With a New Year upon us, it’s a good time to take stock and consider what key trends might help shape small business success in 2026. As interest rates and inflation stabilise, but economic growth looks more uncertain, it’s likely that operational efficiencies will be the key to success this year. So as a business owner, what does it make sense to be aware of as you plan for the year ahead?
Economic pressures
With global economic growth forecast to slow in 2026, it seems that confidence is yet to pick up. Energy prices and wage costs will add to the pressure, along with rises in insurance premiums. If you’re planning on adopting greener practices, remember that several of the key government grant schemes for renewable energy installation will close their application windows in March 2026. This funding could help with solar panels, heat pumps, or LED refits but you’ll need to submit any application quickly. In summary it’s prudent to expect tougher funding, hiring and costs. As a result, cash flow and productivity planning are key.
Legislative changes
From a employment perspective the new ‘6-month’ rule will come into force this year, with the qualifying period for unfair dismissal rights reduced from two years to six months. When hiring you’ll have just six months to decide if your new team member works well in your team. If you retain them after this point, they gain full unfair dismissal protection. Other rights, including paternity leave, unpaid parental leave, and protection from harassment, apply from the first day of employment. Depending on the needs of your business it may be worthwhile considering whether to add senior experts on a retained, freelance basis rather than as permanent employees.
Regulatory updates
There are two main changes for SMEs to be aware of:
- New rules are on the way to help SMEs get paid faster and with more certainty. The changes are expected to cut maximum payment terms from 60 days to 45 days and give the Small Business Commissioner stronger powers, including the ability to investigate businesses that repeatedly pay late.
- Making Tax Digital will change how some SMEs file and pay income tax. The changes kick in from April 2026 for higher-earning individuals.
Digital strategy
If you’re in the online retail space, be aware that the digital landscape is becoming more complex. Seller fees on major social platforms rise in January with TikTok Shop raising its commission to 9%. And as consumers increasingly turn to AI to find products, it’s worth making sure that your website is optimised accordingly. A strong SEO approach will do this job thoroughly – there’s no need to invest in a specific AI strategy.
Priorities for SMEs in 2026
- Modernise systems: check that you’re set up for digital tax filing, review HR policies and be hypervigilant about your accounts.
- Plan finances tightly: rising labour and input costs mean sharper forecasting is key.
- Invest in tech: consider how AI/automation can help your business, and ensure you have a strong security strategy. A certain degree of wariness is advisable when using AI whilst still in its infancy.
- Protect margins: consider your productivity levels and pricing strategy. And negotiate with suppliers as needed.
- Focus on people: look after your team with good retention practices and flexible work arrangements.
Driving small business success in 2026 will be a careful balance. If you need any support with your business accounting and tax, please do get in touch. We’re here to help!