Small businesses in the UK faced numerous challenges throughout 2024. Will 2025 bring relief or introduce new hurdles? Here, we explore some trends that could shape the year ahead.

What to Expect in 2025:

• Will the UK high street see a revival?
• Could experiential retail bring shoppers back?
• Are business costs set to rise further?
• Will exporting goods become less complicated?
• Can small businesses hope for relief from high energy bills?
• Are eco-friendly practices the way forward?
• Will AI simplify starting a business?

1. Will the UK High Street Be Revived?

High street businesses are struggling with rising costs and intense competition. A recent study by Simply Business predicts that independent shops like newsagents and pubs could disappear completely by 2038.

To address this decline, the government has empowered local councils to auction leases for properties left empty for over a year within a two-year period. This initiative, supported by a £1 million fund, aims to make these spaces available for new businesses and community groups. While its success remains uncertain, it could encourage new shops to open and breathe life back into high streets.

2. The Rise of Experiential Retail

One potential solution to the high street’s struggles is experiential retail. Research shows that shoppers are more likely to spend time and money in stores that provide unique, engaging experiences.

Examples include interactive clothing shops that let customers try out different styles and receive personalized suggestions based on their shopping habits. Although this approach requires significant investment, it could be a game-changer for independent retailers. Strengthening the connection between online and offline shopping with data-driven strategies may also help.

3. Are Business Costs Set to Increase?

Changes to employment laws and wages could lead to higher costs for small businesses. Proposed measures include removing zero-hour contracts, banning fire-and-rehire practices, and increasing the National Living Wage to £12.21 per hour in April 2025.

While these changes benefit workers, small business owners may need to adjust hiring plans and restructure their workforce. Additionally, the reduction in business rates relief for sectors like hospitality and retail—from 75% to 40%—could raise expenses by thousands of pounds.

4. Will Exporting Become Easier for Small Businesses?

Brexit has led to higher export fees and disrupted supply chains, causing challenges for many small businesses. In response, the government is working with the EU to simplify trade processes and reduce barriers.

The Labour government has also proposed creating a small business export taskforce in collaboration with the Federation of Small Businesses. This initiative aims to provide better guidance and streamline export procedures, particularly for businesses struggling with Brexit-related trade rules.

5. Will the Energy Bill Crisis End?

Rising energy costs have been a significant burden for small businesses. In 2025, business owners hope the government delivers on its promises to lower energy bills. Planned initiatives include:

• Investing in clean and renewable energy through the Green Prosperity Plan.
• Supporting British manufacturers to improve competitiveness.
• Offering funding for energy-saving measures like loft insulation.
• Launching Great British Energy, a public entity aimed at reducing costs.

These steps could help small businesses better manage their energy expenses.

6. Is Going Green Good for Business?

Sustainability is becoming increasingly important, with consumers and the government pushing for greener practices. This shift isn’t just good for the environment—it can also boost a business’s reputation.

For instance, online sellers of electronics will soon need to contribute to waste management and recycling costs, just as physical retailers do. This measure aims to reduce landfill waste and ensure better recycling of electronics. Businesses that adopt eco-friendly practices and effectively communicate them to customers could gain a competitive edge.

7. Will AI Make Starting a Business Easier?

Platforms like Etsy and eBay have already simplified access to global markets for small business owners. Now, advancements in AI could make it even easier to launch and manage a business.

AI tools can handle tasks like inventory management, marketing, and customer service, allowing entrepreneurs to focus on growth. This trend may encourage more people to start their own businesses and expand their reach with less effort.

These seven trends provide a glimpse into what small businesses in the UK might face in 2025. By staying informed and adapting to these changes, business owners can better position themselves for success in the year ahead.