Three in 4 small enterprise homeowners now pay themselves underneath £20,000 a yr, up from 63% in 2025, new analysis reveals.
For entrepreneurs who make use of employees the determine is 65%, a rise from 48% final yr, which the report by Enterprise Nation mentioned is “proof that homeowners are more and more paying their employees and prices first, and themselves final”.
In different findings, urge for food for exterior funding fell to the bottom level because the quarterly survey started monitoring it in Spring 2023. Two fifth of small companies mentioned they plan to search for finance within the subsequent 12 months, down from a peak of 63% in Autumn 2023.
Amongst these nonetheless looking for funding, the quantities requested have shrunk: 40% wished underneath £10,000, up from 27% a yr in the past, suggesting companies are in search of smaller top-ups to see them by way of slightly than funding for development.
As the federal government’s new laws aimed toward tackling late cost continues its progress by way of Parliament, the report discovered the difficulty of overdue invoices has turn into considerably extra widespread. 42% of small companies mentioned they’ve been paid late within the final yr, virtually double the 24-34% seen persistently throughout 2023 and 2024.
Confidence in enterprise growth fell to 41%, down from 50% a yr in the past and among the many lowest readings recorded throughout the survey’s historical past. The sharpest falls have been concentrated in foods and drinks (down 18.6 factors to 40%) and basic retail (right down to 33%).
In opposition to the backdrop of monetary strain, digital adoption continues to speed up. 64% of small companies mentioned they now use AI instruments resembling ChatGPT or Gemini, up from 59% a yr in the past.
Regardless of this, fewer companies describe themselves as “primarily digital” (35%, down from 43%), which the report mentioned “might mirror a altering definition of digital operation: platforms resembling Etsy, Instagram and TikTok Store more and more supply a ready-made shopfront with out the necessity for a enterprise’s personal web site.”
When founders by age, 18-24 year-olds have been extra prone to have began their enterprise as a aspect hustle (60%) than over-50s (32%). Youthful founders have been extra motivated by incomes cash and turning a talent into revenue, whereas over-50s leant extra in direction of work/life stability.
Each teams mentioned decreasing the tax burden needs to be authorities’s prime precedence because the Price range approaches, cited by 54% of 18-24s and 59% of over-50s.
Aaron Asadi, CEO of Enterprise Nation, mentioned:
“This yr’s Barometer exhibits small enterprise homeowners absorbing strain personally. Three in 4 are actually paying themselves lower than £20,000 a yr, and that quantity solely will get worse as soon as a enterprise takes on employees. Persons are defending their groups and their clients by taking the hit themselves, that’s not a sustainable place for the UK’s key driver of the financial system.
“On the identical time, the funding urge for food has hit a document low. That’s not companies dropping ambition, it’s homeowners telling us plainly that the atmosphere doesn’t at the moment help the chance of borrowing to develop.
“Forward of the Price range, we’d like measures that ease the strain on proprietor pay immediately, get a grip on late funds, which are actually costing small corporations £26 billion in overdue invoices at anybody time, and restore the arrogance to spend money on development once more.
“It’s encouraging to see AI adoption persevering with to speed up, however we all know solely 27% of UK SMEs use AI frequently, simply 6% every day, but AI is the one most in-demand matter throughout our complete community.
“We can’t ignore that enterprise help isn’t working for everybody, male founders specifically are more and more coming away empty-handed once they search recommendation, and that’s a niche we have to shut.”
