With prime minister Rishi Sunak expected to call an election this year, a new survey by Startups.co.uk reveals that most business owners would welcome a change in government. After some gruelling years of back-to-back crises that have seen a huge number of businesses close, there’s evidence of a hunger for change among those running small- to medium-sized businesses.

In a survey of 546 UK small businesses, Startups found that 58% of business owners surveyed believed that a change in government in 2024 would have a positive impact on their prospects. Just 9% felt it would have a negative impact.

Small and medium-sized enterprises (SMEs) in Scotland were the most likely to think a change in government would have a positive impact, at 74%. This is followed by those in Greater London, at 67%.

Business owners looking to the future

SMEs battled numerous challenges in 2023, from soaring inflation to labour shortages. Many of those still standing made it through only narrowly. The survey found that more businesses felt they had survived (51%) rather than thrived (42%) over the past year, making it no surprise many would welcome change.

From an industry perspective, technology and software companies are most eager for a change in government this year. Some 74% of firms in this sector told us that a change in government would be positive, which follows a year where a digital skills gap left many employers struggling to find job-ready talent.

The findings come off the back of a slim Autumn Statement last November, which left many business leaders calling for increased support for SMEs.

Policy can capture small business votes

Entrepreneurs hungry for change may just get their wish. According to a poll by YouGov released this week, the Labour party could be heading for a 120-seat majority.

There is still time for the Tories to turn things around in the eyes of the SME community, however. 54% of company owners told Startups that business incentives could affect how they would vote this year.

Should the Chancellor be able to pass a generous Spring Budget this March, with renewed access to capital and funding, the Conservative party could potentially swing business leader votes back to blue in time for the election.

Optimism on the up in an election year

Despite the appetite for a change in the nation’s leadership, our research uncovered a general sense of optimism among the UK’s small business owners. Those running newer businesses told us they felt the most positive about the future: some 74% of those founded in the past year are optimistic about 2024, versus just 47% of companies that launched in 2019.

However, the mood up and down the country was revealed to be starkly different. According to our research, in London, 73% of business leaders feel ‘highly optimistic’ about their prospects for growth. Meanwhile, Northern Irish business leaders revealed the worst sense of business pessimism of any region in the UK, with 20% saying they felt ‘not optimistic’ about prospects for the year ahead, versus just 7% saying the same in London.

In Scotland, 53% of business leaders told us they felt optimistic for the year ahead, while 13% felt ‘not optimistic’. For Welsh businesses, these figures were 58% and 4%, respectively.

The latest Labour Force Survey (LFS) figures released by the Office of National Statistics (ONS) were marked by labour market pessimism, suggesting a poor state of hiring in the UK.

Between October to December 2023, the estimated number of vacancies fell by 49,000, down to a total 934,000. This represents a 5% decrease since July to September of 2023, with vacancies falling in 12 of the 18 industry sectors examined.

However, all hope is not lost for job-seekers. In contrast to the doom and gloom, an exclusive survey conducted by Startups.co.uk has found that 80% of businesses aim to expand their workforce in the coming year. For anyone seeking a new role in 2024, this could prove welcome news amid less positive headlines.

Looking at the bigger picture

The ONS data paints a story of a stalling labour market as last year closed out. Vacancies continued to fall for the 18th consecutive quarter. This would mean the longest consecutive run of quarterly falls ever recorded. That said, there are still more UK job vacancies in the most recent quarter captured in the ONS survey than in the pre-pandemic period.

Experts claim the slowdown is owed to a general economic belt tightening and challenging business landscape, explained by rising inflation, the Ukraine war, and the cost-of-living crisis.

The industry sectors showing the largest quarterly decreases in the number of vacancies were wholesale and retail trade, which fell by 13,000 and 9,000 vacancies respectively.

“While the latest data is showing a decline in vacancies, there are a number of factors which need to be considered when analysing the state of the UK’s labour market,” warns Tania Bowers, Global Public Policy Director at the Association of Professional Staffing Companies (APSCo).

“First and foremost, the number of jobs noted by the end of last year is still higher than the levels recorded between 2005 and 2020, meaning that things remain relatively stable for now.”

ONS challenge of data capture

ONS data also needs to be approached carefully, as reduced survey participation rates have impaired how accurately results reflect the state of the labour market. The participation crisis hit a peak in October, when the ONS had to suspend its monthly publication of the LFS.

