UK tech & telecoms small firms step up growth plans

Small technology and telecoms businesses in the UK are stepping up investment in growth strategies, with 71% working on plans to support future expansion, according to research from Novuna Business Finance.

The figures suggest the sector is more active than the wider small business population in preparing for the months ahead. Across all UK small businesses, 66% said they were pursuing initiatives aimed at future growth.

Novuna's quarterly Business Barometer found that 32% of small businesses in the technology and telecoms sector forecast growth over the three months from July to September. That was the highest level recorded for the sector in 12 months.

Beyond those forecasting growth in the quarter, a larger share said they were already taking practical steps to strengthen their position. The most common priority was keeping fixed costs down, cited by 62% of respondents in the sector. That was followed by improving cash flow at 36%, managing late payments at 26% and investing in new equipment at 16%.

Some businesses are also looking outward. The research found that 14% of small firms in technology and telecoms were planning to expand into new markets, while 11% expected to hire new staff.

AI uptake

The sector also stood out for its use of artificial intelligence, with 71% of small business owners in technology and telecoms saying they were already using AI.

That puts the sector ahead of many smaller businesses elsewhere in the economy and reinforces a broader pattern in the findings. Novuna's data indicated a link between stronger growth and higher AI adoption among smaller companies.

Among businesses planning further use of AI, 15% said they intended to apply it to online and digital marketing. Another 13% pointed to market research and product development, while 13% said they would use it to improve back-office and operational processes.

Technology and telecoms businesses were also among the most likely in any sector to be pursuing growth plans. Their 71% figure was above finance and accounting and transport and distribution, both at 70%, as well as hospitality and leisure at 63%, agriculture at 54% and real estate at 51%.

The study was based on responses from 1,000 small businesses across the UK and was conducted online. Novuna uses the tracker to measure the share of owners who expect tangible business growth over the coming three months rather than general confidence levels.

Jo Morris, Head of Insight at Novuna Business Finance, set the findings against a difficult backdrop for smaller companies.

"After a challenging summer trading period nationally, this research may offer hope of improving business confidence heading into the autumn months, particularly from small businesses in tech and telecoms that are investing in future growth. The data conveys a real sense of resilience across the UK SME community. Even at a time when market conditions have been challenging, many are taking steps to strengthen their business for the future," said Morris.

"When it comes to AI adoption, small businesses in the tech and telecoms sector seem to be leading from the front. They are more than twice as likely as the small business national average to already be using AI rather than hesitating to adopt this technology. This is significant because our data also suggests there is a correlation between small business growth and AI adoption. For example, AI adoption is more prevalent among small businesses that are growing significantly this quarter (59%) than among those experiencing contraction (23%).

"Operationally, many small businesses are focusing on measures to manage late payments and protect cash flow, while others are investing in new machinery and seeking efficiency gains that can help improve profitability. At Novuna Business Finance, we continue to support established businesses by helping them finance essential assets, enabling them to preserve cash flow and ease pressure on other areas of their budget. Taking a flexible approach gives small businesses greater scope to plan ahead and invest in opportunities that power future growth."