Businesses in Scotland - Key Facts 2012

 

Headline Figures

  • As at March 2014, there were an estimated 335,015 private sector enterprises operating in Scotland - a decrease of 2.4% since March 2013. This is the first annual decrease in total business stock since 2006.
  • The decrease in the total number of private sector enterprises, between 2013 and 2014, has been caused by a fall in the number of unregistered enterprises (the smallest businesses that have an annual turnover below the VAT threshold of £79,000 and do not have employees).
  • The number of registered private sector enterprises (those registered for VAT and/or PAYE) increased, up by 4.0% over the year to March 2014. There are now more registered private sector enterprises operating in Scotland than at any other time in the current series (which goes back to 2000).
  • As at March 2014, there were 332,720 Small and Medium-sized Enterprises (SMEs) operating in Scotland, providing an estimated 1.1 million jobs.  SMEs accounted for 99.3% of all private sector enterprises and accounted for 54.8% of private sector employment and 37.9% of private sector turnover.

Scottish Economy – Gross Domestic Product (GDP) Trends - 1998 to 2014

Scottish GDP in constant basic prices grew each year from 1998 reaching a peak in Q2 of 2008. Scotland then entered recession, which lasted 5 quarters and returned to growth in Q4 of 2009. Further short periods of economic contraction occurred in Q4 2010 and in the first two quarters of 2012. However, since Q2 2012 there has been sustained growth and in Q1 2014 output expanded beyond the pre-recession peak.

Businesses in Scotland as at March 2014

As at March 2014, there were an estimated 335,015 private sector enterprises operating in Scotland. Almost all of these enterprises (98.2%) were small (0 to 49 employees); 3,780 (1.1%) were medium-sized (50 to 249 employees) and 2,295 (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 2014, there were 332,720 Small and Medium-sized Enterprises (SMEs) operating in Scotland, providing an estimated 1.1 million jobs.  SMEs accounted for 99.3% of all private sector enterprises and accounted for 54.8% of private sector employment and 37.9% of private sector turnover.

Small (0 to 49 employees) enterprises alone accounted for 42.3% of private sector employment and 24.5% of private sector turnover as at March 2014 (see Chart 1).

The 2,295 large (250+ employees) enterprises operating in Scotland, as at March 2014, accounted for 45.2% of private sector employment and 62.1% of private sector turnover (see Chart 1).

Chart 1: Share of enterprises, employment and turnover by size of enterprise, 2014

Chart1.4

As at March 2014, enterprises with no employees – that is sole proprietors/partnerships comprising only the owner-managers or companies comprising only the employee director – accounted for 68.5% of all private sector enterprises in Scotland, 12.5% of private sector employment and 4.1% 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. As at March 2014, unregistered enterprises represented 50.3% of all private sector enterprises in Scotland.             

Changes in the Scottish business stock over time

As at March 2014, there were an estimated 335,015 private sector enterprises operating in Scotland - a decrease of 2.4% since March 2013. This is the first annual decrease in total business stock since 2006.

The number of registered private sector enterprises (those registered for VAT and/or PAYE) increased, however, up by 4.0% over the year to March 2014. There are now more registered private sector enterprises operating in Scotland than at any other time in the current series (which goes back to 2000).

Between 2000 and 2014, the total number of private sector enterprises has increased by an estimated 39.6% (95,045 enterprises).  As shown in Chart 2 below this increase has been driven by an increase in the smallest unregistered enterprises – the number of unregistered enterprises in Scotland has increased by 84.5% since 2000 (up from 91,305 in 2000 to 168,490 in 2014).  However, the number of registered enterprises increased between 2000 and 2014 also, from 148,665 to 166,525 (a 12.0% 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 2014

Chart2.2

The decrease in the total number of private sector enterprises between 2013 and 2014 has been caused by a fall in the number of unregistered enterprises (the smallest businesses that have an annual turnover below the VAT threshold of £79,000 and do not have employees). The number of unregistered businesses decreased from 183,055 in 2013 to 168,490 in 2014 - a decrease of 14,565 enterprises (-8.0%).

Having fallen between 2009 and 2011, the number of registered enterprises has increased for the third year in succession. Between 2013 and 2014, registered private sector enterprises rose from 160,050 to 166,525. This 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 4.1% (6,370 enterprises) between 2013 and 2014.

The number of medium-sized (50 to 249 employees) enterprises increased between 2013 and 2014 to 3,780 enterprises – representing an increase of 75 enterprises since 2013. There has been an increase of 430 enterprises since 2000 and the 2014 estimate is now higher than at any time since then.

The number of large (250 or more employees) enterprises also increased, to 2,295, between 2013 and 2014 – an increase of 25 since 2013 and an increase of 50 since 2000. The 2014 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.

