Thinc Insights
UK SMEs can be forgiven for being cautious over the past few years when it comes to investing in transformation. But are we now in a position where staying safe is detrimental to growth?
Few UK SMEs would describe the past few years as predictable. After the post-pandemic recovery came pressures from inflation, shifting interest rates and skills shortages; then there were changing US tariffs, and successive government budgetary hints and announcements. All things considered, uncertainty has been a near-constant backdrop.
In that context, it is entirely sensible that many small and mid-sized businesses (SMEs) have chosen to hold off on spending, even where it’s an investment in their future. Preserving cash, delaying major infrastructure decisions and focusing on short-term resilience were rational responses to a volatile environment. For many leaders, 2025 certainly felt like a year to hold steady rather than push forward.
“Businesses being cautious in these uncertain periods of time is completely understandable,” points out Anastasia Gwynne, Head of SAP Practice at Thinc.
However, as we move into 2026, the dust may finally be starting to settle. Economic signals are mixed rather than constantly negative, and while caution remains, there is also a slight growing sense that opportunity still exists for those prepared to act. The question UK SMEs now face is a critical one: can businesses really afford to stay still? In this blog, we’ll look at what data and narrative is out there, before we give our take, based on the conversations that we’re already having this year with SMEs across the country.
Recent research paints a nuanced picture of business sentiment across the UK – one that balances optimism with ongoing restraint. Again, understandable, but let’s have a look at what recent research is telling us.
According to S&P Global’s UK Business Outlook survey, many businesses are looking ahead to 2026 with cautious confidence. The report highlights that, while there was a high degree of uncertainty about the economic climate, UK firms still see wide ranging opportunities. Manufacturers pointed to “a marked increase in tech-driven efficiency improvements, and a growing appetite for innovation in production processes”. This suggests that, even amid economic headwinds, UK firms are increasingly viewing technology, efficiency and innovation as viable routes to growth rather than discretionary extras.
At the same time as renewed optimism, the Bank of England’s Agents’ Summary of Business Conditions (February 2026) highlights a more restrained outlook: even though uncertainty reduced following the Autumn Budget, expectations for real activity have not improved; businesses increasing their automation and artificial intelligence (AI) to boost productivity and reduce the need for headcount growth.
This caution has been building for some time. The challenges of 2025 – including tariff changes, cost pressures and policy uncertainty – left many businesses wary of over-committing. As a result, while optimism exists, it is often paired with delayed decision-making.
In uncertain times, inaction can feel like the safest option. However – if businesses spend too much time being complacent – it can carry a hidden and growing cost.
When we spoke with Anastasia Gwynne about when too much caution becomes a risk, she mentions that she sees this regularly in growing businesses:
“There is a tipping point where being cautious becomes more of a risk itself rather than sensible risk management, especially if you are looking to grow your business. Growth amplifies all the weaknesses that you have within your business.”
For many SMEs, staying still means continuing to rely on business systems and processes that were never particularly designed to scale. Manual workarounds become normalised. Duplicate data entry creeps in. Familiar ways of working are favoured over new approaches – for example, over-reliance on Excel can begin to hold teams back. Decisions are made using reports that may be incomplete or inaccurate.
“Businesses actually underestimate the real cost of inaction and making do,” Anastasia explains. “Doing nothing is not just inconvenient, but can actually become quite expensive in the long run.”
Those costs rarely show up as a single line item. Instead, they surface as lost time, growing frustration – and leadership distraction.
“All the manual workarounds, all the duplicate work, and the decisions based on figures that might not be correct are actually costing your business – and it all comes out in time,” says Anastasia.
Customer service teams, sales teams and finance teams absorb the burden, while leadership focus is pulled away from strategy and growth.
Gary McKnight, Head of Commercial, Sage, frames the risk of inaction in simple terms:
“If you don’t do something, you stand still and potentially risk going backwards.”
As businesses get busier, inefficient processes don’t just slow things down, but they also start to create structural cost.
“If you do something the same way all the time, as the business gets busier, but you don’t have the procedures and processes in place to carry on in an efficient way, you need more people to do the process. And that becomes a very costly exercise,” Gary explains.
“With rising employment costs, including National Insurance, the default response of adding headcount quickly erodes margins – one way of looking at it is the risk is that you’ve got to invest more in the support services of the existing processes just to keep them working.”
In that context, not investing in better systems is still an investment – just not a strategic one.
In short, yes. SME leaders typically invest in business systems for three core reasons: efficiency, cash flow and resilience. These aren’t abstract benefits – they’re the areas where unfit systems quietly drain performance on a daily basis. Time is lost to duplicated work and manual fixes, cash is locked up by poor visibility and slow processes – and resilience erodes through gaps in controls and integration.
UK government research shows that 24% of SMEs are already using digital tools they don’t fully utilise, meaning many businesses are paying for systems that fail to deliver real value. Inaction doesn’t mean standing still; it means absorbing ongoing costs that compound over time. Business systems are an investment, and the real question isn’t whether change costs money – it’s whether doing nothing costs more.
The alternative to inaction is not reckless transformation. It is targeted, thoughtful improvement. According to S&P Global’s growth report for 2026, UK firms are increasingly seeing technology as a growth enabler – it’s becoming increasingly common to address inefficient processes and outdated systems. UK SMEs can reduce reliance on manual work and duplicated effort, avoid unnecessary headcount growth, speed up reporting and decision-making and free up teams to focus on strategy rather than firefighting – all with a bespoke business systems solution.
Gary highlights how this plays out in practice, particularly in finance:
“If you take a finance leader or FD or Chief Financial Officer, they’re embroiled in the day-to-day stuff. There’s no time for strategic planning, so we just carry on doing things the same way.”
Month-end processes are a common example:
“We get to month end, and month end takes a number of hours, a number of days, and there’s no time to think how we could do that differently.”
Improving even one process can unlock this disproportionate value.
For many SMEs, the biggest barrier to change is fear – fear of cost, disruption, or making the wrong decision in an uncertain world. But that doesn’t mean SMEs should avoid making changes entirely. As Anastasia puts it:
“Being brave doesn’t mean spending a fortune and ripping everything out from your business and starting from scratch.”
Instead, effective change can often be phased. It can start with tightening and standardising processes, cleaning up data and prioritising one or two high-impact areas to focus on.
“The best way forward is implementing it in phases,” Anastasia explains. “Pick one or two processes and start working with your team and with your partners to actually implement those changes.”
Gary agrees:
“One way of mitigating that risk is to actually take small pieces of change, rather than trying to eat the elephant. Let’s take quantifiable, prioritised chunks and deal with them one at a time.” This approach, Gary advises, de-risks transformation while building confidence and momentum.
At Thinc, we work with growing businesses that want to move forward with clarity and confidence, starting with business systems.
We specialise in leading business systems, with Sage Intacct, Sage 200 and SAP Business One as the core ERP and finance solutions. In our initial diagnosis calls; if particular pain points aren’t solved by our standalone solutions, we’ll work with you to provide custom development, integrations, managed services or modular add-ons from our plethora of partners. Bit by bit, with this approach, we free you up from the mundane and the manual, so that your people can focus on growth.
“We’ve seen customers come in where their processes have been a little bit all over the place,” says Anastasia. “We start in small steps. We pick one process, improve it and then move on.”
In a year where the temptation to wait remains strong, the businesses that act thoughtfully will be the ones best placed to thrive. Our expert team can help you to get there.
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