The Federation of Small Businesses (FSB) in Scotland has published the results of its Big Small Business Survey, which shows that three fifths of businesses intend to grow in the next year.
The survey, which was undertaken in January among 602 small businesses across Scotland, found that 45.3% of reported rising turnover during the last year, while 41.4% said turnover fell - and 13.1% stated no change.
Businesses in the wholesale and retail trade, and motor vehicle repair (52%), alongside accommodation and food services (51%) sectors were most likely to report a decrease in turnover in the last year.
Almost half of Scottish small businesses saw an increase in turnover of up to 10% last year.
Just over three fifths of businesses that reported a decrease turnover in the last year attributed this to either the cost-of-living crisis or overall economic uncertainty.
Scotland policy chair Andrew McRae said: “Too often, decision makers fall into the trap of treating business as a monolith, making decisions that assume our smallest firms are operating on the same playing field as multinational corporations.
“What this study demonstrates is that, not only is there a distinction to be drawn between small businesses and their larger counterparts, but indeed there is a huge degree of diversity within the small business community itself.”
The report also revealed that more than a tenth of Scottish small businesses spend more than eight hours per week on regulatory compliance.
As might be expected, those in the financial sector were most likely to spend more than 10 hours per week on regulatory compliance (29%), while 30% of businesses with more than 50 employees were also more likely to spend more than 10 hours per week on regulatory compliance.
Meanwhile, a third of small businesses with premises saw their rateable value increase following the recent non-domestic rates revaluation. Those in the accommodation and food services sector made up 30% of businesses who had seen an increase.
As for staffing, respondents were evenly split on the issue of whether or not they have had enough people to meet their business needs over the past year.
Companies in the accommodation and food services (67%) and construction sectors (62%) were more likely to report not having enough staff, while 60% of businesses in the manufacturing sector reported that they had had enough staff to meet their needs.
Businesses with 11 to 50 employees (74%) were more likely to report not having enough staff to meet their business needs over the past year, compared to micro-businesses (43%).
Almost a third of businesses said the lack of staff has caused reductions in the range of services offered, while more than two fifths of small businesses do not feel confident that they have enough appropriately skilled staff.
And on export markets, the survey showed that the majority of Scottish SMEs sell to other parts of the UK, while almost two fifths export to both Europe and further afield. Despite Brexit, more than two fifths of Scottish small businesses continue to generate some of their income from the EU.
Almost three quarters of Scottish SMEs increased prices across their operations in the last year, with the majority pushing them up by 5% to 10%.
A further two fifths of Scottish SMEs plan to increase their prices in 2023.
McRae commented: “It’s clear that smaller operators have had a tough few years, with a similar proportion of respondents reporting that 2022 posed as great a challenge yet as the worst of the pandemic in 2020.
“It does appear, however, that things might be looking up and the much-anticipated economic recovery could be on the horizon, with three in five businesses telling us they plan to grow over the next year.”
He added: “We hope this study will serve as a useful tool for anyone needing to design and implement policies that touch the lives of small business owners.
“In recent years we’ve seen what can go wrong when decision makers don’t understand the challenges faced by our smallest operators, and we hope that the findings of this survey can play an important role as we work to make Scotland the best place to do business.”
Another section of the survey dealt with the journey to net zero emissions, revealing that almost two fifths of Scottish SMEs have limited or no understanding of government's targets and how these will impact their business.
Businesses in the accommodation and food service sector were least likely to have an understanding of targets and their impact (38% had limited/no understanding), while those in the wholesale and retail trade, and repair of vehicles sector were most likely (22%) to have a clear understanding.
The proportion of businesses who have made changes (two fifths) is almost the same as the proportion of businesses who have not made changes relating to net zero.
There was a wide disparity between younger and older entrepreneurs: those aged 16 to 34 were least likely to have engaged with government support initiatives (91% had not), while those aged 45 to 54 were most likely to have engaged (21% had).
The survey also showed that three fifths of Scottish SMEs do not feel enough support is available to them.
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