SME March 2026: SME sentiment collapses, but growth ambitions remain

Updates to this research are published monthly.

SME March 2026: SME sentiment has weakened significantly, reflecting rising geopolitical uncertainty, cost pressures and a deteriorating near term outlook.

However, growth ambitions and investment intentions remain resilient, highlighting a clear disconnect between current conditions and future expectations.

Near term conditions are deteriorating

This divergence suggests SMEs are looking beyond short-term disruption and maintaining confidence in their longer-term prospects. That said, near term conditions are worsening. Revenue expectations are softening, cost pressures are increasing, and funding behaviour is becoming more defensive, indicating that further pressure is likely before any recovery materialises.

SMEs are shifting to efficiency-led growth

In response, SMEs are increasingly shifting toward an efficiency led growth model. Rather than expanding headcount, businesses are focused on doing more with less, streamlining operations and leveraging technology to improve workflows and productivity.

This is reflected in softer employment and wage expectations, alongside continued investment in IT and equipment. These investments are enabling growth without a corresponding increase in labour or fixed costs, allowing businesses to scale more efficiently. At the same time, ongoing investment in marketing signals a continued focus on demand generation and longer-term growth.

Conclusion

In summary, SMEs are not pulling back from growth, but are recalibrating how they achieve it, prioritising productivity, efficiency and capital light expansion to grow revenue while containing costs and limiting reliance on external funding. SMEs are navigating a more challenging near term environment, with weakening sentiment, softer revenue expectations and rising cost pressures. However, rather than pulling back, businesses are adapting by shifting toward a more efficient growth model. By focusing on productivity, targeted investment and disciplined cost management, SMEs are positioning themselves to sustain growth while managing risk, even as conditions are expected to remain pressured in the short term.

Please click the link below to access the full report including subgroup analysis by industry sector, size of business and state. Fifth Quadrant and Ovation Research publish monthly updates of this SME market research here. For any questions or inquiries, feel free to contact us here.

SME December 2025

SMEs remain resilient