Bold Moves for 2025: Matthew Hayes on How UK Entrepreneurs Can Thrive Matthew Hayes, Managing Director at Champions (UK) plc, discusses the economic headwinds UK entrepreneurs will face in 2025, the role of innovation and AI in navigating these changes, and the opportunities for growth amidst contraction.

With economic uncertainty looming over the UK in 2025, Matthew Hayes, Managing Director of Leicestershire-based brand agency Champions (UK) plc, offers a masterclass in thriving through change. In this exclusive Entrepreneur UK interview, Hayes delves into the power of innovation, smart talent management, and financial resilience - key strategies every entrepreneur needs to drive long-term growth in a fast-evolving business landscape.

Discover his insights and actionable advice to stay ahead in turbulent times.

What trends do you expect to drive UK entrepreneurship in 2025?
I think in business as a whole, entrepreneurs will face quite a few headwinds in 2025. It seems to be that that sector of society are being targeted more than ever by way of taxation and a reduction in incentive by way of capital gains tax, which I think will continue to get worse.

On a personal level, on a business level, the government is talking growth. I think a lot that growth is going to be from the expenditure of tax revenues into public sector.

Inflationary pressures, combined with high interest, high interest rates and low confidence, means that people's capacity for disposable income and expenditure is reduced, and therefore, I think we're, in general, going to see a contraction. So you've kind of got this personal disincentive sensitisation and this macro constriction.

How are you preparing for economic changes in the new year?
I think from our personal experience at Champions and the clients we work with, and from all of the sort of varying entrepreneur networks we're involved in: times of challenge, change and hardship, are actually really favourable hunting grounds for entrepreneurs, because what tends to happen is, when there is a time of contraction or recession, businesses typically look at cost saving, and that cost saving is typically in sales marketing, new business acquisition and innovation.

Those that invest in innovation, sales marketing, expansion growth when everybody else isn't, you get that much more per pound spent by way of market share, by way of noise.

I think it will show entrepreneurial-led businesses have a great opportunity to actually significantly shift market share, shift its access and reach. While that might not immediately pay down to profit in the short term, in the long term it will actually be a really strong investment.

Whilst on the face of it, it's going to be a negative, challenging period. I think actually it nets a huge opportunity for entrepreneurs.

How will AI and automation impact your business strategy?
It's already been sewn into our business as fundamental, both externally and internally, which we focused a huge amount on, particularly in the last two years or so.

I think you've got probably the most innovative business environment you've ever had. With the true accessibility of AI, I think it's a fantastic opportunity for entrepreneurs to really leverage it. One, to drive efficiencies in their business, but also two, to drive change and innovation at speed.

So I think we're going to see change happening at a rate of knots never seen before, and I think we're going to be able to do that much more with the same, if not less, capital expenditure, just by the efficiencies it offers those that are prepared to embrace it. And again, I think the entrepreneurial market place is going to be far more receptive to it than institutional or blue or a blue chip, large PLC, and it's just yet another opportunity for innovation to win out. But in short, it will be across everything we do, and it will be considered in every decision we make.

What's your approach to securing funding as we enter 2025?
We continue to be self-funded. When we set out in 2003 we had a an objective that we were going to achieve that in a way that was self-funded through brick by brick, managed sustainable growth, where growth would be funded from profits, not debt. And we have successfully done that for the 22 years in which we've been trading, much actually against the landscape of the time.

For most of that, cost of borrowing has been extremely low. And as such, there is a strong argument to say that we've actually missed out on well over a decade of cheap money. But the reason we did it, it was because it allowed us to make decisions that were right for our business and right for our clients on a long term basis, where we were answerable to nobody other than ourselves. We have never been answerable to the bank who could influence our decision-making based on the level of debt or size of overdraft, and therefore the independence that being debt-free has given us is something that we have cherished throughout the last two decades or so.

Now, when interest rates have grown and grown fairly dramatically, it actually means our position is infinitely stronger, because a lot of fairly good businesses around us are going to find the next two to three years a challenge just to fund their debt position, because a debt position that was viable at 1.75 to 2% is now potentially 7% and might even grow even more.

You know, if you're on small margins, that's a difficult position. So while they're focusing on just funding the debt, we're going to be focusing on investing in growth, innovation and development.

What challenges do you foresee with talent management in 2025?
Put simply and from a macro governmental position, talent has never been more expensive.

We're in a fortunate position where actually our growth, our continued year-on-year growth, will sustain the workforce that we have currently and we expect that we will, much against the kind of the direction of travel of everybody else in the economy, we actively are looking at increasing our talent pool for 2025.

But in short, we expect to find probably the best quality of talent available in 2025 as has been for five years or more. I think they are likely to start to adjust their salary expectations, because I think with basic supply and demand economics, if all of a sudden there is a reasonable increase in supply and a contraction of demand, it's going to force prices down. I think that's going to be very much the case through 2025 and definitely into 2026 as far as talent is concerned.

That's before you consider the likely impacts that AI plays. I don't think AI is going to be the huge drive in mass redundancies, some doomsdayers think. But if your cost base per capita increases 20-25%, it becomes compelling to look at opportunities to replace, certainly the mundane, the repeatable and the inefficient. So I think those in low end fairly automated, repeatable, basic task jobs are going to struggle.