New research from Novuna Business Finance indicates that small businesses in the construction sector are reliant on the UK market for growth, with a reduction in the percentage of enterprises looking to expand into new overseas markets.
Recent sector growth forecasts
For more than a decade, the Business Barometer study has tracked the percentage of small businesses that predict growth each quarter. Findings for the last two years show that the construction sector has usually trailed the national average, and most other sectors, typically with only around a one in four or one in five predicting growth in any given quarter.
|
|
Q3 2023 |
Q4 2023 |
Q1 2024 |
Q2 2024 |
Q3 2024 |
Q4 2024 |
Q1 2025 |
Q2 2025 |
Q3 2025 |
|
UK average |
32% |
32% |
33% |
30% |
35% |
35% |
33% |
29% |
26% |
|
Construction |
24% |
21% |
23% |
15% |
36% |
29% |
26% |
19% |
24% |
Opening up new markets
Despite the subdued quarterly growth forecasts, small business owners in the sector have, for many years, been consistent at looking to secure future growth, and for many, opening up new markets to reach new customer segments has always been key to this. In fact, figures for summer 2025 revealed a new sector high, in terms of the number of enterprises looking to open up new markets.
|
Q3 2017 |
Q1 2020 |
Q3 2022 |
Q3 2025 |
|
|
% looking at new markets |
72% |
75% |
69% |
82% |
Home or abroad?
In stark contrast to the European focus of manufacturing enterprises, in the construction sector the focus was almost purely focused on the domestic market – opening up new customer segments and regional markets within the UK. Whilst, nationally, Novuna’s data shows small businesses pulling back from Europe and the USA, the figures for construction are extreme, with 96% of small businesses reliant on the UK market.
The Government’s commitment to investing in infrastructure and house building may be welcome news for the construction sector, but relying so heavily on one market for growth also carries risks.
Percentage of small businesses predicting growth opportunities from the domestic UK market, by industry sector
|
Q3 2025 |
Q3 2022 |
Q1 2020 |
|
|
Construction |
96% |
94% |
90% |
|
Retail |
86% |
76% |
84% |
|
Manufacturing |
67% |
68% |
75% |
|
Transport |
64% |
71% |
81% |
|
IT / Telecoms |
63% |
79% |
71% |
|
Hospitality |
57% |
87% |
73% |
|
Agriculture |
54% |
88% |
94% |
Europe falling
Whilst construction by its nature would be expected to have a predominantly UK customer base and supply chain, Novuna’s data over time demonstrates that before the pandemic around a fifth of construction small businesses did business and saw growth opportunities with mainland Europe. Diversifying business across multiple markets also helps to spread risk, which itself is part of managing a growth strategy. The decline of European investment for the sector since 2020 has been significant.
|
Q1 2020 |
Q3 2022 |
Q3 2025 |
|
|
EU |
17% |
4% |
9% |
|
Non-EU |
6% |
3% |
2% |
USA a non-starter
The USA has probably always been too far away to be a viable growth market for small businesses in the UK construction sector. That said, supply chain partnerships, business referrals and raw materials can make it a viable market for many UK sectors. Relative to other industry sectors, construction is the sector that by some distance is least likely to see growth opportunities in the USA.
|
Q3 2025 |
Q3 2022 |
Q1 2020 |
Q3 2017 |
|
|
IT / telecoms |
27% |
22% |
31% |
28% |
|
Retail |
19% |
22% |
21% |
17% |
|
Manufacturing |
17% |
24% |
45% |
27% |
|
Transport |
5% |
8% |
17% |
28% |
|
Hospitality |
3% |
3% |
14% |
21% |
|
Construction |
1% |
2% |
5% |
3% |
Chris Powell, Head of Sales at Novuna Business Finance comments: “At face value, The Government’s grand plan to build 1.5 million homes by 2029 should be well received by small businesses in the construction sector – and be sufficient to suggest there’s no need to look at market opportunities in other countries.
“But there’s also an implicit risk with relying on any single market for growth, because small businesses are completely at the mercy of a single market. Recent news from the sector underlines this, with reports of a decade-low in UK housebuilding. Rising material costs and uncertainty surrounding landfill tax are both possibly factors at play. In many respects, the longer-term growth outlook of small businesses in the construction sector will remain heavily linked to the success of the Government’s house-building plan and the effectiveness of Budget announcements in supporting small business confidence.”
“Aligned with the sector’s focus on the UK market is a focus on managing costs – chasing late payments, taking steps to improve cashflow and there’s also been an upturn in the percentage of construction small business owners that are using this uncertain period to reassess their finance commitments to free up working capital – a trend that is up across six industry sectors this quarter. At Novuna Business Finance, we provide flexible, tailored financial solutions to help established small businesses plan for long-term growth and transformation– enabling them to turn the corner and realise their full potential.”