Three in five London-based small businesses (62%) are working on plans to strengthen and grow over the spring months (down from 84% this time last year), although plans to hire new staff (17%) has hit a new five-year low, according to new research from Novuna Business Finance.
Whilst 84% of small businesses started 2026 with hopes to grow their enterprises during the course of 2026, the first quarter has proved to be challenging for many. The outbreak of war in the Middle East has already impacted energy prices – and at a time when there has been concern that inflation may rise in the coming months. Set against this challenging market context, the majority of London small businesses remain committed to working on short-term growth plans, but the key priority areas all now focus on measures to protect cashflow and minimise costs.
Across the Capital, the Novuna Business Finance data reports that 63% of London-based small businesses are prioritising the need to keep fixed costs down (63%). In addition, 33% also attach importance to protecting cashflow – and more than one in four London-based small businesses said they are prioritising the need to chase late payments (27%).
In London, plans by small businesses to protect costs has had a direct impact on the prospect for employment opportunities from this section of the business community. Only 17% of London-based enterprises plan to hire new staff this spring – hitting the lowest level since 2021, down from 24% last year and a 41% high point in 2022.
Beyond these defensive measures to protect cashflow and control costs in a challenging economic and geo-political climate, some London small businesses are looking at creative and proactive ways to achieve business growth.
Across the city, 21% of enterprises plan to expand into new markets overseas – despite the legacy of Brexit still being seen as a growth barrier to 19% of respondents. In addition, 15% of London-based small business owners are using the context of market uncertainty to free up working capital by re-assessing their funding arrangements – whilst 12% of respondents are looking to invest in new equipment. Here, modernisation offers the potential to reduce overall energy usage and bills.
Joanna Morris, Head of Insight at Novuna Business Finance comments:
“Given the severity of market uncertainty, the fact that many London-based small businesses are working on growth initiatives is a huge positive – although much of this relates to practical measures to protect costs and cashflow. Job creation is a casualty of this defensive, cost-control posture and is not good news.
“At Novuna Business Finance, we specialise in supporting established small businesses as an alternative to the high street banks. Whether investing in new equipment or reviewing existing funding arrangements, our asset finance solutions help businesses manage overall cash flow and ease pressure on other areas of their budget. With an expert team and award-winning service, we provide access to the financial solutions our customers need and are committed to helping them develop and grow.”
For more information, contact:
Wayne Terence Dobb – 07875532644 / wayne@elephantcommunications.co.uk
Disclaimer
The growth outlook research was conducted by YouGov among a nationally representative sample of 1,000 small business owners. The research was conducted online.
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