Armstrong Watson highlights rising costs and hiring struggles for UK firms

Armstrong Watson has reported that rising costs and recruitment challenges are the main pressures facing family-run and privately owned businesses across the UK.The findings come from the firm’s 2025 Family, Privately Owned and Owner-Managed Business Survey, its fifth and largest survey to date, with responses from 858 businesses.

Among the headline figures, 78% of firms reported difficulties in hiring new staff, with more than half citing a lack of skilled candidates as a key factor. In response, many respondents said they were adapting to this by offering flexible working and enhanced benefits, although fewer were introducing incentive schemes or increasing advertising budgets.

The firm said the widespread impact of increased employment costs following rises in Employer National Insurance and National Minimum Wage rates have “disproportionately” affected sectors such as hospitality, retail, and care, where more employees are on lower wages. 

Almost half of respondents (47%) said an increase in costs affecting business viability was their main challenge for growth over the next three years. Changing regulations ranked second at 43%. Only 26% of business owners identified access to funds as a significant barrier.

While most firms reported adopting digital technology and automation, 30% still relied on manual processes, a figure that rose to nearly 40% in agriculture and property. Cyber security awareness appeared mixed, with just under 40% of respondents saying they were “not concerned” about the risk of attack.

Strategic planning was also limited according to the survey, with only 18% of respondents having a written business plan communicated to stakeholders.

Paul Dickson, CEO and managing partner at Armstrong Watson, said: “These businesses are not just economic contributors; they are woven into the fabric of our communities. This year’s survey highlights the resilience and adaptability of business owners who continue to innovate, invest and plan for the future – even in the face of rising costs, recruitment challenges and economic uncertainty.

“Having a strategic plan not only guides long-term goals but also drives more effective short-term planning and decision-making. We are committed to supporting businesses through every stage of their journey – from growth to succession.” 

He added: “We’d like to thank each and every business owner who took the time to share their experiences and insights. The survey is a powerful resource, reflecting the realities faced by family, privately owned and owner-managed businesses across the UK.  

“It’s vital that the voices of business owners are heard, not just by businesses like ours but also by stakeholders, policy makers, industry leaders and across communities.”