“There are still prevailing questions around the statistics which means this information shouldn’t be used as a standalone indicator of the jobs market,” notes Bowers.

Due to lowered participation, the ONS suggested alternative estimates of this month’s LFS, which indicated that the employment rate for those aged 16 to 64 actually increased marginally.

Asda has announced it will trial a four-day working week for some employees later this year in a bid to quell growing manager dissatisfaction.

The supermarket chain has faced growing dissent from employees, as rounds of cost-cutting has led to waves of resignations and planned strike action.

Recognising how the four-day week can boost workforce morale, Asda’s efforts appear to be a last-ditch effort to retain talent amid heightened staff turnover.

Managers plan walkout

Asda has experienced persistent staff turmoil since it was purchased by the billionaire Issa brothers in 2020. Manager complaints about poor working conditions have even led to walkouts.

Strike action was scheduled to take place at Asda Gosport, the firm’s Portsmouth superstore, from Monday 15 to Thursday 18 January.

However GMB, the union for Asda workers, confirmed last week that the action would be pushed back to this coming Friday 19 January following talks with the employer.

Nicola Nixon, GMB Regional Organiser said: “We are being very clear though that if sufficient progress hasn’t taken place in the meantime and Asda haven’t used this week wisely, our members will be out on strike beginning next Friday.

“Our members are bang up for this struggle. We will only delay this strike for so long.”

‘Toxic’ work culture

Much of the criticism is being levelled at Asda’s £2.1 billion dividends, which it awarded to shareholders in 2023, despite the rising cost of living contributing to an annual profit loss.

Union members have also complained about ill treatment at the hands of management. They describe wage errors which have apparently led to a ‘toxic’ work culture.

Asda has responded to the accusations from senior staff members by introducing a variety of flexible work options including a four-day week.

In a presentation given to employees in December, the company said they were making a “case for change” to stop talented store managers leaving their jobs, reports The Sunday Telegraph.

Four-day week: the new workplace detox?

In light of rising inflation, tensions have soared at UK workplaces. Big-name employers such as Transport for London (TfL) and Amazon have also faced strike action as workers campaign for higher wages to compensate for more expensive living costs.

Employee benefits such as the four-day week, where staff work reduced hours but receive the same wage, have become a crutch for employers seeking to placate team members in pay disputes.

Last year, an employee survey conducted by Startups found that 61% of those in favour of a four-day working week think it would ensure a better work-life balance.

Studies also suggest that shorter workweeks can actually lead to productivity gains, making it a profitable policy for businesses.

The trend isn’t fading this year, as a recent Startups survey found that 12% of UK businesses plan to adopt a four-day working week in 2024.

One of the UK’s biggest fashion houses has officially endorsed flexible working. Vivienne Westwood, which is estimated to employ around 250 workers, has adopted a hybrid work model with most employees working from home three days a week

The decision, communicated to staff at its Battersea headquarters, was first reported by The Times and is apparently part of a drive to become more sustainable.

The shift aligns with Startups’ findings that two thirds of businesses intend to implement flexible work this year, and is also likely to be motivated by talent attraction.

WFH better for the environment

Work from home (WFH) models are one of the simplest ways to slash transport emissions. Millions of cars off the road as people skip their commutes translates to a major reduction in greenhouse gases, air pollution, and noise.

The perks will resonate with the fashion industry. Criticism of the sector’s substantial carbon footprint has been considerable, triggering a rise in the number of eco-conscious challengers. Startups named three sustainable and upcycling clothing brands in the 2024 Startups 100.

With green set to be a key colour for the fashion industry this year, it’s only fitting that Vivenne Westwood (the firm known for its outlandish designs) be the one to set the bar.

The company’s influential founder Dame Vivienne Westwood, who died in 2022, was an outspoken climate change activist. Alongside WFH plans, the business said it will urge customers to buy less “to raise awareness of the environmental impact of overconsumption”.

Remote work green and lean policy

Going sustainable can come with a lot of added expenses for businesses. Eco-friendly materials carry a premium price tag due to smaller production volumes. Meanwhile, renewable energy sources often require an initial investment that can be daunting.

Vivienne Westwood’s decision to cut down on office usage is a savvy way to encourage a green transition, while still enjoying significant cost savings on high rent or lease expenses.

