Business closures surge: How to protect your business

The first quarter of 2025 has seen a dramatic surge in business closures across the UK. Between January and March alone, 2,718 companies shut their doors. This is the highest first-quarter figure since 2021.

Many of these were small and medium-sized businesses that weren’t failing due to poor products or customer service. They were hit hard by rising costs, higher taxes and shrinking margins. The current economic environment is making it harder than ever to turn a profit, let alone plan for growth.

What’s driving the increase in business closures?

On 6th April, Chancellor Rachel Reeves’s £40 billion tax package came into effect. A major part of that, £25 billion, comes from increased employers’ National Insurance contributions. The British Chambers of Commerce has called the tax rise a “toxic reality” for businesses. It hits hardest where many small and mid-sized businesses are already vulnerable: payroll.

Combine this with global uncertainty and new US import tariffs, and many business owners are asking the same question: Can we keep going like this?

The good news is: yes, you can. But doing so may take a different approach to the one you’ve used before.

Nine practical steps to protect your business now

1. Optimise your pricing

If your margins are under pressure, price reviews should be top of the list. Many businesses avoid this out of fear they’ll lose clients. But done well, pricing adjustments don’t have to lead to churn. The key is value: articulate the outcome you deliver, not just the activity. We often help clients model pricing scenarios, understand break-even points, and find more sustainable pricing strategies.

2. Renegotiate terms with key suppliers

If you’re buying goods or services that count as ‘cost of sale’ items, materials, subcontractors or stock, start with those. Renegotiating payment terms, reviewing volume discounts, or changing suppliers entirely can have a more immediate impact than trying to trim your overheads.

3. Improve productivity across your team

Now is the time to get more from your current team, not by pushing harder, but by working smarter. Are there blockers in your processes? Do handovers or approvals slow things down? Even minor productivity improvements can add up quickly in this kind of climate.

4. Explore how automation and AI can help

Many SMEs assume automation is only for big business. In reality, tools like invoice scanning, payroll automation, AI-driven reporting, and CRM integrations can eliminate hours of admin per week. Clients who’ve embraced this are seeing both time and cost savings.

5. Assess your product or service mix

Take a fresh look at your product lines or service offerings. Which areas deliver strong margins or long-term value? Which ones drain resources but add little to the bottom line? It may be time to cull poor performers and double down on what’s working.

6. Expand capacity or scale operations, carefully

It might seem counterintuitive, but for some businesses the right answer isn’t to cut, it’s to grow. If demand is strong in certain areas, look at how you can expand capacity, take on more clients, or build recurring income streams. Not every business should play defence right now.

7. Consider offshoring administrative functions

Offshoring doesn’t suit every business, but for those with a high volume of repeatable admin tasks, it can offer significant cost savings. Virtual assistants, finance admin, and customer service roles can all be delivered from overseas teams, often at a lower cost and faster turnaround.

8. Make use of reliefs, incentives and funding

With tax bills rising, don’t leave government support on the table. R&D tax credits, capital allowances, employment incentives and sector-specific grants can help reduce your tax liability or fund growth. If you’re not sure what applies to you, we’ll help you find out.

9. Revisit your overheads, strategically

This isn’t about trimming every expense by 5 percent. It’s about working out which costs are essential and which are optional. Can you reduce office space? Review unused subscriptions? Move to more flexible services? For many clients, these reviews have led to real savings and less waste.

Don’t wait for the next quarter’s numbers

It’s easy to read about rising business closures and assume it won’t happen to you. But in many cases, the common thread isn’t external pressure, it’s inertia. What worked last year may no longer work now.

The best time to stress test your business model was six months ago. The second-best time is today.

We’re already helping clients scenario-plan for tougher trading conditions and identify opportunities to come out stronger on the other side. Whether you need help managing costs, forecasting cash flow or making a bigger shift in direction, we’re here to support you with advice that’s clear, commercial and actionable.

If you’re feeling the pressure, let’s talk before it becomes a crisis. A short call now could save a much harder one later.

Fill in the contact form below, call 01474 853 856 or email enquiries@a4g-llp.co.uk to book your one-to-one.