UK small and medium-sized enterprises (SMEs) have experienced a significant boost in profitability, with profits growing by 7.4% in the year to the first quarter of 2026, reaching the highest rate since 2022. This positive trend is accompanied by the launch of a new support programme in Staffordshire aimed at fostering business growth and scalability.
Key Takeaways
- UK SME profits surged by 7.4% in the year to Q1 2026, the highest growth since 2022.
- Real revenues for small businesses also saw a 3.2% increase, marking the fourth consecutive quarter of growth.
- A new "Build and Scale" programme has been launched in Staffordshire to support ambitious local businesses.
- Despite profit growth, cash flow remains a challenge, with nearly half of small business invoices overdue.
Profitability and Revenue Surge
Data compiled by Sage from nearly 150,000 firms reveals a robust increase in SME profits, accelerating from 5.5% growth in the previous quarter. This expansion aligns with broader economic growth, as the UK economy grew by 0.6% quarter-on-quarter in the first quarter of 2026, according to the Office for National Statistics.
Real revenues for small businesses also climbed by 3.2% during the same period, indicating a sustained period of positive financial performance for the sector. Regionally, the East Midlands led the profit growth with an impressive 20.2%, followed by the West Midlands at 16.3% and London at 10.6%. Derby stood out among UK cities, recording the highest two-year revenue growth at 43.6%.
Persistent Cash Flow Challenges
Despite the encouraging profit and revenue figures, cash flow issues continue to plague small businesses. A significant 49% of small business invoices remain overdue, with firms waiting an average of 27 days for payment after billing. These delays have a ripple effect, causing small firms to take an average of 37.1 days to pay their own suppliers, an increase from the previous year.
Efforts are underway to address this issue, including the progression of the Small Business Protections (Late Payments) Bill through parliament, which aims to penalise persistent late payers. Furthermore, mandatory e-invoicing is planned from 2029, a measure expected to speed up transactions and payments.
New Support for Staffordshire Businesses
In parallel with these national trends, Staffordshire County Council has launched the "Build and Scale" programme. This initiative is designed to provide bespoke support to businesses within the county’s key growth sectors, including property development, construction, trades, and professional services. The programme aims to help companies accelerate sustainable growth, leading to improved productivity, job creation, and increased turnover and profit.
Eligible businesses, established between two and five years and based in Staffordshire (excluding Stoke-on-Trent), will work with growth consultants to overcome barriers and develop strategies for high growth. This programme represents a practical step towards strengthening the local economy by supporting ambitious entrepreneurs and fostering innovation.
Sources
- UK small business profits hit four-year high, Sage finds, Accountancy Today.
- New programme set to help Staffordshire businesses Build and Scale, Staffordshire County Council.
