There is a particular quality to the conversations we are having with business owners at the moment. It is not panic. It is not resignation.
It is something closer to a controlled, careful fatigue. The kind that comes not from any single blow but from absorbing several things simultaneously while trying to keep your concentration on the work in front of you.
Some of what is driving that feeling is familiar territory. Rising costs, cautious customers, pressure on margins. Owners of well-run businesses in Richmond and across South West London have navigated versions of this before, and most of them have done so with more composure than they give themselves credit for.
But March 2026 has an unusual density to it. The energy shock triggered by the conflict in the Middle East has pushed business energy costs to levels not seen in years, and the situation is still unresolved. A cluster of regulatory and tax changes is landing simultaneously in April, each individually manageable but collectively demanding. Hiring has become a cautious and sometimes demoralising exercise. And threaded through all of it is a diffuse but persistent anxiety about artificial intelligence, whether to act on it, how quickly, and what the cost of hesitation might be.
This article does not attempt to solve any of these things. What it attempts to do is name them clearly, interpret what they actually mean for businesses of the kind we work with across Richmond, Twickenham, Kew and the surrounding area, and offer a frame for thinking about them that is slightly calmer than the one available from the financial news.
What you will learn
- Why the energy shock from the Iran conflict is a direct and immediate cost pressure for businesses without a price cap, not a background economic story
- How the compounding of several simultaneous pressures creates a distinct kind of fatigue that is different from ordinary business stress
- What the AI anxiety that many owners are carrying actually reflects, and why the instinct to defer is neither irrational nor permanently safe
- Why hiring caution in 2026 is a rational response to a genuinely changed environment, not simply timidity
- What the current moment looks like specifically for Richmond’s concentration of professional services, technology and consumer-facing businesses
- How advisors are helping owners find a position of deliberate steadiness rather than reactive decision-making
When everything arrives at once
Business uncertainty is not new.
Any owner who has run a company through the 2008 financial crisis, through Brexit, through the pandemic and the inflation surge that followed it, knows that uncertainty is, in a sense, simply the operating environment. You plan around it. You build reserves against it. You make decisions with incomplete information and refine them as things become clearer.
What makes the current period feel different is not the severity of any individual problem. It is the simultaneity. In conversations with clients across Richmond and the surrounding area over recent weeks, the phrase that comes up most often is not ‘this is terrible’ but ‘I can’t quite get ahead of it.’
That distinction matters. It describes not a catastrophe but a rhythm problem, a sense that the pace of incoming pressures has outrun the capacity to process and respond to each one properly.
A useful way to understand why this happens is to think about cognitive load in a business context. Any individual challenge, a contract that needs renegotiating, a key member of staff who is unsettled, an energy bill that has arrived higher than expected, is something an experienced owner can address methodically. They have dealt with variants of each before. The difficulty arises when five or six such challenges arrive in the same quarter, each requiring attention, each carrying some financial implication, none of them fully within the owner’s control. The mental bandwidth required to track all of them simultaneously is genuinely significant, and it is compounded by the fact that some of the most pressing ones involve forces that are entirely external to the business.
Survey data reflects this. Research conducted in early 2026 found that 79 per cent of small business owners in London described themselves as losing sleep over the challenges facing their businesses, with economic volatility and geopolitical uncertainty the dominant concerns.
What is notable about that figure is what sits alongside it. Roughly 40 per cent of the same owners still expected their businesses to grow during 2026. These are not contradictory positions. They describe a business owner who is anxious but not defeated, who can see a path forward but is aware of how many things could obstruct it.
That combination, clear-eyed concern alongside genuine commercial confidence, is, in our experience, exactly the right posture for this moment. The errors tend to happen at the extremes: the owner who dismisses all of it as noise and carries on without adjustment, and the owner who becomes so focused on what could go wrong that they stop making the decisions that would help. The advisory conversation that is most useful right now is usually the one that helps a business owner find the point between those two positions, and stay there.
The energy shock is not a background story
On 28 February 2026, US and Israeli forces launched coordinated strikes against Iran. Whatever one’s view of the geopolitical dimensions of that conflict, its commercial consequences for UK businesses arrived quickly and materially.
Within days of the initial strikes, wholesale gas prices had risen by over 50 per cent. The Strait of Hormuz, through which roughly 20 per cent of the world’s oil and gas normally passes, became effectively impassable to commercial shipping. Qatar’s major LNG production facilities were hit by Iranian drone strikes and halted output. By mid-March, UK next-month gas was trading at levels not seen in years, and forward energy contracts for summer and winter 2026 had moved sharply.
