What are the biggest challenges for SMEs in 2024?

How confident are you of business success in 2024? 

What are your predictions for the UK economy in the next 12 months? 

It’s time for us to reveal the results of our Q4 2023 Vistage CEO Confidence Index. Our regular barometer of SME leaders’ economic and business predictions is now available to download here – read on for the highlights…

Overall confidence has risen

Our latest data reveals that overall business confidence has risen to 105.8 points – up 11 points on Q3. 

It’s a similar pattern to the one we saw between Q3 2022 and Q4 2022, when confidence rose from 75.1 points to 80.1 points. After a further rise in Q1 of this year, confidence then declined. Could it be that SME leaders are simply more optimistic about their prospects as the New Year approaches? 

We see this optimism in SME CEO’s predictions for their own business prospects in 2024. 77% believe that 2024 will bring with it an improvement in the overall state of the economy (possibly prompted by the news of an impending General Election?) 

CEOs are similarly confident in their own business prospects. 63% expect an increase in revenue this year, while 53% foresee improved profitability in the next 12 months. Perhaps in a bid to prepare for this increased growth, 56% state that they expect their total employee numbers to grow in 2024. 

However, finding these new hires could prove challenging. 

The talent challenge

The fact that over half of the SME leaders we interviewed plan to increase their headcounts signals confidence in their 2024 business prospects. What could prove a struggle, though, is finding the right people for the task. 

When asked to identify their biggest challenge regarding business growth, 40% of our respondents pointed to the market’s current talent and skill shortage. It certainly appears to be hampering forward movement: 51% say that the challenges of hiring have had a severe impact on their ability to operate their business at full capacity. 

As a result, retention is at the forefront of many CEOs’ minds. 29% state that – to retain their top talent – they are actively budgeting for pay rises in 2024. 

What other challenges do SMEs face in 2024?

While optimism for 2024 is high, SME leaders continue to face challenges beyond those of hiring and retaining talent. 29% stated that both domestic and international economic and political issues will prove challenging this year while rising inflation was cited by a surprisingly low 9% of respondents. 

5% highlighted sustained supply chain disruption as a key concern, while a further 5% believe that the digital transformation process will be a key issue for this year. 

We may also see a potential increase in focus on cybersecurity amongst SMEs in 2024. 27% of our respondents were victims of a cyber-attack last year. Worryingly, just 60% have a regularly-reviewed cybersecurity plan in place in their business. Further questioning reveals a fairly lax approach to cybersecurity amongst some of our respondents: should this be a key focus for 2024?

For more on the above – and further results of our Q4 2023 Vistage SME CEO Confidence Index – click here.

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