According to a recent Startups survey of 546 small firms, those based fully in-office were twice as likely to have laid off staff in 2023, compared to remote and hybrid organisations.

Employees happier at home

Research also suggests that hybrid work models can positively impact employee satisfaction and engagement, both of which are key concerns for today’s businesses.

Young people are one of the toughest nuts to crack. The fashion industry has a big audience in Generation Z, and the majority want sustainability to be a key priority for businesses.

The group is also increasingly regretful of careers that don’t allow them to work from home, making flexible working their most sought-after employee benefit when job seeking.

This could be why the same Startups survey found that 66% of respondents plan to adopt a flexible working model in 2024, as a way to supercharge hiring plans this year.

Flexible working could save your job this year. Exclusive data from Startups reveals that companies clinging to a fully in-office culture were twice as likely to have laid off staff in the past 12 months, compared to remote and hybrid-friendly counterparts.

Startups surveyed a representative sample of 546 UK businesses towards the end of 2023. The results show that 38% of fully in-office firms made job cuts last year, compared to 16% of remote teams.

Flexible work options are already among the most important employee benefits for those on the hunt for new jobs. Now, it seems there’s an additional job security incentive for seeking a hybrid or fully remote role this year.

Remote teams liberated from layoffs

Mass redundancies dominated last year’s headlines as employers like Meta, Google, and X (formerly Twitter) sought to save money.

This trend isn’t fading in 2024. The New Year has already seen tech giants like Amazon and Google announcing layoffs, Meanwhile, countries including the United States, Netherlands and India were reported to be among the top countries for sacking employees without warning.

Startups’ research pinpoints working from home (WFH) as the most cost-effective shield against layoffs. Shrinking or ditching office space means companies can save on one of their highest expenses while maintaining a stable workforce.

Even switching to a partly-remote model was found to have a positive impact. Hybrid firms, where employees were required to go into the office for two or three days per week, also showed an improvement on fully in-office counterparts with a layoff rate of 30%.

Richard Parris, Managing Editor of Startups.co.uk, comments: “It’s cold, it’s grey, and it takes you an hour to get there each morning. But, there’s yet another reason to resent your office as we begin 2024: it could cost you your job.

“Our research found that businesses allowing employees to work fully remote roles or hybrid setups have less risk of laying off staff, compared to those with a fully in-office culture.”

WFH better for mental health

Recent discussions on mandatory in-office policies have highlighted concerns about their impact on employees’ mental well-being.

Last week, WebMD’s parent company elicited groans with its cringeworthy, ‘back-to-the-office’ video. Google’s forced return to desk life has also fueled employee dissent.

Staff who refuse to give up work from home privileges have pointed to the improved work-life balance and mental well-being they achieve as a result. After years of debate, it seems their arguments are finally resonating with decision-makers.

This improvement to mental health doesn’t just extend to staff, but also to those running companies, too. The Startups survey also shows that 11% of business leaders in full-time office-based roles report lower mental well-being compared to those running remote or hybrid-working businesses.

Flexible working to explode in 2024

With even the C-Suite now experiencing the benefits of flexible working, 2024 could be the year the debate around remote versus office working is finally won.

In our survey, 66% of business leaders told Startups they intend to improve their flexible work options this year.

This includes 12% saying they were considering introducing a four-day work week, and 14% who aim to increase the number of days staff can work remotely.

Conversely, and in good news for employees, just 6% of employers said they intended to increase the number of days their staff were expected to attend the office in 2024.

Remote work could win the talent war

With job security concerns rising, the Startups survey suggests that companies offering remote or hybrid work models could be at an advantage when it comes to hiring right.

The findings are particularly relevant to employers because the survey also found that 80% of respondents are actively seeking to increase their staff over the next year.

Remote work could be the secret recruitment weapon for HR teams. It aligns with recent trends in the job market, where flexible work options are becoming increasingly important to employees.

Workers have even been found to prioritise home working arrangements over salary, suggesting that a hybrid or remote working policy could help firms source the best talent while keeping staffing and payroll costs down.

Parris adds: “If you’re on the lookout for a new role this January, the smart money is on applying for remote and hybrid positions. As well as the improved work-life balance and lower commuting costs, you may benefit from better job security, too.”

In a sign that employee engagement has hit a crisis point, reduced survey participation rates mean the UK government is now struggling to form effective labour policies.

