A new report from Bibby Financial Services has warned that UK small businesses are facing "compounding pressure" as rising costs, economic uncertainty and sector-specific challenges continue to bite.

The report paints a mixed picture.

Some businesses are growing and investing. Others are seeing margins squeezed, cash flow tighten and customer demand soften. Perhaps most importantly, it's becoming increasingly difficult to talk about "small businesses" as one group.

According to the report, the gap between sectors is widening. Some are proving remarkably resilient. Others are finding trading conditions significantly tougher than they were even 12 months ago.

The report calls this "sector divergence".

Most business owners would probably call it something else.

A postcode lottery.

Because right now, the economy can feel very different depending on what your business does.

So what is the report actually saying?

Strip away the economic jargon and the message is fairly simple.

Running a business isn't getting easier.

Costs remain elevated.

Customers are becoming more cautious about spending.

And businesses are having to work harder for the same level of growth.

None of that will come as a surprise to most owners.

If you've renewed an energy contract, taken on staff, negotiated with suppliers or reviewed your insurance recently, you'll already know costs have changed dramatically over the past few years.

What the report highlights is that those pressures are no longer affecting everyone equally.

Not every business is feeling the economy in the same way

For a long time, conversations about the economy have been fairly broad.

Businesses are struggling.

Costs are rising.

Customers are spending less.

But that's becoming less true.

Some businesses are having a difficult year.

Others are growing.

Some sectors are seeing demand fall.

Others are struggling to keep up with demand.

That's what the report means by "sector divergence".

The gap between winners and losers is getting bigger.

And it means comparing yourself to the wider economy is becoming less useful.

The question isn't whether businesses are struggling.

It's whether businesses like yours are struggling.

A construction company, a manufacturer and a digital agency may all be operating in the same town, but they can be experiencing completely different economic realities.

Costs haven't stopped rising

If you're waiting for everything to become cheaper again, you could be waiting a while.

Energy costs remain unpredictable.

Employment costs have increased.

Many suppliers have pushed through multiple price rises over the last few years.

Even where inflation has slowed, that doesn't mean prices have gone backwards.

It simply means they're rising more slowly than before.

That's an important distinction.

Many business owners hear that inflation is falling and expect some relief. What they often find is that costs are still going up, just not quite as quickly as they were.

For businesses that have absorbed those increases rather than passing them on to customers, margins are continuing to come under pressure.

Cash flow matters more than ever

One of the most interesting themes running through the report isn't profit.

It's resilience.

The businesses coping best aren't necessarily the ones generating the biggest profits.

They're often the ones with the strongest cash flow.

Because when costs rise unexpectedly or customers take longer to pay, cash gives you options.

Without it, even a profitable business can find itself under pressure.

That's why more owners are focusing on payment terms, stock levels, forecasting and keeping a close eye on recurring costs.

Cash flow isn't the most exciting part of running a business.

But it's often the difference between being able to react to challenges and being forced to react to crises.

Standing still is becoming riskier

If there's one message that runs through the report, it's that businesses can't afford to be passive.

The firms performing best are generally the ones actively reviewing costs, adapting to changing market conditions and making decisions before problems become urgent.

That doesn't necessarily mean making dramatic changes.

It might mean reviewing suppliers.

Checking whether you're overpaying for energy.

Looking at your pricing.

Speaking to customers more often.

Reviewing whether your current funding arrangements still suit the business you are today.

The common thread is action.

What should small businesses take away from this?

The report isn't predicting disaster.

Nor is it suggesting every small business is struggling.

What it does suggest is that the gap between businesses that are adapting and businesses that are standing still is growing.

Some sectors will continue to face significant challenges.

Others will find opportunities.

Many businesses will experience a bit of both.

The key is understanding what's happening in your business rather than relying on national headlines to tell you how things are going.

Know your numbers.

Understand your cash flow.

Review your costs regularly.

And don't assume that doing nothing is the safest option.

Because in the current climate, standing still can be one of the biggest risks a small business takes.