The growth challenge: why owner managed businesses need more support

A new survey of 272 owner managed businesses highlights the significant pressures facing the UK’s SME sector, with rising labour costs, economic uncertainty and a lack of confidence in government support all impacting growth ambitions.

The research, conducted by the Association of Practising Accountants (APA), a network of 20 leading firms of which Kreston Reeves and AAB are members, reveals that while many businesses remain resilient, most are prioritising stability over expansion as they navigate another challenging economic period.

Low confidence in government support

One of the most striking findings from the survey is the lack of confidence in Government support for owner managed businesses.

Almost all respondents (97%) rated current Government support as either poor (41%) or very poor (56%), suggesting a significant disconnect between policy initiatives and the day-to-day realities faced by business owners.

At a time when SMEs are expected to play a leading role in driving economic growth, business leaders are looking for clearer guidance, greater certainty and policies that encourage investment and expansion.

Rising costs restricting growth plans

Cost inflation remains the dominant concern for many businesses.

The survey found:

• Uncertain trading conditions (40%) is the biggest challenge facing businesses followed by wage inflation (25%) 
• 91% of businesses expect labour costs to increase over the next 12 months 
• 88% anticipate higher supply chain costs – up from 82% in 2025.  
• Worryingly, over half (53%) of respondents have less confidence in the resilience of their supply chain in the next 12 months.

These pressures are directly influencing decision making.

More than two-thirds of respondents (68%) said they are unlikely or very unlikely to make significant capital investments over the next year, potentially limiting future productivity gains and growth opportunities.

Survival and stability prioritised over expansion

The findings suggest that many owner managed businesses are taking a cautious approach to the future.

When asked about their primary business priority in the next three to six months:

• 49% said sustaining their business 
• 12% focused on business survival 
• 32% identified growth as their main priority 
• 4% said they were selling or exiting their business.

While growth remains important, the results indicate that many organisations are concentrating on maintaining stability. This cautious mindset is understandable given the economic backdrop, but it also highlights the risk of under-investment across the UK economy if business confidence does not improve.

Beyond borders

Businesses are thinking beyond borders. When asked what is more important right now almost two thirds are looking beyond the UK. Forty per cent believe that strengthening trading relationships with Europe is most important right now, while a further 24% believe striking trade deals beyond Europe is. 

When asked whether the UK should rejoin the Customs Union, 49% of respondents said yes compared to 30% who said no. A fifth were not sure.

Resilience and adapting to change

Despite the challenges, the survey highlighted the resilience of owner managed businesses: almost half of respondents (49%) believe their business is in better shape than it was 12 months ago.

Businesses are also beginning to explore new technology to improve efficiency. Almost one quarter (23%) reported using artificial intelligence over the last year to reduce costs and increase output. This compares to almost two thirds (64%) who said AI had not enabled them to reduce costs or increase output over the same period.

Meanwhile, despite the signals about the tough jobs market, just 7% identified labour challenges as their biggest concern, compared with 9% in 2025. 

Helping unlock growth 

Andrew Griggs, Senior Partner and Head of International at Kreston Reeves, said:

“The findings demonstrate a need for stronger alignment between government policy and the needs of owner managed businesses, the backbone of the UK economy. any businesses are operating in an environment characterised by rising costs and continuing uncertainty. 

“The challenge for policymakers is to create the conditions that give businesses the confidence to invest, recruit and grow.  

“There is a real opportunity to unlock growth across the UK if businesses are provided with the practical support, incentives and certainty they need to plan for the future. This will help give them the confidence they need to compete in this fast-changing world.” 

John Beevers, Head of Regions at AAB, said: 

“These findings reflect the reality facing many owner-managed businesses today. While there is still ambition to grow, rising employment costs, margin pressures and continued economic uncertainty are understandably causing many leaders to take a more cautious approach to investment and expansion. 

“What’s particularly notable is the tension between the need to grow and the confidence to invest. Businesses recognise the importance of investing in people, technology and operational improvement, but many are focused first on maintaining stability and building resilience. 

“At the same time, we’re seeing businesses look for new ways to drive productivity, explore opportunities in new markets and use technology to improve performance. With greater certainty and the right support, owner-managed businesses can play an even greater role in driving innovation, employment and economic growth across the UK.” 

What businesses say they need

With the Budget being announced on 28 October, the APA is clear about ways that Government could provide additional support that could help stimulate growth. It is calling on Government to: 

• Introduce greater fiscal incentives to unlock capital investment 
• Encourage closer alignment of modern apprenticeships with the needs of the workplace 
• Take a more realistic view of our future trading relations with Europe and outside Europe recognising that labour shortages coupled with an altogether more challenging export environment pose a real threat to long term growth 
• Recognise that uncertainty remains across many sectors of the economy and that businesses want reassurance as well as clear and unambiguous advice and support. 

Andrew Griggs concludes: “As policymakers continue to focus on economic growth, the findings serve as a reminder that confidence remains a critical factor. Without the right support and certainty, many businesses may continue to prioritise resilience and hold back from expansion.  They must be brave and look to do things differently in the future as other organisations will be! 

“Businesses are also demonstrating a strong international mindset. Whether looking to Europe or markets further afield, the focus is on creating opportunities for growth, strengthening trading relationships and removing barriers that can hinder cross-border business.” 

John Beevers added: “The survey highlights that many businesses are looking beyond their domestic markets for growth opportunities. While uncertainty remains a challenge, organisations that invest in productivity, embrace innovation and build strong trading relationships will be better positioned to achieve sustainable long-term growth. 

“For business leaders, the focus is increasingly on balancing resilience with ambition, ensuring they are equipped not only to manage today’s challenges but also to take advantage of tomorrow’s opportunities.” 

We work alongside and advise many businesses facing these issues. If you would like some guidance on any of the topics covered in this report, please get in touch. 

Methodology 

Between May and July 2026, the Association of Practising Accountants surveyed 272 owner managed businesses across 15 sectors and 11 regions of the UK economy. The analysis also builds on comparative data across five years of previous research undertaken across this sector.  

The Association of Practising Accountants (APA) 

The Association of Practising Accountants (APA) is a network of 20 leading business advisory firms meeting the needs of the real economy from SMEs through to AIM companies as well as the third sector. APA members collectively advise and support well over 14,000 businesses with turnover up to the hundreds of millions. Our clients produce goods and services which drive jobs and growth across the UK and internationally.