How Can SMEs Build Financial Strength for the Year Ahead?

Jonathan Cooper - Founder & Director of The Director’s Helpline

The financial landscape for UK SMEs in 2025 remains challenging, with high business insolvencies, ongoing challenges from Brexit, and economic uncertainties putting pressure on small business owners.

That’s why it’s more important than ever for directors to build financial resilience - adapting and forward planning has never been more critical.

And for directors already facing testing financial circumstances, the key to survival and growth lies in proactive decision-making and seeking expert advice before problems escalate.

The business landscape

If we look at the Government’s company insolvency statistics for December 2024, there were 1,838 in total.

While this was a 14% decrease compared to December 2023, the number of company insolvencies remained much higher than those during the pandemic. Additional data suggests that approximately 172,000 UK jobs are at risk in 2025, too.

It’s been a difficult period for companies with construction, trade, retail, and hospitality being some of the hardest-hit industries, and these statistics indicate the extent of the toll it’s taking on the business community.

The Budget also introduced new fiscal policies, such as higher National Insurance rates and

adjustments to corporation tax, that further impact SMEs. While these changes may place additional strain on already-tight margins, they highlight the importance of building financial resilience through careful planning.

There’s also the ongoing issue of bad debt, which remains a critical issue for SMEs.

To help combat this, SMEs need to proactively assess their financial health, implementing robust credit control processes and staying on top of debt management.

Adopt a preventative approach

By engaging early with financial consultants, businesses can identify risks, manage debts effectively, and implement strategies to stabilise and strengthen their finances.

It’s likely that the uncertain economic backdrop will see directors and business owners seeking more advice on the running of their business.

It’s important to talk, and talking is a key part of the prevention process when it comes to avoiding testing financial situations.

Directors need to take greater measures to prepare - surrounding themselves with the right support and advice networks to help them plan for different eventualities.

SMEs that wait until financial issues reach crisis levels risk limited options and higher costs for

recovery.

Jonathan Cooper

The difference between the business and the company

It’s important to understand that a business and a company are two different things that shouldn’t be used interchangeably.

Running a company presents a different set of challenges and requires a strategic approach to legal, financial, and operational governance that ensures long-term sustainability.

The key to success is recognising that no one can do it all and building a strong support network of trusted advisors that can support with navigating risks, managing debts, and maintaining financial health.

With access to the right guidance, owners can focus on what they love the most, their business, while ensuring their company remains resilient against economic pressures.

A robust support network will transform financial resilience from an overwhelming solo responsibility into a collaborative effort.

By focusing on cash flow management, tackling bad debt head-on, and leaning into expert guidance, UK SMEs can position themselves to weather the challenges of 2025.

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