A new survey of family, privately owned, and owner-managed businesses across the UK highlights the recruitment and cost challenges facing firms in the North East.

The 2025 Family, Privately Owned and Owner-Managed Business Survey Report by Armstrong Watson, Accountants, Business and Financial Advisers, received a record 858 responses nationally.

In the North East, recruitment is a particularly acute problem, with 46% of business owners finding it ‘very difficult’ to hire new staff, significantly higher than the national figure of 32%. A lack of skilled candidates is a primary factor. In response, businesses are adopting flexible working, enhancing benefits packages, and over a third are now using agencies to support recruitment.

Like the rest of the UK, North East businesses are struggling with increased employment costs from rises in Employer National Insurance and National Minimum Wage rates. These increases have a disproportionate effect on sectors with lower wages, such as hospitality, retail, and care.

Almost half of North East business owners (47%) cite an ‘increase in costs impacting business viability’ as the main hurdle to growth over the next three years. This is closely followed by ‘changing regulations’ at 38%. A third of businesses (34%) also view ‘having sufficient funds’ as an obstacle to growth, which is higher than the national figure of 26%.

Paul Dickson, Chief Executive and Managing Partner at Armstrong Watson, said: “These businesses are not just economic contributors; they are woven into the fabric of our communities. This year’s survey highlights the resilience and adaptability of business owners who continue to innovate, invest and plan for the future – even in the face of rising costs, recruitment challenges and economic uncertainty.”

On the technology front, a third of North East businesses still rely primarily on manual processes, and 31% remain unconcerned about the threat of a cyber attack.

Regarding long-term strategy, only 22% of North East business owners have written down their growth plans and shared them with stakeholders.

Mr Dickson added: “Having a strategic plan not only guides long-term goals but also drives more effective short-term planning and decision-making. We are committed to supporting businesses through every stage of their journey – from growth to succession.”