The UK business environment: Easy to Start, Hard to Scale

Whilst a large majority thought life as an entrepreneur had become harder since they started their business, most would still encourage others to launch their own business and there is some clear, straightforward advice to entrepreneurs.

The barriers to scale

Several key challenges were identified:

 1. Raising Investment

• While start-up funding (such as the Start-Up Loans scheme) is available, raising investment for scaling has become harder. High loan rejection rates (45% for SMEs) and loss of EU grants post-Brexit have exacerbated the issue. 75% of respondents felt that raising investment was difficult.

2. Tax and Costs

• Business rates, increases to taxation and national insurance, and rising operational expenses (energy, premises, staff) are frequently cited obstacles. These are compounded by the removal of Entrepreneurs’ Relief and the scaling back of R&D Tax Credits.

3. Bureaucracy & Regulation

• Tightening employment laws was also seen as potentially harmful to British business. When asked which hypothetical policies founders were particularly concerned about, 44% cited making it harder to fire staff within the first two years of employment, 22% cited making it harder to hire foreign workers, 19% mentioned banning businesses from contacting employees outside working hours, and 18% referenced forcing employers to grant greater levels of flexibly working.

4. Government Disconnect

• Only 4% of founders responding to the survey felt that the current government understands the needs of entrepreneurs. Whilst overall levels of trust vary amongst the main political parties, a staggering 43% don’t trust any of the parties to understand and support them.

Why This Matters

The UK’s scale-up gap threatens future growth:

• A decline in mid-sized firms and global HQs has eroded resilience and international competitiveness in the UK
• While 52% of entrepreneurs expected growth in the year ahead, 76% are concerned about rising costs and the need for funding, and 99% want support now.

Recommendations for Ambitious Founders

If you're committed to scaling in the UK, here’s a six point playbook:

1. Build a Robust Financial Strategy

• Begin with a detailed business plan, even a light version can catalyse growth.
• Investigate all forms of growth capital: Enterprise/Seed Enterprise Investment Schemes (EIS/SEIS), Community Development Finance Institutions (CDFIs), scale up loans. Engage financial advisers early to map sources and timelines.

2. Optimise Your Tax Profile

• Work with an accountant to review thresholds for VAT, business rates, and NI. Consider structuring to avoid cliffs or locking in tax breaks.
• Take advantage of government incentives for R&D, growth initiatives, and apprenticeship schemes.

3. Streamline Operations & Reduce Red Tape

• Automate admin with modern tools. Streamlined accounting, payroll, and compliance software can free up valuable time.
• Proactively tackle IR35, procurement, and planning permissions by engaging specialists or membership organisations.

4. Lobby for Better Government Understanding

• Join local enterprise networks or collectives (eg Chambers of Commerce, TEN, Enterprise Nation) to voice your needs. A coordinated effort can influence policy.
• Be vocal: share stories on social media or at events to reshape how policymakers perceive entrepreneurial ecosystems.

5. Invest in Talent & Leadership

• Scaling depends on experienced hires. Invest in recruitment early, even overpay if necessary to bring scale stage skills onboard.
• Cultivate leadership and engagement frameworks to build a cohesive team culture as you grow.

6. Prepare for International Markets

• Exporting can be a strategic lever, but needs logistical planning (currency, supply chains, local regulations).
• Adopt a ‘think global, act local’ mindset with on the ground hires or partnerships to reduce risk.

Final Word

It’s fair to say that the UK enables entrepreneurial beginnings but it needs to improve how it supports businesses to scale. However, with astute planning, financial savvy, regulatory awareness, and collective lobbying, scaling here is still achievable.

Founders should treat the scaling journey as a second startup, with structured planning, resourcing, and firm advocacy. If the UK is where you want to build big, then make your growth roadmap both disciplined and bold. Engage with networks, influence policy, and build resilient foundations. That’s how you not only stay, but also scale here.

By taking control of your growth strategy and helping shape the ecosystem you’re growing into, you help build a UK that’s as easy to grow in as it is to start in.

If you need help scaling your business, see how hgkc can help – hello@hgkc.co.uk

*The Entrepreneurs Network (TEN) survey of 236 UK founders, conducted in May/June 2025