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4 Growth Performance and Ambitions
This section reports the extent to which SME employers had grown in the previous twelve months and their ambitions for future growth.
4.1 Growth in the past 12 months
The survey explored the extent to which SME employers had experienced growth in the previous 12 months in terms of both employment and turnover.
Chart 4.1 shows that approximately two thirds of SME employers in Scotland (68 per cent) maintained the same size workforce throughout the previous year. Close to one in five SME employers had seen the size of their workforce grow over the year (18 per cent) and 14 per cent per cent had downsized.
The larger the employer, the more likely they were to have grown over the previous 12 months. It was not the case, however, that smaller employers were particularly likely to have downsized.
Chart 4.1 Employment growth in past 12 months
Base: All SME employers in Scotland (weighted data); unweighted N-916
SME employers in Scotland were somewhat more likely to have seen their turnover increase over the year (42 per cent) than stand still (33 per cent). One in five (19 per cent) had experienced a fall in their turnover (the remainder were either unable or unwilling to answer). As with employment trends, medium-sized employers (66 per cent) were more likely to have seen turnover growth than small or micro employers (53 per cent and 40 per cent respectively).
4.2 Growth ambitions
As well as exploring recent performance, the survey sought to understand the future growth aspirations of employing SMEs. In order to assess growth intentions, a general question was asked about whether or not the businesses aimed to grow over the next two to three years. Two thirds of Scottish SME employers were aiming to grow their business (64 per cent).
The larger the business the more likely it was to have aspirations for growth. 91 per cent of medium-sized employers were aiming to grow, as were 76 per cent of small employers. Only 61 per cent of micro-employers had growth ambitions.
New businesses were much more likely to anticipate growth (76 per cent) than the overall population of businesses.
Overall, approaching nine in ten SME employers (87 per cent) were registered for VAT. These businesses were asked at what stage they registered. Most commonly they did so at start-up, or as soon as possible afterwards (55 per cent), with a total of 87 per cent registering within the first four years of their existence.
A third of SME employers anticipated closing down or transferring ownership of their business in the next five years (33 per cent). A further six per cent did not know whether the business would close or transfer ownership in that timeframe.
The smaller the business, the more likely was its imminent closure or transfer. Micro-sized employers were more likely than small or medium-sized employers to anticipate sale or closure (35 per cent compared to 25 per cent and 20 per cent respectively).
4.3 Growth trajectories
By combining measures of past employment growth and ambitions for future growth, it is possible to define four categories that broadly describe the extent of dynamism amongst SME employers. These are:
- Sustained growth - those with more employees than they had 12 months previously which also anticipated increasing staff numbers in the next year.
- Contained growth - those with more employees than 12 months previously but which did not anticipate further growth in their workforce in the next 12 months.
- New growth businesses - those that had not experienced employment growth in the previous 12 months, but which anticipated growth during the next year.
- The remainder of businesses that show no growth.
Chart 4.2 illustrates that the majority of SME employers in Scotland fell into the no growth category (68 per cent). Almost one quarter of all SME employers (23 per cent) either have grown or plan to grow over the two year period spanning the survey. Almost one in ten (9 per cent) are growing on a sustained, year-on-year, basis.
Chart 4.2 Growth trajectories (percentage of all employers)
Base: All SME employers in Scotland (weighted data); unweighted N-916
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