It Has Never Been Harder to Run an SME in the UK — But There’s a Way Forward

Author: Jim Brennan, Co-Founder, Mimio Labs

Small and medium-sized businesses (SMEs) are the beating heart of the UK economy. They represent 99.9% of the UK’s business population, three-fifths of the employment, and account for around half of the private sector turnover, according to the Federation of Small Businesses. Without SMEs, the UK economy simply doesn’t function.

And yet, running an SME in 2025 has never been more challenging.

A Tough Climate for Business Builders

Every generation of SME leader has faced its challenges — recessions, policy shifts, technology disruption. But today’s conditions are particularly acute. Here’s why:

1. Policy Headwinds Are Blowing Hard

Recent changes in employment law have made it more difficult for businesses to remain nimble. More rigid working conditions and additional compliance overheads are placing a disproportionate burden on small employers, who can’t absorb policy shifts the way larger corporates can.

At the same time, National Insurance contribution increases have quietly ramped up the cost of employing people. In the wake of COVID-19 and the furlough scheme, the government is under pressure to recoup spending — but it’s SME employers who are left holding the bill.

2. Big Business Is Moving Faster (and Spending More)

If you're a small business leader, you’ve likely felt it: the creeping gap between you and the big guys. Large enterprises are outspending SMEs on new technologies — especially in AI and automation — at an accelerating rate.

What does that mean in practice? Faster decision-making. Better customer insight. Automated admin. And ultimately, greater competitiveness.

It’s a David vs Goliath moment. Only Goliath has access to data scientists, enterprise-grade platforms, and million-pound innovation budgets. And David has… well, a slingshot, if he’s lucky.

Time to Fight Like David vs Goliath

But here’s the thing about SMEs: they’ve never won by playing the same game as big business.

They win by being faster. More creative. Closer to customers. Willing to try something new.

This isn’t the time for SME leaders to bury their heads in the sand, or lick their wounds. It’s time to fight back — by using the very same technologies the big players are investing in, but tailored for smaller teams, at a fraction of the cost.

AI isn’t just for giants anymore. And when used right, it can level the playing field.

5 Ways AI Can Help SMEs Punch Above Their Weight

Here’s how AI is already transforming how smaller businesses operate — and how it can help your business stay in the game:

1. Make Smarter, Faster Decisions

SMEs are drowning in data — from sales figures to customer interactions to website analytics — but often lack the time or tools to use it effectively. AI can bring all your data together and turn it into something actionable. With platforms like Mimio, you can literally chat with your data, ask questions in plain English, and get answers in seconds.

2. Set and Track Goals with Confidence

Running an SME often means wearing multiple hats. AI tools can help leaders set measurable goals, monitor progress across teams, and get early warnings when things are off-track — without having to build dashboards or crunch spreadsheets every week.

3. Predict What Works (and What Doesn’t)

By analysing your past actions and outcomes, AI can start to show what strategies are delivering results. Whether it's a marketing campaign, a hiring decision, or a pricing strategy, you can begin to see the patterns and double down on what works — and avoid costly missteps.

4. Automate the Mundane, Focus on the Meaningful

From sorting invoices to drafting emails, AI can take time-consuming admin tasks off your plate. That frees up your team to focus on what actually grows your business — relationships, creativity, innovation.

5. Compete with Bigger Players Without the Overhead

AI levels the playing field. With the right tools, SMEs can now access insights, automation and decision-support that used to require whole departments. And because AI tools for SMEs are built with usability in mind, you don’t need a data team to make it work.

Final Word: Adapt, Don’t Retreat

The pressure on UK SMEs is real. But so is the opportunity.

The next few years will separate the businesses that lean into change from those that get left behind. By embracing AI and smart data tools, SMEs can not only survive — they can outmanoeuvre their larger, slower rivals.

David just needs a smarter slingshot.

Editor Credit: we use LLMs to help improve our blogs, including ChatGPT, Perplexity and other wizards who, let’s face it, are very good real-time editors!