SME Workforce Pulse research & how to recruit for an expanding business
The latest SME Pulse data shows the East Midlands leading the UK on jobs and pay growth. Thinking of expanding there, or into any other new location? Here’s how to choose well and hire well.
In partnership with Smart Data Foundry and The Centre for Economics and Business Research, Sage has published its latest SME Monthly Workforce Pulse research.
This is drawn from anonymised payroll data from approximately 200,000 small businesses and provides unheralded insight into pay across the UK.
The data is part of Data for Good, Sage’s commitment to help Small and Medium Businesses thrive using anonymised insights from our data and enabling better decision making by stakeholders.
As such, smart managers and leaders can use SME Monthly Workforce Pulse to plan their next moves—such as how to choose a new location with recruitment in mind, and how to get your first hires right.
Here’s what we cover in this article:
SMEs continue to show resilience
SME Monthly Workforce Pulse’s latest data shows median gross pay rose 4.1% year-on-year to £2,209, with take-home pay up 3.5% to £1,804.
However, higher inflation and slower pay growth are squeezing household finances.
Headcount among micro businesses grew +0.5%, outpacing small and medium firms at +0.4% each. The £10,500 Employment Allowance may be shielding the smallest employers from the full impact of the NICs rise, but this protection falls away as firms scale up.
The East Midlands led regional SME growth, with headcount rising 1.5%—three times the UK average while pay increased by 4.2%. This might partly reflect recent investment in the region’s manufacturing, clean-energy and infrastructure economy.
On a sectoral basis, finance and insurance was the strongest sector for headcount growth at +1.3%, while Wholesale and Retail Trade led on earnings growth at +4.4%. This comes amid wider evidence of stronger recruitment across technology, security and transformation roles in the insurance sector.
Yet the recovery remains uneven
Headcount among 65–75-year-olds rose 7.4%, alongside the strongest pay growth of any age group at 4.9%. Meanwhile, employment among 25–34-year-olds fell 1.8%, and workers aged 16–24 recorded the weakest pay growth at just 1.9%.
Accommodation and Food shed the most staff of any sector at -0.7%. Given the sector’s role as an entry point into work, continued weakness could have wider implications for younger workers and local high streets.
All of this data can be put to use in your business right now if you’re thinking of expanding. Here’s what you need to bear in mind.
Follow the talent: Choose your location around the people you need
The East Midlands story is a reminder that growth follows people.
Where investment creates jobs, skills gather—and businesses that set up nearby benefit.
So if you’re weighing up an expansion, don’t start with the property deal. It’s better to start with the local talent picture.
University towns and cities are a reliable signal. A strong local university—especially one running courses aligned to your sector—means a fresh intake of educated graduates entering the jobs market every year, plus placement schemes, careers fairs and research partnerships you can tap into.
Further education colleges matter just as much for skilled trades and technical roles, and many now co-design courses with local employers.
And don’t be put off by competitors nearby in the planned new location. In recruitment terms, they’re often an advantage. Where similar businesses cluster, a pool of experienced people builds up, along with the suppliers, training providers and professional networks that support them.
Finally, check the practicalities: transport links, typical commuting patterns, and whether offering hybrid working would widen your catchment area beyond the immediate postcode.
Do the sums before you commit
Pay varies significantly across the UK, so benchmark local salaries before you set them. The SME Workforce Pulse data is an excellent starting point.
Pitch too low and you’ll struggle to attract anyone, of course. Pitch too high and you may strain your cashflow—and unsettle your existing pay structure. Regional data such as SME Pulse, official statistics, and live job adverts in the area will give you a realistic range.
Look beyond salaries, too.
Compare property costs and business rates between shortlisted locations, and investigate local support—growth hubs, enterprise zones and local authority grants can meaningfully reduce the cost of setting up.
And remember the full cost of employment: the £10,500 Employment Allowance softens employer National Insurance for the smallest firms, but as our data shows, that protection falls away as you scale, so build the total cost of each new hire into your forecasts.
Make your first hire count
Wherever possible, anchor your expansion with an experienced local hire.
This has to be someone who knows the market, brings a network, and can act as your champion on the ground.
They might also tell you what a realistic salary looks like, where good candidates spend their time, and which local quirks a head-office job advert would miss.
Then build your reputation as a local employer.
Show up at regional business events, build relationships with nearby universities and colleges, and write job adverts that demonstrate you understand the area—not a copy-and-paste from HQ.
In a new location, you’re an unknown quantity, so every early interaction with candidates shapes how the local market sees you.
Get the practical side ready before the first payday
Nothing undermines a new team’s confidence faster than a late or incorrect first payslip. Before anyone starts, make sure contracts are issued, right-to-work checks are complete, pension auto-enrolment is set up, and your payroll is ready to run for the new location.
If your expansion takes you into Scotland or Wales, remember that income tax rates and bands differ from the rest of the UK. Good payroll software will apply the correct tax codes automatically, but it’s worth knowing when you’re talking take-home pay with candidates.
Public holidays can vary too, of course.
It’s also the moment to check your HR processes scale: who onboards new starters at the new site, who answers their day-to-day questions, and how you’ll keep a growing, more dispersed team feeling like one business.
Get the admin humming in the background, and you’re free to focus on what the expansion is really for: winning customers in your new market.
Final thoughts
The East Midlands exception revealed in the data shows what happens when investment, skills and opportunity line up in one place—and there’s no reason your business can’t ride a similar wave elsewhere.
Choose your location around the people you’ll need, benchmark the true cost of employing them, anchor your move with a strong local hire, and have payroll and HR ready from day one.
Do that groundwork, and expansion stops being a leap of faith and becomes what it should be: a confident next step for a growing business.
Frequently asked questions
Choose a location based on access to the talent you need. Look for areas with universities or colleges teaching skills relevant to your sector, existing clusters of similar businesses, good transport links, and pay levels your budget can sustain. Balance this against property costs, business rates and any local grants or incentives available.
Often, yes. Areas where similar businesses cluster tend to have a deeper pool of experienced candidates, plus established suppliers, training provision and professional networks. While you’ll compete for some hires, you’ll also benefit from a jobs market that already understands your industry—which usually makes recruitment faster and easier than starting somewhere with no sector presence.
A blend usually works best. An experienced local hire brings market knowledge, contacts and credibility, while seconding a trusted existing employee helps transfer your culture and ways of working. If budgets only stretch to one, prioritise the local hire for customer-facing growth roles and support them closely from your existing team.
One payroll can cover employees anywhere in the UK. However, if you hire in Scotland or Wales, employees pay income tax under Scottish or Welsh rates and bands, applied through their tax code. Modern payroll software handles this automatically, but you should factor it in when discussing take-home pay with candidates.
Start with the local growth hub or council business support team for the area you’re targeting – they can point you to grants, premises support and recruitment schemes. Enterprise zones and freeports offer incentives in some areas, while local universities and colleges often run funded placement, internship and apprenticeship programmes that reduce early hiring costs.
Better outcomes with Data for Good
Sage is committed to unlocking the power of anonymised data to drive insight that supports better decisions. In partnership with Smart Data Foundry and CEBR, we translate anonymised data into independent evidence‑based insight that supports better decision‑making.
Browse more topics from this article
Explore more wisdom
The Clinic Newport Trusts: How Tricia Jordan built Maldiva Aesthetics from dream to reality
Discover how Newport entrepreneur Tricia Jordan built Maldiva Aesthetics through trust, community and customer care, growing a loyal client base while using Sage to simplify administration and support future growth.
