Scottish Government

Main findings

• Over four-fifths (83%) of respondents said their business was doing well.
• 63 per cent of respondents say that they would encourage some one to start up in business. Views were most positive in transport and construction businesses (72 per cent and 67 per cent) and least positive in manufacturing (48 per cent).
• 22 per cent of businesses have successfully raised finance in the past year - higher than in the UK as a whole (18 per cent).
• When asked to rank obstacles to success, nearly one in five Scottish businesses consider the economic environment to be the greatest obstacle. The next most commonly cited obstacles were competition or winning sales, tax and regulations. In the UK as a whole, businesses considered regulations to be the greatest obstacle to success.
• The survey found that most SMEs using the Small Business Gateway were satisfied and 75% of those using the service would recommend it to others.
• 28% of businesses expect to have employment growth for the period 2001-2003.
• 50% of firms in Scotland have at least one woman owner compared to 47% in the UK as a whole.

Aims of the Survey

• Gauge the concerns of small businesses, their needs and the barriers to fulfilling their potential;
• record awareness, perception of, and satisfaction with, public support for small businesses;
• act as a screening survey for other research such as panel surveys, focus groups or surveys of sub-groups of the small business population.

Findings

The main findings are listed below. Although the survey included businesses without employees, the reported findings concentrate on those with 1-249 employees. Figures for the zero employee enterprises are reported separately. Where appropriate the results are compared with the findings for the UK as a whole or for the previous year. On the whole the findings for Scottish SMEs are broadly similar to the UK.

Characteristics of small businesses in Scotland

50% (2001 - 52%) of firms in Scotland have at least one woman owner compared to 47% in the UK as a whole. 14% of businesses are all-female owned, 2% are majority female owned, 27% are equally owned by male and female owners, 7% are majority male owned.

2% of businesses in Scotland have at least one owner from an ethnic minority group, compared to 6% for the UK as a whole.

7% of businesses have changed their incorporation status in the past five years; half of these having changed from a sole trader or partnership to a company.

More than two thirds of businesses in Scotland are family owned.

54% of Scottish businesses are members of employer bodies - mainly trade associations (2001 - 46%).

22% said that their markets were mostly outside Scotland.

60% of businesses have access to the internet. 12% of these have a broadband connection (compared to 16% in the UK as a whole).

How well are they doing?

83% of SMEs in Scotland feel that their business is doing well (2001 - 81%), and 4% are concerned about their ability to survive (2001 - 6%). 22% feel that their business is doing really well (similar to the 21% in the UK as a whole).

21% of businesses employ more people than a year earlier. Over a half of the firms (55%) have plans to increase their sales in the next three to five years.

63% of respondents said that they would encourage someone to start up in business. Views were most positive among the younger businesses. Views were most positive in transport and construction businesses (72% and 67%) and least positive in manufacturing (48%).

22% had had difficulties renewing their commercial combined insurance including employer's liability. Difficulties were most common in manufacturing.

61% of businesses have taken some action to reduce the cost of energy, water or waste disposal to the business (compared to only half in the UK as a whole).

Obstacles to success of the business

Nearly one in five Scottish businesses considers the economic environment to be the greatest obstacle to the success of their businesses. The next most commonly cited obstacles are competition or winning sales, tax and regulations. Compared to the UK as a whole, Scottish firms are more concerned about the economic environment and less concerned about regulations. Scottish firms are also more concerned about cashflow and raising finance.

26% of businesses had tried to raise finance in the past year and 22% of firms were successful. Figures for the UK as a whole were lower: 20% and 18% respectively.

27% were aware of business angels and 11% of businesses were aware of Linc Scotland an organisation that helps bring together business angels and businesses seeking finance.

49% reported problems with late payments (UK as a whole 45%).

Use of external advice

Nearly half of Scottish SMEs had not used any external advice at all in the past year (49%) - similar to the rate for the UK as a whole. The most common source used was accountants (25% of firms), followed by Scottish Enterprise (8%), solicitors (8%) and consultants (7%).

57% of SMEs in the Scottish Enterprise area are aware of Small Business Gateway, compared to 74% awareness of Business Link in England, 57% awareness of WDA Business Connect Gateway in Wales, and 51% awareness of Invest Northern Ireland in Northern Ireland. There is no equivalent single point of access for advice in the Highlands and Islands area.

Awareness of Small Business Gateway is higher among the more recently formed businesses.

The survey found that most SMEs using he Small Business Gateway were satisfied and 75% of those using the service would recommend it to others.

43% of Scottish businesses with Internet access would be interested in online business advice compared to 26% in England, 38% in Wales, and 49% in Northern Ireland.

How do Growing businesses differ?

28% of businesses in Scotland expect to have employment growth for the period 2001-2003. 54% of businesses do not envisage change in employment (more than half of these, 54%, are zero employee businesses), and 18% are expecting to have a reduced number of employees.

The concerns of growing businesses are different from those where employment was stable or contracting. Among growing firms the major obstacles are around employing, training and keeping staff rather than the economic environment or taxation.

Growing firms are more likely to use a wider range of advisory services, including Small Business Gateway.

Methodology

The stratified sample was selected at random from a sample from of 4,000 organisations that in turn had been randomly selected from the D&B database of enterprises in Scotland. The results were weighted to match the number of organisations based on the Inter Departmental Business Register.

The survey was carried out by telephone and the questionnaire was completed by the interviewer using CATI (Computer Assisted Telephone Interviewing) software.

In total 1,756 organisations were contacted and asked to participate. This produced 1,002 completed interviews, and a refusal rate of 14% (2001 - 18%). Others were either out of size band quota or were not needed to meet quotas.