For businesses, the critical point is one that is easy to miss if you are accustomed to thinking about energy in domestic terms. There is no price cap for commercial energy.
The Ofgem price cap that shapes public conversation about energy costs applies only to households. Businesses negotiate their own contracts directly with suppliers, and those contracts are priced against wholesale markets. When wholesale markets move 50 per cent in a week, the exposure for a business that is out of contract, or approaching a renewal, is direct and immediate. Energy brokers and suppliers have, in several cases, suspended the offering of new fixed-price contracts while the wholesale market remains volatile, leaving businesses in the uncomfortable position of having no certainty about what their next contract will cost, or when they will be able to fix it.
Why there is no safety net for business energy costs |
Domestic consumers in the UK are protected by Ofgem’s energy price cap, which limits what suppliers can charge per unit of gas and electricity. This protection does not extend to businesses. Commercial energy is an unregulated market: prices are set by contract between the business and its supplier, with those contracts priced against wholesale energy markets. When wholesale prices spike, as they have since late February 2026, businesses on variable tariffs or approaching a contract renewal absorb those increases in full. For a business with significant energy costs, such as a commercial kitchen, a manufacturing unit, a gym or a large professional services office, this can represent a material and sudden increase in the monthly cost base.
For many of Richmond’s businesses, particularly the professional services firms, consultancies, technology companies and financial advisers that make up a large share of the borough’s commercial base, energy is not the dominant cost line. A 40 or 50 per cent increase in the electricity bill is uncomfortable but not existential. It tightens the margin on an already pressured P&L without immediately threatening the business.
The picture is significantly different for Richmond’s hospitality and leisure sector.
Restaurants, cafes, small hotels, fitness studios and the independent operators that give the town centres of Richmond, Twickenham and Kew their character run on thinner margins and have higher energy intensity in their operations. They are facing this energy shock at exactly the moment that the 40 per cent retail, hospitality and leisure business rates relief ended on 31 March 2026. Richmond Council has publicly lobbied the government to extend relief to independent cafes, small hotels and restaurants, describing them as the lifeblood of the borough’s economy. Some of these businesses are managing three or four simultaneous cost increases at a moment when consumer spending is cautious and footfall in many high streets remains below pre-pandemic norms.
Even for businesses not directly exposed through energy costs, the second-order effects are worth understanding. Rising energy costs feed into the prices charged by suppliers. They increase the operating costs of logistics companies, which pass those costs through in delivery charges. They contribute to inflationary pressure that complicates the Bank of England’s decisions on interest rates, and they reduce consumer disposable income in ways that eventually affect spending across most sectors.
The energy shock is not a story that only applies to manufacturing or hospitality. It is a story about the cost of doing almost anything in the UK economy, playing out at a moment when most businesses have limited capacity to absorb further pressure.
Our role here is not to predict what happens next in the Middle East. No one can do that reliably. It is to help businesses understand their actual exposure, model a range of scenarios, and make decisions about energy procurement and cost structure that are sensible across those scenarios. Our business advisory team is working through exactly these questions with clients at the moment.
The AI question most owners are deferring
Alongside the immediate pressures of energy costs and economic uncertainty, there is a slower-burning anxiety that comes up in most substantive conversations with business owners at the moment. It is the question of artificial intelligence. Specifically, the question of what to do about it, and when.
The difficulty with this question is that it resists easy framing. For most owner-managed businesses, it is not an immediate operational crisis. Few Richmond-based SMEs are facing the sudden displacement of core business functions by AI tools.
But it is not something that can be indefinitely deferred, either. The evidence that larger businesses are moving quickly, investing in AI capabilities, automating tasks that people used to do, reducing headcount in some areas while recruiting specialists in others, is real and accumulating. And the businesses that will find themselves behind in two or three years are not necessarily the ones that made a conscious decision not to adopt AI. They are more often the ones that kept meaning to look into it and found more pressing things to deal with every quarter.
A client who runs a professional services firm in Richmond, with around 25 staff, put it well in a recent conversation. “I know I should be doing something with AI,” he said. “I’ve read about it. Some of my competitors are using it. But every time I sit down to think it through properly, something more urgent takes over. And I’m not sure whether that’s a reasonable response to a genuine set of demands on my time, or whether I’m just avoiding a decision that feels complicated.” That uncertainty, whether the deferral is rational or avoidant, is something we hear from thoughtful, capable owners regularly.
