Building resilience into 2025

Facing surging inflation and a cost-of-living crisis, SMEs have been forced onto the backfoot and are prioritising building shorter-term resilience over longer-term growth.

But with signs the worst may be past and quiet optimism returning, businesses are increasingly positioning themselves for future growth by implementing a range of measures to the challenges they face.

Our SME Affordability Report highlights seven areas where businesses are boosting their resilience and how they are doing it.

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Financial performance and stability

Facing higher operational costs and supply chain disruption, many SMEs have experienced a negative hit to their cashflow, impacting their growth ambitions and stability. To compensate, many have enacted cost-saving measures to reduce their costs and boost cash levels, giving them strong grounds for future recovery.

Employee and team development

Businesses are facing challenges hiring and retaining their best talent, so upskilling and reskilling talent is helping many SMEs boost their employees’ knowledge. However, high turnover remains an issue impacting business performance.

Customer relationships and sales

In the face of rising prices, many businesses face changing consumer patterns. While some businesses are facing growing demand, others risk weakening brand loyalty due to cheaper imports and competition. Deepening customer relationships and emphasising quality service is key to winning loyalty.

Business growth and innovation

With the cost-of-living crisis leading customers to shift their behaviour, businesses are diversifying their services and focusing on innovation to tap into new markets and find new avenues for growth.

Technology and process improvements

Implementing effective and time-saving solutions, like AI, are helping SMEs work faster and reduce their operational costs. Keeping cybersecurity and data protection systems up to date is also crucial for winning customer confidence.

Operational challenges and adaptation

Wrestling with a number of different challenges means that businesses are facing added strains across their operations. While there are some positive signs ahead, SMEs are continuing to adapt to meet the demands of today’s challenging landscape. To do this, many are streamlining their costs and making improvements throughout their value chain.

External market pressures

Some of the leading market pressures forcing SMEs to enact resilience measures are external forces. Ongoing conflicts in Ukraine and the Middle East, in conjunction with the continuing impact of Covid-19 on the economy, mean businesses have had to adapt to more disruptive supply chains and greater friction across their value chain. Though credit is helping many firms adjust and respond, external pressures remain a present driver of market change.