Statistical response rates have been steadily declining over the past few years. In October 2023, the Office for National Statistics (ONS) suspended publication of its monthly Labour Force Survey (LFS) due to concerns about the accuracy of the data being gathered.

The shift mirrors a similar pattern in UK workplaces. Last year, a report from workplace consultancy Gallup found that just 10% of UK employees feel engaged at work – one of the lowest recorded in Europe.

What is the Labour Force Survey?

The LFS is a survey of private households in the UK. Every month, it tracks key indicators like labour participation rates to give employers and employees an up-to-date picture of the jobs landscape.

Forming the backbone of several crucial policy decisions, the data collected is then used to inform initiatives, such as flexible working measures and minimum wage adjustments.

But, with many households no longer bothering to fill in their responses, an ONS update today revealed it was still unable to source precise analysis of the UK work landscape.

This could have significant consequences. Inaccurate findings could lead to misdirected policies, potentially exacerbating existing problems or overlooking emerging trends. Underestimating unemployment could lead to a drop in support packages.

Organisations, too, rely on these insights to make informed decisions regarding hiring, training, and adapting to shifting workforce dynamics.

Staff engagement risks economic recovery

Governments and statistical agencies are taking note of the drop in contributors. Initiatives like increasing sample sizes and offering alternative participation methods like online forms are being explored.

However, declining staff engagement is not an isolated case. It reflects a broader trend of reduced worker participation across various sectors, fuelled by the rising cost of living and anxieties about job security due to recent high-profile layoffs.

As a result, many employees are switching off from full-time work and engaging in anti-work trends like ‘quiet quitting’.

Disengaged employees pose a concern for businesses. Their lower output, higher error rates, and poor morale can jeopardise a company’s objectives and competitive edge.

Additionally, the ripple effects of absenteeism and heightened staff turnover can create a vicious hiring cycle that further hinders growth potential.

In a business landscape where growth is crucial for survival, fostering a positive work culture and motivating staff through meaningful work is key to reversing this trend and ensuring growth in 2024.

Find over 50 ways to motivate employees in our guide to the top employee benefits and perks.

In a recent announcement, Google has revealed its plans to shutter basic websites created through Google Business Profiles. 

The affected sites, specifically those ending in business.site and negocio.site, will face closure in March 2024, with Google redirecting customers to their respective Google Business Profiles.

Google advises users to update their Google Business Profile as soon as possible, and to change to a new website domain.

Act now or face the “Page not found”

After June 10, pages will no longer even be redirected. 

Visitors attempting to access your Google Business Profile website will be met with a discouraging “page not found” error, as the website will have been inactive for around three months.

Google emphasises: “If you’d like to continue having a website for your business, consider creating a new website using other tools and updating your Business Profile with the new website address” to avoid inconvenience.

The quest for new website builders

In their official statement, Google also recommended exploring alternative website builders, emphasising the importance of a seamless transition for maintaining an active online presence.

Google sold its Domains business to Squarespace in 2023, and has been redirecting Google Domains customers to Squarespace ever since. But interestingly, in its list of the six website builders they officially recommend, Squarespace only snags second place, behind Wix. 

The list also features GoDaddy, Google Sites, Shopify, and WordPress.

The clock is ticking – update your Google Business Profile by March to fight the 404 and keep your online presence intact.

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Hollywood actor, Jodie Foster has bemoaned that young people don’t know how to write business emails anymore, in comments to The Guardian.

Describing younger colleagues as “really annoying” to work with, she called out their poor grammar. “In emails, I’ll tell them ‘this is all grammatically incorrect, did you not check your spelling?’ And they’re like, ‘Why would I do that, isn’t that kind of limiting?'” she explains.

Foster joins other employers and managers who criticise Gen Z for their new ways of working, which are reshaping how businesses communicate.

Are young workers killing corporate culture?

Corporate culture can be challenging for newcomers to adjust to. That’s especially true today, when organisational cultures are being re-defined in an increasingly digitised world.

Trends such as flexible working, which took off at the same time that many Gen Zers first entered the workforce, have led to workplace debates about everything from remote work attire to should employees answer calls outside work hours.

Those who think young people are not following these business rules correctly feel irritated. 16-25 year olds have been labelled the anti-ambition generation, referring to their supposedly entitled views about how much freedom they should have at work, and their belief in pushing back against always on culture.