The research data offers some context. Surveys conducted in early 2026 suggest that roughly a third of UK small businesses have begun integrating AI tools into their daily operations, but that productivity across SMEs has remained broadly flat despite this adoption.
The gap between buying a tool and using it well turns out to be significant. Businesses that implement AI on top of fragmented or outdated internal processes do not gain efficiency. They automate confusion. The businesses that appear to benefit most are those that use AI adoption as an opportunity to clarify and rebuild their processes first. This is one reason why getting cloud accounting and digital record-keeping in order is often the most practical starting point, well before committing to anything more complex.
For Richmond’s professional services community, the specific concern is usually competitive. If a competitor in a similar practice area is using AI to prepare first drafts, conduct research, or manage client communications at scale, the question of what that means for pricing, turnaround times and client expectations is genuine and not trivial.
A financial adviser or accountant who requires two hours to produce a piece of analysis that a competitor can produce in thirty minutes is not necessarily facing immediate displacement. But they are facing a question about how they position the value of their time and expertise, and how they charge for it. That is a question worth working through deliberately rather than avoiding.
Our observation, from working with businesses across a range of sectors and sizes, is that the owners who make the most sensible decisions about AI are those who approach it as an operational question rather than a strategic one. The strategic question, where does AI fit in my business in five years, is genuinely difficult and depends on factors that are not yet knowable. The operational question, which tasks in my business currently consume significant time but add relatively little distinctive value, is much more tractable. Starting there, with specific, concrete processes rather than abstract transformation programmes, tends to produce better outcomes and considerably less anxiety.
The hiring picture, and why caution is rational
If there is one area where the mood among business owners has shifted most visibly over the past six months, it is hiring.
Research published in early 2026 showed UK hiring optimism at its lowest level in nearly fifteen years. Rising employment costs and the prospect of new workers’ rights legislation were identified as the primary contributing factors. This is not simply timidity or pessimism. It reflects a genuinely changed cost environment. Getting payroll planning right in this environment is more complex than it has been for some time.
Employer National Insurance contributions rose in April 2025, and while the Employment Allowance provides some offset for smaller businesses, the net effect for many is a measurable increase in the cost per head. The National Living Wage rises again in April 2026, to £12.71 per hour, which affects not only minimum-wage roles but the entire pay structure above them, as employees at higher levels expect their differentials to be maintained. The Employment Rights Act 2025, which phases in over 2026 and 2027, adds further obligations that carry both administrative burden and financial exposure.
The result is that many businesses are choosing to do more with the people they already have, rather than taking on additional headcount. This is not always a bad outcome.
It frequently prompts a useful conversation about where time is being spent, which tasks genuinely require skilled human attention and which do not, and how the business could be organised more efficiently. But it does mean that growth, for many businesses, is currently happening more slowly than it might in a different environment, and that the owners carrying the load are often more stretched than they would like to be.
There is a further dimension to this that affects Richmond specifically. The borough has a high concentration of professional services businesses, technology companies and knowledge-intensive firms, as we explored in our earlier piece on why being busy is not the same as being healthy in professional services. In these sectors, the competition for skilled people is structurally intense regardless of the wider economic cycle. An accountancy practice, a management consultancy, a technology firm, all operate in labour markets where good candidates have options.
In an environment where some businesses are reducing headcount, or freezing recruitment, the pool of available candidates can look reassuringly large. But the pool of the right candidates, people with the specific technical skills and the cultural fit that make them genuinely valuable, remains competitive. Owners who are using the current environment as a reason not to invest in talent at all may find, when conditions improve, that the people they needed are no longer available.
What this looks like specifically in Richmond
Richmond upon Thames is not a uniform business environment.
The borough spans a range of commercial characters, from the high-footfall retail and hospitality of Richmond town centre and Twickenham, to the quieter professional services clusters around Kew, Ham and the residential stretches of South West London where a significant number of owner-managed businesses operate from relatively small premises, sometimes from home. Understanding which of the current pressures apply most acutely to which parts of this landscape requires some nuance.
The borough’s economic base is heavily weighted towards professional, scientific and technical activities, which account for over a fifth of its registered businesses, with information and communication and real estate activities also significant. This means that Richmond’s business community is, broadly, a knowledge-economy community. Its employers tend to be relatively asset-light, commercially well-educated, and operating in sectors where relationships, reputation and the quality of advice or service are the primary competitive differentiators.
