 60% of small businesses don’t make it past their first three years. Even those that survive often struggle to remain profitable and sustainable over the long term due to increasing red tape and decreasing productivity. The total number of private sector businesses fell by 56,000 to 5.5 million in the year leading up to 2024, marking a total decline of 500,000 businesses from the peak of six million at the start of 2020 [1].
Then there are the businesses built with short-term goals in mind—maximising profits fast, scaling for a quick exit, or chasing trends rather than creating something with real, lasting value. This mindset undermines the long-standing British tradition of entrepreneurialism that once defined our economy. The UK's score in the National Entrepreneurial Context Index (NECI) has been declining, with concerns over finance and education, and while start-up rates remain high, the number of growing businesses is decreasing [2].
Britain’s past success was built on hands-on hard work, resilience, and a commitment to continuous improvement. If we want to see productivity increase, and for SMEs to survive and thrive today, we need to refocus on these values, as well as prioritise realistic goals, strong financial management, and long-term vision over quick wins and speculation.
Britain: A Nation of Entrepreneurs—What Happened?
Britain has always been a nation of entrepreneurs. From shopkeepers and skilled craftsmen to pioneering industrialists, small businesses have long been the backbone of our economy. It is in our blood.
The Industrial Revolution was driven by innovators who built businesses that spanned generations. The Victorian era saw merchants, manufacturers, and builders invest in their legacies. Even in the 20th century, independent retailers, tradespeople, and family firms thrived—not just to turn a profit, but to build something lasting.
In recent decades, something has shifted. Many SMEs are now built to sell, not to sustain. The focus has moved from long-term value to short-term gains, leading to the loss of many hands-on, skilled businesses that once defined British industry. More than half of working-age adults in Britain now say fear of failure is preventing them from starting their own business, a significant increase from previous years[3].
But it doesn't have to be this way. Take JCB, founded by Joseph Cyril Bamford in 1945. It started as a small engineering business in a garage, but instead of chasing a quick sale, Bamford reinvested profits into innovation. Today, JCB remains a privately owned global leader in construction equipment, proving the power of long-term thinking.
The Reality of Running an SME Today
While entrepreneurship is still prevalent in Britain, today’s SMEs face unique challenges that make long-term sustainability harder than ever. Rising costs, supply chain disruptions, and economic uncertainty have put additional pressure on small businesses. Many owners are stretched thin, managing operations, finances, and people all at once.
At the same time, there is a growing expectation for SMEs to be more than just profit-driven—customers and employees alike value businesses that demonstrate purpose, resilience, and a commitment to quality. However, many businesses struggle to balance these ideals with financial survival and eventually the stress catches up with them.
So, what separates those that thrive from those that fail? How do you get from being a great idea to a business that can thrive in good times and survive the bad days?
The Truth About SME Success and Failure
We hear a lot about profitability, but the real make-or-break factor in any SME is cash flow. You might have a P&L that looks great on paper, or the best marketing in town, but if you can’t pay the bills when they’re due, your business is in trouble — fast.
One of the best lessons my father taught me is this: cash is king.
- Fancy reports might paint a rosy picture, but if customers aren’t paying on time, or costs are creeping up, trouble is ahead.
- A profitable business can still collapse if staff aren’t pulling their weight or efficiencies aren’t managed properly.
- Growth looks great, but if it’s fuelled by unreliable cash flow, it can be a dangerous illusion.
Consider a small furniture manufacturer in the Midlands. It was thriving on paper, with strong sales and high margins. But late payments from retailers created a cash flow gap, leading to a sudden and unexpected collapse.
Forecasting: It’s Not Just Numbers, It’s Survival
Another critical lesson: always look at the downside.
Too many businesses rely on optimistic forecasts, assuming sales will always rise, customers will always pay on time, and costs will remain stable. But what if they don’t?
Real forecasting isn’t just about predicting growth—it’s about identifying risks and preparing for them. Successful business owners don’t just ask, “What if things go well?”—they also ask:
- What happens if a key client leaves?
- What happens if costs spike unexpectedly?
- What happens if a project overruns or funding is delayed?
A business that only plans for best-case scenarios is building on shaky ground.
Look at the 2008 financial crisis—many SMEs were growing aggressively, assuming the market would continue booming. When the downturn hit, businesses that had prepared for potential risks (by maintaining healthy cash reserves and keeping debt levels manageable) survived. Those that had overstretched themselves collapsed overnight.
Forecasting is about more than just numbers—it’s about resilience.
Reviving Britain's Entrepreneurial Spirit—Why It Matters for the Nation
It’s time to restore Britain’s entrepreneurial roots. We need to return to the fundamentals: hard work, clear focus, practical skills, and a long-term approach to business. The British entrepreneurial spirit was never about chasing quick cash—it was about building something meaningful, taking pride in work, and creating value for communities and future generations.
A thriving SME sector isn’t just beneficial for individual business owners—it strengthens the entire nation. When more small businesses succeed:
- Employment increases, providing stable, rewarding jobs for local communities.
- Innovation thrives, as SMEs drive new ideas, technologies, and industries forward.
- The economy stabilises, reducing reliance on large corporations and creating a more diverse and resilient market.
- Communities grow stronger, as local businesses reinvest in their people, neighbourhoods, and causes that matter.
We should aim to create workplaces where people love their work, feel valued, and contribute to something bigger than just the bottom line. When businesses focus on long-term impact rather than short-term gain, they build stronger communities, provide lasting employment, and drive real progress.
So, let’s shift the conversation:
✅ Can we build businesses that support our families and communities for generations? ✅ Can we create workplaces where people feel valued, not just another cog in the machine? ✅ Can we redefine success beyond just an exit strategy?
I believe we can. And I believe we should.
If you’re an SME owner looking for ways to build a business that’s not just profitable today but sustainable for years to come, let’s talk. There’s a better way to do business—one that’s focused on purpose, people, and long-term impact.