One area that has garnered particular attention from commenters – now including Jodie Foster – is the topic of corporate speak. Gen Z, who grew up in the internet age, are more used to instant messaging and text speak.

A recent study by Sky found that young people now habitually ignore phone calls, with over half even blanking their parents.

The age group’s struggles to understand and adopt corporate talk could be one reason why young people are now being viewed as rude or entitled. By shunning traditional communication channels, Gen Z employees are getting lost in translation.

Is Slack making us stupid?

The generational language divide has been worsened by the switch to messaging platforms post-COVID. Whereas the majority of business comms were previously done over the phone or by email, many firms now rely on apps like Slack, Microsoft Teams, and even Whatsapp.

As a result, an emoji-filled, informal way of communication has trickled into UK workplaces.

Traditional salutations or sign-off greetings are being replaced by ‘x’ or even GIFs. Spelling and grammar has gone out the window as online slang and abbreviations take over.

While older channels of communication still exist – and are popular with customers – the lines between what is and isn’t acceptable business language are increasingly blurred.

Informal communication

There are plenty of benefits to a more relaxed communication style. While formal talk can make those who are unfamiliar feel left out, encouraging coworkers and managers to speak to each other more casually can bridge gaps and create a sense of belonging.

Off-the-wall chats, jokes, rumours, gossip, and feedback are all examples of informal communication styles. These help to build rapport between colleagues and enable the expression of emotions, ideas, and personal views – all of which are required for effective problem solving and collaboration.

The advantages are particularly pertinent to Gen Z, who typically populate junior roles and are less familiar with the ins and outs of corporate culture.

Don’t say ‘regards’ to the business email yet

Foster’s complaint that young people can’t write business emails may be fair criticism. But as more businesses embrace an informal communication style, does it really matter?

In a word, yes. If colleagues are using different tones, communication channels, or slang words to work together, this could negatively impact teamwork.

Good employee engagement relies on workers feeling connected, which means it is more important than ever for companies to create inclusive workplaces where everyone feels their preferred communication style is valued and respected.

The key is to strike a balance between formal and informal communication to give employees a chance to familiarise themselves with both.

For example, channels like emails or meetings are usually reserved for legal, contractual, or policy-related content. Informal channels are better for bonding through social messages, collaborating with colleagues, and resolving urgent or simple matters.

Bosses should educate staff on when it is and isn’t appropriate to use formal or informal speech. Encourage them to tailor their speech to the environment, audience, message, and feedback. And, if they ever work with Jodie Foster, tell them to find a spellchecker.

Employers are being warned to pay close attention to older worker absences this January, as research finds staff aged between 50 and 64 are the most likely to take sick leave.

Data from the Office for National Statistics (ONS), analysed by claims.co.uk, found that older workers are 125.9% more likely to call in sick than Gen Zers, throwing cold water on the stereotype that young people don’t work as hard as senior colleagues.

Winter bugs and cold temperatures might not be to blame. The report attributes a significant portion of absences to mental health struggles, with 12% of UK working days reportedly being lost due to burnout, stress, depression, and anxiety each year.

Sick of 2024 already?

Every year, the UK workforce loses on average 146.6 million days due to sickness, which equates to approximately 4.5 days per worker – or almost a full working week.

January is often the worst month, as employees deal with both the flu season and the holiday blues.

The study by claims.co.uk shows that workers aged between 50 and 64 lose more days at work than any other age bracket, with an average of 56.3 million total days lost per year. Per worker, this works out to approximately 6.1 lost days annually.

Interestingly, the 16 to 24 age group have only lost an estimated 10.2 million days per year – which is 65.2% lower than the average. This equals 2.7 days lost per worker each year.

Sick days sap productivity and fracture teams

Employees taking sick leave naturally leads to a drop in productivity, as fewer team members means less resources to complete their work. This can have a knock-on effect, as co-workers are forced to take on other people’s tasks, increasing their stress levels.

Having a high percentage of specifically older employees off work is detrimental in other ways. Senior staff absence also disrupts mentorship and knowledge transfer, impacting younger employees’ development and succession planning.

If older workers are increasingly away from the desk, younger staff members will feel unsupported. Meanwhile, management tasks are more likely to fall by the wayside.

Could hybrid working = better health?

