Swedish small business profitability diverges as IT consultancies decline

Data from Ludvig & Co reveals a divergence in the Swedish small business sector. While small businesses across the country saw an average revenue increase of 2.7 percent and a profitability rise of 4.7 percent, small IT consultancy firms experienced a significant decline in profitability, dropping by 4.5 percent despite a 2.1 percent increase in revenue.

Fredrik Backman, CEO of Ludvig & Co, noted that the consulting industry, which has historically driven growth, is seeing a trend reversal. He suggested that rapid developments in artificial intelligence may be impacting the offerings and profitability of smaller IT consultancies.

In contrast, other sectors showed strong growth. The service industry, including hotels and accommodation, led with a 17.4 percent increase in profitability, followed by trade at 13 percent and the construction industry at 7.7 percent.

Parallel to these economic shifts, the digitalization of bookkeeping is transforming how small businesses operate. Moving from paper-based systems to cloud-based, automated solutions allows entrepreneurs to monitor finances in real time, automate routine tasks like invoicing and VAT reporting, and use financial data as a strategic tool for growth.