Businesses in Scotland - Key Facts 2012

 

Headline Figures

  • As at March 2013, there were an estimated 343,105 private sector enterprises operating in Scotland - the highest figure since the time series began (in 2000)
  • Although economic conditions continue to be difficult, the estimated number of private sector enterprises in Scotland has increased in each year since 2006. Between March 2012 and March 2013 the estimated number of enterprises increased by 0.5% (1,745 enterprises).
  • Small enterprises (0-49 employees) accounted for almost all of the rise in the total number of enterprises, and 73% of the increase (over the latest year) was due to unregistered businesses (i.e. those not registered for VAT and/or PAYE).
  • As at March 2013, there were 340,840 Small and Medium-sized Enterprises (SMEs) operating in Scotland, employing an estimated 1.1 million people.  SMEs accounted for 99.3% of all private sector enterprises and accounted for 54.7% of private sector employment and 36.7% of private sector turnover.

Scottish Economy – Gross Domestic Product (GDP) Trends - 1999 to 2013

Scottish GDP (in constant basic prices) grew each year since 1998 reaching a peak in Q2 of 2008. Scotland then entered recession, which lasted 5 quarters, before returning to growth in Q4 of 2009. The Scottish economy then contracted again for two short periods, in Q4 2010 and Q1 2012. The most recent quarterly GDP figures show Scottish growth of 0.6% during Q2 of 2013, meaning that output in Scotland is now estimated to be 1.4% below its 2008 peak. Latest estimates of UK basic price GDP showed that the UK economy expanded by 0.6% in Q2 2013[1].

[1] More information on Scottish Quarterly GDP can be found at: http://www.scotland.gov.uk/Topics/Statistics/Browse/Economy/PubGDP

 

Businesses in Scotland as at March 2013

As at March 2013, there were an estimated 343,105 private sector enterprises operating in Scotland. Almost all of these enterprises (98.3%) were small (0 to 49 employees); 3,705 (1.1%) were medium-sized (50 to 249 employees) and 2,270 (0.7%) were large (250 or more employees). These percentage shares have remained relatively stable since 2000 (the earliest point in the time series).

As at March 2013, there were 340,840 Small and Medium-sized Enterprises (SMEs) operating in Scotland, employing an estimated 1.1 million people.  SMEs accounted for 99.3% of all private sector enterprises and accounted for 54.7% of private sector employment and 36.7% of private sector turnover.

Small (0 to 49 employees) enterprises alone accounted for 42.3% of private sector employment and 23.6% of private sector turnover as at March 2013 (see Chart 1).     

The 2,270 large (250+ employees) enterprises operating in Scotland, as at March 2013, accounted for 45.3% of private sector employment and 63.3% of private sector turnover (see Chart 1).

Chart 1: Share of enterprises, employment and turnover by size of enterprise, 2013

BIS13 - Chart1

As at March 2013, enterprises with no employees – that is sole proprietors/partnerships comprising only the owner-managers or companies comprising only the employee director – accounted for 70.6% of all private sector enterprises in Scotland, 13.4% of private sector employment and 4.2% of private sector turnover.  

The total number of enterprises operating in Scotland comprises  those that are registered for VAT and/or PAYE, and those that are not (so called unregistered enterprises). Unregistered enterprises are sole proprietorships and partnerships that are not large enough to be VAT or PAYE registered.  The majority of private sector enterprises in Scotland are unregistered. As at March 2013, unregistered enterprises represented 53.4% of all private sector enterprises in Scotland.                 

Changes in the Scottish business stock over time

As at March 2013, there were an estimated 343,105 private sector enterprises operating in Scotland - the highest figure since the series began (in 2000).

Between 2000 and 2013, the total number of enterprises increased by an estimated 43.0% (103,140 enterprises).  As shown in Chart 2 below this increase was driven by an increase in the smallest unregistered enterprises – the number of unregistered enterprises in Scotland has more than doubled since 2000 (up from 91,310 in 2000 to 183,055 in 2013).  However, the number of registered enterprises increased between 2000 and 2013 also, from 148,665 to 160,050 (a 7.7% increase) - driven by an increase in the number of small (0 to 49 employees) registered enterprises.   

