The dynamic economic landscape and evolving consumer behaviours pose ongoing challenges for small businesses in the current year. However, these obstacles are not stifling emerging trends and optimism for the future.
Anticipated Developments for Small Businesses in 2024:
1. Uncertainty Surrounding General Election and High Bills:
As the next general election approaches and operational costs soar, businesses brace for uncertainty. With the Energy Bill Discount Scheme concluding in March 2024, the impending energy crisis may lead to additional financial burdens for small enterprises.
According to our SME Insights Report, small businesses experienced a substantial increase in energy bills in 2023, prompting nearly half of them to report spending 21 to 60 per cent more than in 2022. Despite these challenges, 63 per cent of businesses plan to raise prices, showcasing the resilience of the nation’s self-employed.
In a November 2023 survey, small business owners expressed their expectations from the government:
- 66 per cent sought tax incentives and breaks.
- 34 per cent advocated for increased funding to assist with energy payments.
Stay tuned as we delve into each political party's election manifesto to unravel key promises for small businesses.
2. Tax Changes on the Horizon:
Self-employed individuals need to stay informed about impending tax changes:
- Class 2 National Insurance contributions will be abolished from April 2024.
- The Class 4 National Insurance contribution rate is set to reduce from nine to eight per cent for the 2024-25 tax year.
- Basis period reform is expected for the same tax year, potentially altering how and when businesses report profits or losses.
- Platforms facilitating side hustles, such as Etsy, Airbnb, and Deliveroo, are obligated to report freelancers' earnings to HMRC from January 1, 2024. Compliance with tax return filing, especially for earnings exceeding £1,000 in a tax year, becomes crucial.
3. Continued Surge in Side Hustles:
The trend of running side businesses, which gained momentum during the Covid-19 pandemic, persists. Whether driven by passion or necessity, individuals are increasingly choosing entrepreneurial paths while still employed elsewhere.
Our SME Insights Report for 2023 revealed that 40 per cent of established businesses started as side hustles. Notable side hustle trends from 2023, with potential carryover into 2024, include:
| Side Hustle | % Increase 2022-23 |
|---|---|
| Food van / ice cream van | 22% |
| Florist | 15% |
| Craft stall | 14% |
| Calligraphy | 11% |
| DJ | 6% |
| Massage | 5% |
| Personal tutor | 3% |
| Fitness instructor | 3% |
4. Rise of Young Entrepreneurs:
The entrepreneurial spirit among young people has flourished since the pandemic. Companies House data analyzed by One Family indicates a 19 per cent increase in companies registered by 16 to 19-year-olds in 2020 compared to 2019.
Simply Business is committed to supporting the next generation of entrepreneurs, with a focus on initiatives to nurture small business ventures.
5. Anticipated Changes in Tipping Laws:
Restaurant, bar, and café owners should be prepared for a shift in tipping laws, making it illegal for employers to withhold tips from workers. Expected to come into force in 2024, these changes aim to ensure fair and transparent distribution of tips, whether received in cash or card.
Food businesses should also monitor potential alterations to allergen labelling legislation, with Owen’s Law campaigning for comprehensive allergen information on restaurant menus.
6. Growing Demand for Childminders:
Despite the government expanding access to free childcare support, there's a notable gap in meeting demand. Analysis of Simply Business data reveals a 66 per cent increase in the number of childminders in the UK in 2023 compared to the previous year. As of September 2024, working families can access up to 15 hours of free childcare for children aged nine to 23 months, with plans to increase to 30 hours from September 2025.
7. Sustainability and Second-Hand Shopping:
With consumers prioritizing businesses with sustainable practices, embracing this strategy can benefit both the planet and business. The trend of shopping second-hand, whether through clothing apps like Vinted or establishing online shops for repairs and custom-made items, is set to grow in popularity in 2024.
Additional Trends and Predictions:
- Etsy sellers should focus on quality photography, customer reviews, and strategic keyword tagging, as the platform's latest algorithm update prioritizes well-optimized product listings.
- Authentic storytelling on social media is becoming more influential than traditional marketing in connecting with customers.
- The national living wage is set to increase to £11.44 from April 1, 2024.
Stay tuned for further updates and insights as we navigate the evolving landscape for small businesses in the UK.
Article by Simply Business
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