They are also, almost by definition, the kinds of businesses most likely to be grappling seriously with what AI means for their sector and their clients.
For Richmond’s professional services community in particular, there is an added dimension that deserves mention. Many of the individuals running these businesses are also personally exposed to the tax changes arriving in April 2026. As owner-directors, they often pay themselves through a combination of salary and dividends, which means the 2 percentage point rise in dividend tax rates directly affects their own take-home pay. They may also be affected by the frozen income tax thresholds, which quietly pull more income into higher bands each year as earnings rise with inflation. We have covered several of these in detail in our guide to personal tax facts that regularly catch Richmond’s higher earners by surprise, and the personal tax planning conversations those changes are prompting.
And many of them own property, either commercial or residential, which brings its own set of complications in the current environment. The professional running a business is also a personal taxpayer, a potential landlord, and often a family member thinking about intergenerational wealth. These strands do not come apart neatly, and the current environment is pulling at all of them simultaneously.
Richmond Council has, to its credit, been vocal about the pressures facing the borough’s hospitality sector. Its public lobbying on the business rates relief gap, the fact that independent cafes, small hotels and restaurants are not covered by the pubs-specific relief introduced in April 2026, reflects a genuine and locally significant concern. February 2026 saw some of the weakest high street footfall figures for London since April 2024.
The town centre regeneration work currently underway in Richmond is a longer-term positive. The borough’s fundamentals, its affluent residential base, its connectivity, its quality of environment, remain genuine strengths. But longer-term strengths do not resolve shorter-term cashflow pressures, and this is the distinction that matters most for the businesses navigating the spring of 2026.
What deliberate steadiness looks like from here
The advisory conversations we find most useful in periods like this are not the ones that try to predict what happens next.
No one reliably can. The oil price may stabilise if the conflict in the Middle East moves towards resolution. It may not. The employment legislation changes may prove easier to absorb than businesses currently fear. Or the combination of rising costs and new obligations may produce a more pronounced hiring retreat than the surveys currently show. Spending significant energy trying to forecast which scenario will materialise is generally less productive than building a business that can function across several of them.
What deliberate steadiness looks like in practice is, first, visibility.
In periods of heightened external pressure, the businesses that cope best are almost always those with a clear, current picture of their numbers. Not approximate or lagged or based on last quarter’s management accounts, but a genuine understanding of where their cash is, where their costs are, and what their forward exposure looks like across a range of scenarios. If the patterns we described in our earlier cashflow article resonated with your experience, this point will be familiar: visibility is not the same as certainty, but it is the closest thing to it that a business owner can actually achieve. The financial control disciplines we described in a subsequent piece matter even more when the external environment is this unsettled.
Second, it means separating the things that require an immediate decision from the things that require a watching brief. The energy contract situation, for businesses whose contract is ending or has already ended, is a decision that benefits from prompt attention. The market is volatile, options are changing, and the cost of inaction can be significant. The question of how deeply to invest in AI tools, for most businesses, is not an immediate decision but a considered one that benefits from gathering information over the next few months before committing to anything substantial.
Treating both with the same urgency, or neither with any urgency, produces worse outcomes than distinguishing between them clearly.
Third, and perhaps most importantly, it means holding the distinction between external noise and internal clarity. Most of what is described in this article is outside the direct control of an owner-managed business in Richmond. What is within their control is the quality of their own financial management, the strength of their client relationships, the focus of their team, and the decisions they make about cost structure, tax planning and investment. Businesses that keep their attention on the controllable elements, without ignoring the external environment, are generally the ones that emerge from difficult periods in the strongest position.
We have worked with businesses through enough cycles to know that the owners who look back at periods like this one with the least regret are rarely those who made the boldest bets or the most dramatic pivots. They are the ones who maintained clear financial discipline, stayed close to their clients, made considered decisions about where to invest and where to reduce exposure, and did not allow the volume of the external noise to drown out the quieter signals inside their own businesses.
That is not a glamorous approach. But it is, in our experience, a reliable one.
Key takeaways
- The current period is characterised not by any single severe shock but by the compounding of several simultaneous pressures, each individually manageable but collectively demanding.
- The energy shock triggered by the Iran conflict is a direct and immediate cost pressure for businesses without the protection of a domestic price cap. Businesses approaching contract renewals should take specialist advice promptly rather than assuming prices will fall before a decision is needed.
- Anxiety about AI is widespread among owner-managed businesses, but the most productive approach is to treat adoption as an operational question about specific processes rather than a strategic programme requiring immediate commitment.