Chart 2: Estimated number of private sector enterprises operating in Scotland, 2000 to 2013

BIS13 - Chart 2

Although economic conditions continue to be difficult, the estimated number of enterprises in Scotland has increased in each year since 2006.  Between March 2012 and March 2013 the estimated number of enterprises increased by 0.5% (1,745 enterprises).

Unregistered enterprises (the smallest businesses that have an annual turnover below the VAT threshold of £77,000 and do not have employees) accounted for the majority of the rise in the total number of enterprises between 2012 and 2013.  The number of unregistered enterprises increased from 181,775 in 2012 to 183,055 in 2013 – an increase of 1,280 micro businesses (0.7%).

Having fallen between 2009 and 2011, the number of registered enterprises (those registered for VAT and/or PAYE) increased by 0.3% (470 enterprises) between 2012 and 2013, the second increase in successive years. The rise in registered enterprises over the latest year was driven by an increase in the number of small (0 to 49 employees) registered enterprises – up 0.2% (385 enterprises) between 2012 and 2013.

The number of medium-sized (50 to 249 employees) enterprises increased between 2012 and 2013 to 3,705 enterprises – representing an increase of 70 enterprises since 2012. There has been an increase of 355 enterprises since 2000 and the 2013 estimate is now higher than at any time since then.

The number of large (250 or more employees) enterprises also increased, to 2,270, between 2012 and 2013 – an increase of 20 since 2012 and an increase of 25 since 2000. The 2013 estimate is still lower than the large enterprise peak level of 2,345 enterprises experienced in 2001 and lower than the more recent high point of 2,315 large enterprises that were in operation in Scotland in 2009.

The total stock of private sector registered enterprises per 10,000 resident adults in Scotland is the basis of the Scottish Government National Indicator: “Increase the number of businesses”.  The indicator will be updated in June 2014 when the 2013 mid-year population estimates, needed to form the ‘per 10,000 adults’ rate, will become available. Further information can be found at: http://www.scotland.gov.uk/About/Performance/scotPerforms/indicator/businesses

Enterprises by legal status

As at March 2013, private sector enterprises in Scotland, as per the ‘Businesses in Scotland’ definition, fell into the following categories:

Sole Proprietors/Partnerships       (72.0% of enterprises, 22.8% of employment)
Companies/Public Corporations    (26.0% of enterprises, 69.7% of employment)
Non-Profit Making Bodies            (2.1% of enterprises, 7.5% of employment)

Although Sole Proprietors/Partnerships continue to make up the majority of private sector enterprises, the number of enterprises has decreased by 0.9% since 2012 while the number of Companies/Public Corporations has increased by 5.1%. Employment in Sole Proprietors/Partnerships has decreased by 1.0% and has increased by 2.4% in Companies/Public Corporations.

Note that the Sole Proprietorships/Partnerships legal status group (above) includes unregistered enterprises.

Enterprises by broad industry sector

As at March 2013, the two largest sectors are Construction and ‘Professional, Scientific & Technical Activities’, which make up nearly 30% of private sector enterprises in Scotland. In 2013, 14.5% (49,655) of private sector enterprises were in the Construction sector while 15.1% (51,915) were in the ‘Professional, Scientific & Technical Activities’ sector. In March 2012, however, the Construction sector had a larger proportion of private sector enterprises (16.6%) than the ‘Professional, Scientific & Technical Activities’ sector (13.1%).

The number of enterprises within the broad industry groups in March 2012 and March 2013 can be seen in Chart 3.

Chart 3: Estimated number of private sector enterprises operating in Scotland, by industry sector, 2012 and 2013

BIS13 - Chart3

Ownership (registered enterprises only)

Information on the ownership of enterprises operating in Scotland is only available for enterprises registered for VAT and/or PAYE.

Within the ‘Businesses in Scotland’ publication, enterprises can be either Scotland owned, Rest of the UK owned or Abroad owned.

As at March 2013, registered private sector enterprises with ultimate ownership outside Scotland (RUK or Abroad owned) represented 3.1% of enterprises, accounting for 35.2% of employment and 58.1% of turnover. Within large firms (250+ employees) they represented 82.4% of enterprises, accounting for 63.6% of employment and 78.1% of turnover.

