The Sage Small Business Tracker Q4 2023

In collaboration with Smart Data Foundry and The Centre for Economics and Business Research (Cebr), the latest Sage Small Business Tracker has been launched (see here and here for previous versions).

The Tracker continues to analyse anonymised Sage Accounting and Payroll data of over 130,000 UK Small and Mid-sized Businesses (SMBs) and looks at how they are performing in real terms in the current economic climate. The anonymised data set includes SMBs from all regions across the UK, including Northern Ireland, Scotland, and Wales with annual revenue of between £0 – £200,000 +.

The most recent data shows that SMBs have proven resilient, despite the UK’s technical recession (two consecutive quarters of negative growth). They recorded real revenue growth in the final quarter of 2023 and are well positioned for further growth with the easing of overheads (-1.8% in the year to Q4) and a reduction in cost pressures.

The average SMB has seen profits grow by 23.2% in the year to Q4 2023, with all regions of the UK experiencing profit growth across the period. However, despite the positives within this data, the persistent issue of late payments remains, affecting over 40% in Q4 2023 alone.

Sage’s Chief Commercial Officer, Derk Bleeker commented: "Small businesses are continuing to show signs of weathering tough economic conditions. Our data shows they recorded average real revenue growth in the final quarter of 2023, while overheads and capital expenditure continued to fall. This culminated in stronger profit growth.

However, despite the positives, SMBs across the UK are continually plagued by late payments - the overall share of invoices which were late was 40.5% in Q4 2023. This presents a strain on cash flows and leaves business owners unsure of their ability to invest. The Government should follow the example of other countries to bring forward measures for faster, more reliable and secure payments through e-invoicing to ease the burden on SMB owners and enable them to remain competitive."

Q4 2023 – top findings

• Small business revenues were up by 0.9% on an annual basis in Q4 – average real revenues for small businesses grew by 0.9% on a year-on-year basis in Q4 2023.
• The average real EBITDA of small businesses grew by 23.2% in the year to Q4, much higher than the 10.5% increase in Q3 2023.
• Real overheads fell by 1.8% in the year to Q4, the largest annual decline in 2023. Real expenditure fell by 3.8% in the same period.
• On an annual basis, capital expenditure fell by 16.8% in Q4 2023, following a decline of 7.7% in the previous quarter. Capital expenditure has now declined on an annual basis for nine consecutive quarters.
• London saw the largest annual increase in profitability, up by 43.7%. Areas of London accounted for three of the five fastest-growing UK cities over the past two years in terms of average real business revenue growth.

Download the report for the full analysis.