Going for growth in 2025 and beyond

As we look back on 2024, my main reflection is that small and mid-sized businesses (SMBs) are not merely the backbone of our economy; they are its lifeblood.

This year has been defined by both economic challenges and the extraordinary resilience of our nation's entrepreneurs and SMB owners. Businesses across the UK have demonstrated remarkable resilience and agility, navigating a range of external headwinds, including increased costs, economic uncertainty, and changing global trade policies.

SMBs are essential for national economic prosperity, driving innovation, job creation, and thriving communities.

In our report, Small Business, Big Opportunity 2024, we found nearly half of UK SMBs reported annual revenue growth over the past year, defying the odds when many larger organisations struggled. Even in the context of wage growth and inflation, on average, SMBs grew profits by 8.3% in Q3.

The Budget brought some unexpected challenges for UK businesses. While addressing rising costs and wage pressures may strain SMBs, it underscores the need for stronger, more immediate support from the government to help them navigate these challenges. Now, the government must provide tangible, actionable measures to alleviate pressures.

For example, ‘digitising the economy’ might sound abstract but consider this: a local retailer using software to manage invoices, rather than just emailing PDFs, can save time, reduce errors and get paid faster.

This, in turn, allows them to maintain a clearer understanding of their cash flow position, helping them to plan inventory purchases more effectively and avoid unnecessary financial strain. These practical applications of tech are a lifeline, enabling businesses to tackle immediate challenges while building resilience for the future. And UK firms are ready to invest.

Resilience and growth are often underpinned by strategic planning and smart investments. As our survey shows, 73% of UK SMBs have integrated AI solutions into their operations, ahead of their European counterparts, allowing them to enhance productivity and focus on higher-value tasks. This targeted adoption of tech has driven an impressive 86% of SMB leaders to express confidence in their success—up from 80% last year. Such optimism reflects their ingenuity and ability to adapt to an ever-evolving economic landscape.

However, despite digitisation’s potential to future-proof SMBs, challenges remain. Financial pressures—like cash flow difficulties and operational costs—continue to weigh on these businesses. Moreover, recruiting and retaining skilled workers remains a significant hurdle, alongside managing supply chain disruptions and attracting customers. These challenges highlight the urgent need for more comprehensive and sustained government support.

For instance, implementing e-invoicing on a wide scale could streamline payment processes and reduce friction for SMBs. Expanding access to affordable finance is another critical step, along with ensuring SMBs can recruit and train skilled workers to meet evolving industry demands. These steps would enable SMBs to take advantage of growth opportunities rather than merely focus on survival.

At Sage , we're focused on real solutions for real businesses, from local retailers to modern accountants to global construction businesses. Every day, we’re looking for ways to save them time, help them grow and support their resilience.

By fostering collaboration among businesses, governments, and communities, we can ensure that SMBs not only survive but thrive as key drivers of economic prosperity.