Enterprises by legal status

As at March 2014, private sector enterprises in Scotland, as per the ‘Businesses in Scotland’ definition, fell into the following categories:

Sole Proprietors/Partnerships       (69.1% of enterprises, 21.5% of employment)
Companies/Public Corporations    (28.7% of enterprises, 70.5% of employment)
Non-Profit Making Bodies            (2.2% of enterprises, 8.0% of employment)

Although Sole Proprietors/Partnerships continue to make up the majority of private sector enterprises, the number of enterprises has decreased by 6.2% since 2013 while the number of Companies/Public Corporations has increased by 8.0%. Employment in Sole Proprietors/Partnerships has decreased by 4.6% but employment has increased by 2.0% in Companies/Public Corporations.

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

Enterprises by broad industry sector

As at March 2014, the two largest industry sectors were ‘Professional, Scientific & Technical Activities’ (52,160 enterprises) and Construction (44,540 enterprises). Together, these two sectors make up nearly 30% of all private sector enterprises in Scotland.

Between 2013 and 2014, the number of enterprises in the ‘Professional, Scientific & Technical Activities’ sector increased by 245 enterprises. The number of enterprises in the Construction sector decreased by 5,115 enterprises (-10.3%) between 2013 and 2014 - this was driven by a fall in the number of unregistered construction sector enterprises, as the number of registered enterprises in the Construction sector increased by 280 over the same period.

The number of enterprises within the broad industry groups in March 2013 and March 2014 can be seen in Chart 3.

Chart 3: Estimated number of private sector enterprises operating in Scotland, by industry sector, 2013 and 2014

Chart3.4

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 2014, registered private sector enterprises with ultimate ownership outside Scotland (RUK or Abroad owned) represented 3.0% of enterprises, accounting for 34.4% of employment and 57.1% of turnover. Within large firms (250+ employees) they represented 81.5% of enterprises, accounting for 62.5% of employment and 77.0% of turnover.

As at March 2014, 34.4% of private sector employment was in enterprises with ultimate ownership outside Scotland. Breaking this down, 18.2% of Scottish private sector employment was in enterprises with ultimate ownership in the RUK with the remaining 16.2% 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 2014, 32.5% of Scottish manufacturing employment was in Abroad-owned enterprises, compared to 4.5% of Scottish construction employment (see Chart 4).

Chart 4: Share of employment by ownership, by industry sector, 2014

Chart4.4

Local Authority Area breakdown (registered enterprises only)

Between 2013 and 2014, all local authority areas saw an increase in the number of registered enterprises. The City of Edinburgh local authority area experienced the greatest increase with a rise of 890 enterprises between 2013 and 2014 - followed by Glasgow City local authority area with an increase of 770 enterprises.

SMEs account for a larger share of private sector employment in the more rural local authority areas, compared to the more urban local authority areas. As at March 2014, SMEs accounted for 86.6% of private sector employment in the Orkney Islands local authority area compared to 37.2% in the Glasgow City local authority area.

Urban/Rural Area breakdown (registered enterprises only)

SMEs account for a larger share of private sector employment in rural areas, compared to urban areas. As at March 2014, SMEs accounted for 80.5% of private sector employment in remote rural areas compared to 69.4% in accessible rural areas and 45.9% in the rest of Scotland.

In remote rural areas, the ‘Agriculture, Forestry & Fishing’ industrial sector had the largest share of private sector employment (18.7%), in accessible rural areas the Manufacturing sector was largest (14.9%) and in the rest of Scotland, the ‘Wholesale, Retail and Repair’ sector was largest (20.9%).  

Changes to Scotland's registered business stock rate

The registered business stock rate, 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".

Between 2013 and 2014, the number of registered enterprises increased by 4.0%. This has increased the business stock rate from 362 to 377 over the latest year. As Table 1 shows, this increase is almost entirely due to the increase in the number of small enterprises (those with 0 to 49 employees).

Table 1 – Private sector business stock (registered only) per 10,000 adults, by size, Scotland, 2006-2014

      Private Sector per 10,000 adults
      Enterprise Size (number of employees)  
Year

Resident adult
mid-year
population

Registered private sector
enterprises
Small (0-49) Medium (50-249) Large (250+) All Sizes
2006 4,206,900 147,745 338 8 5 351
2007 4,246,400 151,145 342 8 5 356
2008 4,281,300 155,285 349 8 5 363
2009 4,311,700 155,320 346 8 5 360
2010 4,344,400 155,045 343 8 5 357
2011 4,383,800 154,365 339 8 5 352
2012 4,398,900 159,580 349 8 5 363
2013 4,416,000 160,050 349 8 5 362
2014* - 166,525 363 9 5 377
Sources - Businesses in Scotland 2014. NRS Mid-year population estimates.
*The provisional business stock rates for 2014 are based on the 2013 mid-year population estimates.

 

The 2014 estimate for the indicator is provisional and is based on the currently available mid-year population estimate for 2013. This will be updated in April 2015 when the 2014 mid-year population estimates, needed to for 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

Comparisons with the UK Business Stock

The Businesses in Scotland publication usually includes comparisons to the UK total business stock estimates as published by the Department for Business Innovation and Skills (DBIS). However, the DBIS publication estimates for 2014 are not yet published. For the latest comparisons to the total UK Business Stock, please see the Businesses in Scotland 2013 publication, available at: http://www.scotland.gov.uk/Topics/Statistics/Browse/Business/Corporate/BISPDF13