- Hiring caution in 2026 is a rational response to a genuinely changed cost environment, but businesses that avoid all investment in talent may find themselves at a disadvantage when conditions improve.
- Richmond’s professional services community faces a distinctive combination of business pressures and personal tax exposure, as owner-directors are often affected simultaneously by dividend tax rises, frozen thresholds, and the energy and employment cost environment.
- The most reliable response to external uncertainty is maintaining strong internal visibility: clear, current financial data, disciplined cost structure, and the discipline to separate what requires an immediate decision from what requires a watching brief.
Frequently asked questions
Is the energy situation likely to improve quickly, or should we be planning for a prolonged period of high costs?
Honestly, no one can say with confidence. The speed at which energy costs normalise depends almost entirely on how and when the conflict in the Middle East moves toward resolution, and on how quickly damaged infrastructure, particularly in Qatar’s LNG production facilities, can be brought back into service.
Previous conflicts in the region, including a shorter engagement between Israel and Iran in June 2025, saw prices spike sharply and then retreat once fighting stopped. But the current conflict involves more extensive infrastructure damage and a more prolonged disruption to the Strait of Hormuz, which makes a rapid return to pre-conflict prices less certain than it was then. Businesses approaching a contract renewal should seek specific advice rather than assume the market will improve before they need to act. Locking in at current elevated rates is uncomfortable. Being on a fully variable tariff if prices rise further is more so.
We have been meaning to look properly at AI for some time but have not got around to it. Are we genuinely at risk of being left behind?
The honest answer is: it depends on your sector and your competitive context.
In some professional services areas, particularly those where research, document production and client communication are significant elements of the workload, competitors who are using AI tools effectively can produce comparable work faster and at lower marginal cost. Over time, that creates pricing pressure and capacity differences that compound. In other areas, the differentiation that clients pay for is relational and judgement-based in a way that AI currently does not replicate.
The starting point is an honest assessment of what your clients are actually paying you for, and how much of your current workflow genuinely requires your distinctive expertise versus how much is processable work that happens to consume significant time. That analysis will tell you more about your specific risk than any general statement about adoption rates.
We are thinking about hiring but are nervous about the Employment Rights Act changes. Is it worth waiting to see how things settle?
This is a question we are hearing often. The short answer is that the core employment law landscape for April 2026 is now relatively clear, even if some of the changes scheduled for 2027 are still being consulted on.
Waiting for absolute certainty is rarely a viable strategy, because that certainty tends not to arrive. What is more productive is understanding which of the April 2026 changes are most relevant to your planned hire, ensuring your contracts and policies reflect the current requirements, and getting proper advice on areas such as the doubling of the collective redundancy protective award if you are thinking about team changes. We will be covering the April 2026 employment and tax changes in detail in a forthcoming article in this series.
The macro forecasts are not encouraging. Should we be scaling back our plans for 2026?
The OBR’s revised GDP forecast of 1.1 per cent for 2026 is modest rather than alarming. It describes a slow-growth environment, not a recession. And it was prepared before the Iran conflict, which adds an additional variable to the picture.
What it does suggest is that businesses which have been planning on the assumption of strong consumer or business spending growth may need to revisit those assumptions. A conservative revenue forecast, supported by a clear understanding of costs and a decent cash buffer, is a more reliable planning foundation right now than an optimistic one. That does not mean retreating from all investment or ambition. It means making sure the plans that require external conditions to cooperate are tested against scenarios where those conditions are less favourable than hoped.
A conversation can often clarify more than an article can
If any of what is described here feels familiar, whether it is the energy cost picture, the uncertainty about AI, the hiring question, or simply the general weight of managing a business in a period of compounding pressures, it is often useful to talk it through with an adviser who has seen similar patterns across different clients and different cycles.
We work with owner-managed businesses, professionals and growing companies across Richmond, Twickenham, Kew and the surrounding area. If you would like to have a conversation, there is no obligation and no agenda beyond understanding your situation clearly.
About the author
Donovan Crutchfield is Area Managing Partner at Xeinadin Richmond and founder of TaxAgility. He is ACA-qualified and has worked with owner-managed businesses, professionals and growing SMEs across Richmond and South West London for many years. His practice focuses on helping business owners make clear, well-informed financial decisions, particularly in periods when the external environment makes that harder than usual.
Xeinadin Richmond is part of Xeinadin Group, one of the UK’s leading networks of independent accountants and business advisers.