As at March 2013, 35.2% of private sector employment was in enterprises with ultimate ownership outside Scotland. Breaking this down, 18.7% of Scottish private sector employment was in enterprises with ultimate ownership in the RUK with the remaining 16.5% of employment in enterprises with ultimate ownership Abroad (outside the UK). The share of employment by Abroad owned enterprises varies by industry sector. For example, as at March 2013, 31.3% of Scottish manufacturing employment was in Abroad-owned enterprises, compared to 6.1% of Scottish construction employment (see Chart 4).

Chart 4: Share of employment by ownership, by industry sector, 2013

BIS13 - Chart4

Urban/Rural Area breakdown (registered enterprises only)

The publication ‘Businesses in Scotland’ includes a breakdown of the Scottish registered business stock by urban, accessible rural and remote rural areas.

SMEs account for a larger share of private sector employment in rural areas, compared to urban areas. As at March 2013, SMEs accounted for 79.9% of private sector employment in remote rural areas compared to 68.9% in accessible rural areas and 45.4% in the rest of Scotland.

Between March 2012 and March 2013, private sector employment decreased slightly, by 0.1%, in remote rural areas. However, it increased by 2.7% in accessible rural areas and by 1.4% in the rest of Scotland.

In remote rural areas, the ‘Agriculture, Forestry & Fishing’ industrial sector had the largest share of private sector employment (19.1%), in accessible rural areas the Manufacturing sector was largest (15.6%) and in the rest of Scotland, the ‘Wholesale, Retail and Repair’ sector was largest (21.2%).   

Comparisons with the UK Business Stock

Business stock estimates for the UK as a whole are published by the Department for Business Innovation and Skills (DBIS). The DBIS Business Population Estimates 2013 show that for the UK as a whole the total number of businesses (registered and unregistered) increased by 2.1% between the start of 2012 and start of 2013. This compares to an increase in total number of businesses of 0.5% for Scotland between March 2012 and March 2013 (as per the Businesses in Scotland 2013 results). 

Although the DBIS figures are on slightly different basis to the Scotland results[2] , there are similar patterns shown in the changes to the business stock in Scotland and the UK - between 2012 and 2013, most of the increase in the business stock could be attributed to a rise in the number of unregistered enterprises. In the UK as a whole, unregistered enterprises increased by 3.3%, compared to a rise of 0.7% in Scotland.. 

However, it is important to note that Scotland has a very different business stock make-up, compared to the UK as a whole. Table 1 below shows that, in 2013, Scotland had a business stock rate of 764 enterprises per 10,000 adults, compared to 947 enterprises per 10,000 adults in the UK as a whole. 

Scotland has a lower rate of small businesses but a higher rate of medium and large businesses compared to the UK as a whole – see Table 1 below. In Scotland, there are 751 small enterprises per 10,000 adults (939 in the UK), 8 medium-sized enterprises per 10,000 adults (6 in the UK) and 5 large enterprises per 10,000 adults (1 in the UK).

Also, large businesses account for a higher share of Scotland’s private sector employment (45%), compared to the UK as a whole (41%).

Table 1 – Private sector business stock (registered and unregistered) per 10,000 adults, by size, UK and Scotland

      Private Sector per 10,000 adults
      Enterprise Size (number of employees)  
Country Resident Adults
Mid-year 2012
Private Sector
Enterprises
Small (0-49) Medium (50-249) Large (250+) All Sizes
UK 51,721,200 4,895,655 939 6 1 947
Scotland 4,398,900     335,975 751 8 5 764

Source:  UK - Business Population Estimates 2013, DBIS.  Scotland – Businesses in Scotland 2013. Note that the Scotland data, in the table above, is restricted to enterprises that are companies, sole proprietorships, partnerships or public corporations to ensure as much consistency as possible between the UK and Scotland results. 

[2] Information on how the methodology used in the ‘Businesses in Scotland’ publication differs from the DBIS Business Population Estimates publication can be found at:  http://www.scotland.gov.uk/Topics/Statistics/Browse/Business/Corporate/ukbusiness