Younger business leaders more likely to invest in productivity, according to new report uncovering growing business optimism

Date: 27 March 2024

Today, Be the Business, an independent charity focused on improving business productivity, launches its seventh edition of the Productive Business Index (PBI). The report looks at the performance, attitudes and plans of over 1,100 UK small business leaders in relation to key areas driving productivity.

This latest research identifies striking behavioural and attitudinal differences between younger and older business leaders. While business leaders across both demographics are feeling more optimistic about the future of trading conditions and business capabilities, younger leaders exhibit particularly high levels of optimism, along with a commitment to continuous learning and investment in productivity-driving areas:

• When looking ahead to the UK’s economic outlook for this year, more than half (52%) of business leaders aged 18-34 felt positive about the outlook, almost double their older counterparts (28% of 55+ years)

• Half (50%) of younger business leaders plan to increase their focus on strategic planning during the next year - more than double the number of leaders aged 55+ (24%)

• Half (50%) of younger leaders plan to increase training and leadership skills in the next 12 months, double the number of leaders aged 55+ (25%)

Notably, leaders under 35 years are more inclined to take proactive steps to enhance their leadership skills, assess performance metrics, and refine their business operations. These actions are indicative of a continuous improvement mindset and are directly correlated with heightened productivity levels.

Across all five productivity areas measured by the PBI (leadership and management, training and HR, innovation, operational efficiency and technology adoption), the Confidence-Action Gap for older leaders (aged 55+ years) is double and sometimes treble what it is for younger leaders (aged 18-34 years). This gap – the discrepancy between the confidence of business leaders and their failure to take action to improve – was first identified by Be the Business in June 2023, in its G7 PBI report1.

This significant difference highlights how the positive behaviours and attitudes demonstrated by leaders under 35 can improve productivity and boost business performance. In fact, younger leaders reported that the following factors have improved in the previous 3 months:

• Business situation: 44% of younger leaders reported an improvement in their business situation and conditions, which is considerably higher than the 19% of leaders aged 55+

• Finances: 45% of younger leaders say the financial situation of their business improved over the last 3 months, compared to just 22% of business leaders aged 55+

• Training and leadership: 53% of younger leaders reported that their general management and leadership skills have improved in the last 12 months, compared to 28% of leaders aged 55+

• Headcount: 36% of younger leaders report an increase in the number of people they employ, compared to 8% of business leaders aged 55+

• Investing in measurement: 43% of younger leaders reported that they will increase their level of activity or investment in initiatives to measure staff and business performance; use data to improve their operations and measure and improve efficiency and productivity - whereas only 15%, 20% and 13% of leaders aged 55+ reported the same respectively

More broadly, this latest edition of the PBI shows that SMEs have had a strong start to 2024 and are positive about the future – 37% predict increased revenues over the next three months, the most positive forecast since the first edition of the PBI in 2021. And, despite a backdrop of continuing economic uncertainty, almost a third (30%) of UK small and medium-sized enterprises (SMEs) are optimistic that business conditions will improve over the next three months.

Anthony Impey MBE, CEO of Be the Business commented:

“The overall sense of optimism and confidence unveiled by the latest edition of the Productive Business Index is truly encouraging, as we see the endurance and perseverance of the UK’s small business leaders finally paying off after four incredibly tough years.

“Productivity is the pulse that powers economic growth and prosperity, and the improvements reported by younger business leaders demonstrates the impact that small actions can make.

“I am confident that if we adopt the same positive mindset as the next generation, we can overcome the confidence-action gap, boosting performance for the 5.5 million small businesses across the UK and improving their overall economic contribution.”

Launched in February, Be the Business’ inaugural manifesto sets out policy recommendations aimed at reducing the confidence-action gap significantly, by shifting to demand-side policies which mobilise and inspire business leaders to take action to improve productivity.

For the complete findings, download the Productive Business Index - Edition 7.

Notes to Editors

About the Productive Business Index

The Productive Business Index (PBI) monitors the performance, confidence and capabilities of micro, small and medium-sized businesses in the UK, which we define as businesses employing between 2 and 250 employees.

1. Research carried out by Opinium. Polling took place between 18 and 31 January 2024, with a sample of 1,135 senior decision-makers in UK business, weighted to be nationally representative.

2. Based on data from Be the Business, Be the Business G7 Productive Business Index (July 2023).

About Be the Business

Be the Business is the UK’s leading expert of small business productivity.

As an independent charity, we work to boost small business productivity, by connecting business leaders to world-class productivity expertise. To date, we have directly added £500m to the productivity of the firms it has worked with.

By combining in-depth research into different aspect of productivity, practical work with small business leaders and publishing our insights, we have become the UK’s leading authority of small business productivity.

Collectively we’re transforming the UK’s productivity, raising the value of businesses in our communities, safeguarding jobs and improving standards of living.