Implementing flexible work policies can improve overall employee wellbeing. Staff who work from home have been shown to experience better work-life balance and improved morale. This is especially true in winter as the days get shorter and commutes get colder.

Permitting ill staff to work from home will also reduce the risk of ‘presenteeism’ (where staff come into work even when they are sick) and prevent the spread of disease in the office.

Startups recently surveyed 546 businesses about their plans to introduce an alternative workplace model in 2024. The results show that 66% of firms plan to introduce a flexible work policy like remote working or even a four-day week this year.

Internet Brands, the company that owns major internet names like WebMD, has caused an upset after an internal video telling staff to give up remote working was published online.

Striking a balance between bizarre and blackmail, the full video sees CEO Bob Brisco warn employees who are working from home that he will be “more serious” about forcing them back to the office.

The film’s messaging has sparked backlash from employees, who are increasingly embracing flexible work models as a way to improve work-life balance.

WebMD’s messaging misfire

The full Internet Brands video, entitled “A Message From Company Leadership” was published on the firm’s public Vimeo channel earlier this month.

In classic corporate format, it features a variety of office stock images, workers laughing at meeting tables, and shots of panicky-dancing employees giving their best impressions of not being held at gunpoint.

Following the significant attention the video has received, the company has since published a new introduction defending its tone and style. “For the record, our return to office policy is a hybrid one,” the new line reads. “[And] corporate videos are corporate videos!”

Nonetheless, this latest attempt at crisis control does little to mitigate the video’s threatening subtext of ‘back to the office, or else’.

Far from displaying flexibility towards employee demands, Internet Brands’ HR team tells viewers, “your manager will be in touch shortly about how this will be implemented and tracked”, suggesting that employee attendance will be monitored and supervised.

“We aren’t asking or negotiating at this point. We’re informing,” Brisco adds, while posing in front of a green-screened office backdrop.

Office return: both sides refuse defeat

Internet Brands is not the first company to attempt a rewind on remote work policies. Salesforce and Amazon are among major companies that have also stepped up their return-to-office policies despite a backlash from some employees.

Last year, Google said it would start incorporating office attendance into performance reviews. Even Zoom, the company whose video conferencing software made WFH possible, has asked employees to come into work two days a week.

Despite their best efforts, employees have remained steadfast in their refusal to reintroduce the daily commute. As a result, 80% of employers reported they regret earlier return-to-office plans in an August survey.

Remote working to remain popular

Most firms have now accepted the inevitability of hybrid and remote work policies, in light of the damage to talent retention and employee morale their loss could wreak on the workforce.

Startups surveyed 546 business owners at the end of last year about their current and future workplace models. Based on the results, 66% of respondents plan to introduce flexible work in some format this year.

Tellingly, 14% of UK businesses plan to increase the number of days that their staff can work remotely next year, making it the clear favourite amongst business owners and their staff.

Just 6% of companies surveyed said they planned to require staff to come into the office more days per week. This puts WebMD in the minority and suggests that employers are easing off on the ferocity of last year’s return-to-office debate.

Forget the AI frenzy: small businesses now say customer relationships are more important for growth than new technologies, as research suggests repeat customers had the biggest impact on success last year.

Startups asked 546 small businesses about the factors that led to them “thriving” overall in 2023. The most popular response was strong customer relationships, as chosen by 54% of those surveyed. 

Having a talented and motivated workforce (40%) came in as the next most important factor, further solidifying the focus on human-centric strategies.

Product development and innovation, often associated with AI, was listed as the sixth most popular choice with 29% of votes. The results signal that, despite its growing popularity with tech giants, AI has yet to become a fundamental business tool.

Loyal customers top business wishlist for 2024

Tight customer relationships was the clear favourite amongst small business respondents, ranking as the number one factor that attributed to business success in 2024.

The results show that servicing customer needs beats out effective marketing and brand visibility as the most valuable business strategy, confirming that satisfied buyers have a bigger lifetime value than new sales leads and acquisitions in customer service.

Strong customer relationships also appear to give businesses a financial edge over competitors. Interestingly, regular customers were shown to have a more positive impact on business performance than cost-cutting measures (21%) or gaining funding (22%).

The results come despite a cost of living crisis threatening consumer confidence. They suggest that customers are still choosing to spend money with firms that are taking steps to improve their customer retention, such as introducing loyalty schemes and programs.

