SMB Profitability Continued to Grow in Q2

Smart Data Foundry Collaborates on Latest Sage Small Business Tracker

In partnership with Smart Data Foundry and the Centre for Economics and Business Research (Cebr), Sage has released the latest edition of the Sage Small Business Tracker. The Tracker offers fresh insights into the performance of over 140,000 UK small and mid-sized businesses (SMBs), based on anonymised Sage Accounting and Payroll data.

Drawing on data from businesses across all UK regions (including Northern Ireland, Scotland, and Wales) the Tracker provides a real-time view of how SMBs are navigating the current economic environment.

Mixed Signals Amid Ongoing Economic Challenges

The Q2 2025 Tracker reveals a mixed picture. While revenue growth has stalled and profit growth has slowed, overall profitability remains resilient. UK SMBs recorded a 3.7% year-on-year increase in profits, despite mounting cost pressures and softer consumer demand.

Key data points for Q2 2025 include:

• Revenue: Real revenues declined by 0.2% year-on-year, ending a run of four consecutive quarters of growth.

• Profitability: Profit growth slowed from Q1 but still rose 3.7% year-on-year, remaining above levels seen over the past two years.

• Expenditure: Real business spending fell by 2.9% year-on-year - the first decline since early 2024. This cost-cutting contributed to sustained profitability in the face of declining revenues.

These findings underline the ongoing pressures facing the UK’s small business sector, often referred to as the backbone of the economy. They also highlight the critical need for smart policy interventions and practical support to foster growth and resilience.

Regional Bright Spots

While national trends present challenges, regional insights point to areas of relative strength. Notably, small business revenues in the North East grew by 3.9% in real terms, outperforming the UK average and signalling resilience in the region.

Access The Report

Download the full report for comprehensive insights into how UK small businesses are adapting in 2025 and the role data can play in supporting their continued success.