The Scottish Government

« Previous | Contents | Next »

Listen

3 Size and structure of the SME sector andcharacteristics of business owners

3.1 Size and structure of SME sector

There were an estimated 265,640 business enterprises in Scotland at the start of March 2006. SMEs (businesses with zero to 249 employees) accounted for 99 per cent of these businesses ⁴.

The majority of SMEs have no employees; they are sole proprietorships, partnerships comprising only the self-employed owner-manager(s) or companies comprising only an employee director. Approximately a third (34 per cent) are SME employers. Of these, around 74 thousand are micro-employers (employing fewer than ten people), 13 thousand are small employers (with between ten and 49 employees) and 3.5 thousand are medium-sized employers (with 50 to 249 employees). It is on these 90 thousand SME employers that this report focuses.

In total, SMEs employ almost one million people (approximately 40 per cent of the total workforce of Scotland) and have an aggregate turnover of approximately £80 billion (approximately 40 per cent of the Scottish whole economy total of £196 billion).

3.2 Characteristics of business owners

Whilst the official SME Statistics are a valuable source of information on the size and profile of the UK's SMEs, they cannot tell us much about the characteristics of those who own, run and manage small businesses throughout the UK. The ASBS series has been designed, in part, to fill some of these gaps. Based on data from the 2006 survey, this section describes the proportion of business owners who ran new businesses in Scotland and the gender, ethnicity, disability status and age of Scottish business owners. It also reports on the prevalence of family-business and "home-working".

3.3 New businesses

ASBS defines new businesses (often referred to as start-ups) as businesses trading for less than four years or those which have changed ownership in the last three years. Based on this definition, new businesses accounted for slight more than one in five SME employers in Scotland (22 per cent). The majority (86 per cent) of new businesses were micro-employers.

3.4 Gender

Table 3.1 summarises SME leadership in Scotland broken down by gender. Whereas elsewhere in the report the figures quoted are for employers only, Table 3.1 also presents data for all businesses including those without employees.

Table 3.1 Leadership by gender

Most SME employers were owned by men, or led by a management team with a majority of men. Only 18 per cent of Scottish SME employers were women-led (defined as run by a woman or having a management team made up mostly of women).

Women-led businesses tended to be smaller than other businesses. Nine in ten Scottish women-led SME employers were micro-businesses (91 per cent compared to 83 per cent overall). Women-led SME employers were more likely to be new businesses than SME employers led by men. Approximately one in three (31 per cent) was a new business compared to 22 per cent of SME employers that were led by men.

3.5 Minority Ethnic Groups ( MEG)

Six per cent of Scottish SME employers were MEG-led; that is led by a member of a minority ethnic group or a management team with at least half of its members from minority ethnic groups.

3.6 Disability

Six per cent of Scottish SME employers had partners or directors with a long standing disability. Seven per cent of partnerships and nine per cent of companies had partners or directors with a long standing disability. Two per cent of sole proprietors had a long standing disability.

3.7 Age

The majority of SME employer owners and co-owners in Scotland fall in the 35 and 44 (22 per cent), 45 to 54 (32 per cent) and 55 to 64 (29 per cent) age categories. The proportions in younger and older cohorts are much smaller; just nine per cent were aged under 35 and seven per cent over 65.

Chart 3.1 shows the distribution of growing and non-growing Scottish businesses by age of business owner (growers are businesses that either grew in the previous year or which aspire to grow in the next twelve months, non-growers are those that have neither grown nor plan to grow over this period). The data show that growing businesses tend to have younger owners.

Chart 3.1 Age of business owner and business growth

Base: all businesses with employees in Scotland (weighted data); unweighted N-916

3.8 Family businesses

Family-owned businesses accounted for three quarters (75 per cent) of the total population of Scottish SME employers. A higher proportion of micro-sized businesses (76 per cent) than small or medium-sized businesses (70 per cent and 50 per cent respectively) were family-owned.

Nine out of ten partnerships were family-owned businesses (93 per cent) as were almost three quarters of sole proprietorships (72 per cent) and two thirds of companies (66 per cent).

The majority of businesses that were family-owned (72 per cent) were "first generation", 16 per cent had been passed down into the second generation. Just over one in ten family-owned SME employers had been "in the family" for three generations or more (12 per cent).

3.9 Working from home

One quarter (26 per cent) of Scottish businesses used someone's home as the main business or work premises when the business first started up.

« Previous | Contents | Next »