Human touch not yet replaceable

While investment in AI is still seen to be important, Startups’ research indicates companies understand new products need a foundation of strong customer relationships and a capable workforce to thrive.

Building trust and rapport with customers requires human empathy and emotional intelligence, two areas where AI still struggles. Indeed, research shows that an AI trust gap still persists in the UK.

The impact of AI on business communication is still yet to be fully understood. Until the tech is fully embraced by the wider public, business leaders shouldn’t be too quick to write off more traditional methods of B2C contact such as contact centres and telephone calls.

AI brings positive outlook to UK businesses

Despite the findings, Startups’ data also found that businesses that firms who are preparing to embrace AI this year feel better positioned for future growth.

According to the results, a mere 2% of those expecting a high level of AI disruption said they feel pessimistic about their growth prospects.

Meanwhile, 32% of those who anticipate no disruption display negative sentiment towards the future, suggesting that the business landscape could be about to shift rapidly as UK customers increasingly adjust to the rapid emergence of AI startups and software this year.

After entering bankruptcy protection late last year, WeWork might have been hoping to leave its money woes behind this year. That ambition has been made harder by recent financial results, which indicate sluggish demand for its UK offices.

The UK arm of the coworking giant, WeWork International, posted a loss of £110 million in 2022, according to figures published by Companies House. It also owes £731m to parent company, WeWork US.

The drop in profits is considerably less than the £153 million loss it made the previous year. But office experts are warning that the potential collapse of the provider could create chaos for UK customers in an already competitive commercial property market.

WeWork’s profit paradox

WeWork’s financial difficulties have been well reported since the company’s failed IPO back in 2019. The brand expanded at breakneck speed during its early growth stages, racking up years of losses that saw it forced to file for Chapter 11 in the US last November.

This has combined with a slowdown in demand for long-term office rentals, triggered by the pandemic and worsened by the rise in hybrid and remote working policies.

WeWork US’ bankruptcy proceedings do not impact WeWork International. But the business has warned that the group’s wider trading position is a growing concern for its extensive UK portfolio.

The firm said that “the recent macroeconomic environment has caused higher member churn and weaker demand than contemplated under the group’s business plan.”

Will Kinnear is founder of HEWN, the UK’s leading specialist flexible workspace agency. Kenner describes his concern at the recent news regarding WeWork International’s profit losses.

“The impact of Chapter 11 in the US will undoubtedly impact the UK business who owe the brand some £731m,” he stresses. “Something has got to give.”

Londoners most at risk

WeWork’s strategy has so far been an attempt to consolidate their position in the market. By closing poor performing sites, and moving members to more profitable workspaces, they intend to negotiate lease payments with landlords and reduce their overheads.

In the UK, this will have the biggest impact on firms based in London coworking spaces. The capital is one of WeWork’s biggest markets globally, accounting for 89% of its UK offices.

Discussing the impact a WeWork collapse could have, Natasha Guerra, CEO of Runway East says it could create short-term chaos as companies flock to alternative neighbouring providers.

“It could also create some chaos for customers – there’s simply not that much flex space free in London to accommodate all WeWork members easily.”

Nonetheless, the London coworking market has boomed in the past year, with more options than ever cropping up to service startups and small businesses.

“WeWork’s collapse, if it were to happen, would create opportunity for UK flex operators who would look to take over their better buildings,” Guerra adds.

Can WeWork cater to the new workplace?

There are still signs that WeWork closed 2023 with a stronger performance. On-demand spaces, a type of flexible payment option which offers “drop-in” workspaces for members, were up 33% in November from a year earlier in the capital.

The trend is likely a result of more companies embracing flexible working for 2024. A recent survey by Startups found that 66% of SMEs will adopt a flexible work model this year.

Still, the increase may not be enough to take WeWork out of the red – particularly now that its partnerships with landlords have become bruised.

In October, the firm briefly moved its occupiers at The Bower, in London’s Old Street to alternative accommodation before managing to strike a last-minute deal with landlord Helical.

Many members have stuck with the coworker throughout its troubles. Should more key properties close, they will likely get cold feet.

“WeWork is a strong brand – which has been its liferaft, and there are customers who are loyal to it. But how loyal will businesses be when they cannot rely on their spaces still being available to them?” Kinnear probes.

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