Increasing costs, regulatory changes and recruitment stood out as the key challenges impacting business growth over the next three years, as highlighted by this year’s respondents to our recently released 2025 Family, Privately Owned and Owner-managed Business Survey.
Over 850 business owners took part in the survey, sharing their views on current - and future - challenges and opportunities. Here we explore those having the biggest impact, and actions business owners should look to take to sustain and support their business.
Economic and regulatory pressures
Increasing costs impacting business viability is the biggest concern for businesses over the next three years, and is weighing heavily, with 47% of respondents citing this as a key challenge.
As consumers face higher prices, discretionary spending drops, leading to reduced sales and tighter profit margins for businesses. This is a particular risk for those that operate on tight margins, such as construction and manufacturing businesses, but also those that rely on discretionary spend, charities and the hospitality, leisure and tourism sectors, for example.
Meanwhile, the impact of the 2024 Budget is hitting home for employers, with increases in employer National Insurance (NI) and National Minimum Wage rates affecting over two-thirds of businesses. This has disproportionately impacted those businesses with a lot of employees on lower wages. The impact of these measures has been further exacerbated with pressure to increase pay across the board as employees struggle against high inflation and living costs, with 44% of employers in our survey boosting wages and salaries above inflation.
Added to this are worries over regulatory changes (43%). Businesses need to remain agile, reviewing cost structures and preparing for reforms such as the upcoming April 2026 Employment Rights Bill, with proposed changes that include ending ‘exploitative’ zero hours contracts, amendments to Statutory Sick Pay, and the right to family leave. Despite the bill being due to take effect in 2026, 74% of respondents are either unprepared or unaware of the changes. This is a critical area where payroll and HR teams must step up to ensure compliance and mitigate risk. With the changes set to impact day-to-day operations, businesses should be looking to prepare.
Recruitment
Having the right people in the business is seen by 36% of survey respondents as a key challenge to business growth over the next three years.
Across all sectors, 78% of businesses report difficulties in recruitment, with 54% citing the main issue as a lack of suitable candidates. This is particularly acute in rural and semi-rural areas like Cumbria, where talent pools are smaller.
While almost a third have made no changes to aid recruitment, others have implemented strategies that go beyond financial incentives to attract and retain talent. Those that have been proactive - introducing flexible (37%) working and improved benefit packages (26%), as well as taking on apprentices (33%) - should be better positioned to build a strong workforce to support business growth.
Planning and investing for the future
All of the concerns highlighted above are likely to mean that some businesses are not looking to make investments at this time (22% are not looking to seek further finance over the next three years), and though a degree of caution in the current environment is wise, businesses should remain creative and alive to opportunities that may present themselves. If a business is not investing in the future, there is a real risk of falling behind the competition.
Many will be closely watching the upcoming 2025 Autumn Budget to see what measures will be announced and how these could impact costs, investment decisions, and overall growth strategies. Any changes to taxation, incentives, or regulatory frameworks could significantly influence business planning over the next few years.
Businesses will always be required to react to external pressures and regulatory change, however, achieving success requires more than reactive measures. Business owners must plan ahead and implement changes to improve their position with careful strategic direction.
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