Businesses in Scotland: 2018

March 2018, there were an estimated 345,915 private sector businesses operating in Scotland.  Between 2000 and 2018, the total number of businesses increased by an estimated 45.4% (108,020 businesses).  As shown in the Chart 2 below, this increase over the long term has been driven by a rise in the number of unregistered businesses.  Although there has been a considerable increase in the number of registered businesses over this period also – up 18.6% (27,630 businesses).

Chart 2: Estimated number of private sector enterprises operating in Scotland, 2000 to 2018

Between 2017 and 2018, the total number of private sector businesses in Scotland decreased by 8,830 businesses (-2.5%).  This follows an increase in the previous annual period. 

The decrease over the latest year was driven by a fall in the number of unregistered businesses. The number of unregistered businesses decreased from 178,340 in 2017 to 169,620 in 2018 – a decrease of 8,720 unregistered businesses (-4.9%).

The number of registered businesses (those registered for VAT and/or PAYE) decreased over the latest year also - down by 105 businesses (-0.1%) from 174,600 in 2017 to 176,295 in 2018 – this is the first fall in the registered business stock since 2011.  However, the registered business count for 176,295 is still relatively high – it is the second highest point in the series back to 2000. 

This slight fall in the registered business stock over the latest year was as a result of a decrease in the number of small (0 to 49 employees) registered businesses – down 0.1% (-190 businesses) between 2017 and 2018.  Within this group, there was a decrease in the number of non-employing registered businesses (down 1,025 businesses) but an increase in the number of small employers (1 to 49 employees) from 101,245 in 2017 to 102,075 in 2018 (up 830 businesses).

The number of medium-sized (50 to 249 employees) businesses increased between 2017 and 2018 to 3,925 – representing an increase of 70 businesses. There has been an increase of 575 medium-sized businesses since 2000 and the 2018 medium-sized business count is a series high.

The number of large (250 or more employees) businesses also increased, over the latest year, to 2,380 – an increase of 15 since 2017.  There has been an increase of 135 large businesses since 2000 and the 2018 large business count is a series high also.  Following the recession, from mid-2008 to 2009, there was a slight shift in employment from large businesses (250+ employees) to small businesses – with large businesses accounting for 47.1% of private sector employment in 2010 compared to a low of 44.2% in 2015.  The latest figures for 2018 show that the large business share of private sector employment has increased slightly over the latest year from 44.9% in 2017 to 45.1% in 2018.

The number of employers increased, between 2017 and 2018, from 107,465 to 108,830 – representing an increase of 915 employers (0.9%). This takes the number of private sector employers in Scotland to the highest level in the series (back to 2000).

Chart 3: Private sector employers operating in Scotland, 2000-2018​

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 ‘UK owned - Scotland based’, ‘UK owned - Rest of the UK (RUK) based’ or Abroad owned.

As at March 2018, registered private sector enterprises with ultimate base outside Scotland (RUK based or Abroad owned) represented 3.1% of enterprises, accounting for 34.5% of employment and 53.7% of turnover. Within large firms (250+ employees) they represented 81.5% of enterprises, accounting for 62.3% of employment and 74.8% of turnover.

As at March 2018, 34.5% of private sector employment was in enterprises with ultimate base outside Scotland. Breaking this down, 17.5% of Scottish private sector employment was in enterprises with ultimate base in the RUK with 17.0% of employment in enterprises with ultimate ownership Abroad (outside the UK). The share of employment in Abroad owned enterprises varies by industry sector. For example, as at March 2018, 31.4% of Scottish manufacturing employment was in Abroad-owned enterprises, compared to 3.3% of Scottish ‘Arts, entertainment and recreation’ employment (see Chart 5).  Between 2017 and 2018, the number of Abroad-owned enterprises in Scotland increased from 2,350 to 2,610.    

Chart 5: Share of employment by ownership, by industry sector, 2018

As at March 2018, there were 1,100 EU Abroad-owned enterprises operating in Scotland – employing 121,790 people and generating a turnover of £33 billion (12.6% of all turnover from registered businesses in Scotland or 38.6% of all turnover from Abroad-owned registered businesses in Scotland). 

In terms of individual countries, USA-owned enterprises accounted for the highest share of Scotland’s Abroad-owned enterprises, Abroad-owned employment and Abroad-owned turnover. As at March 2018, there were 590 USA-owned enterprises operating in Scotland – employing 107,750 people and generating a turnover of around £31 billion (36.6% of all turnover from abroad-owned registered businesses in Scotland).

Between 2017 and 2018, the registered business stock decreased in 18 of Scotland’s 32 local authority areas – with the registered business stock falling the most in Aberdeen City (down 210 businesses, -2.2%) and Aberdeenshire (down 140 businesses, -1.0%).  Over the latest year, Glasgow City local authority area experienced the greatest increase in the registered business stock with a rise of 335 businesses (up 1.7%) – followed by Fife (up 190 businesses, +1.9%) and then the City of Edinburgh (up 145 businesses, +0.7%).

The reduction in the business stock, over the latest year, in Aberdeen City and Aberdeenshire is driven by a fall in the number of enterprises in the ‘Professional, scientific and technical activities’ sector – reflecting the slowdown in the oil and gas sector and associated supply chain.

The share of employment in Abroad-owned enterprises varies significantly by local authority area. For example, as at March 2018, 29.7% of West Dunbartonshire’s private sector employment was in Abroad-owned enterprises, compared to 4.8% in the Orkney Islands.  

The share of employment in SMEs also varies significantly by local authority area. SMEs account for a larger share of employment in the more rural local authority areas, compared to the more urban local authority areas.  As at March 2018, SMEs accounted for 81.8% of private sector employment in the Orkney Islands local authority area compared to 38.3% in the Glasgow City local authority area.

The National Performance Framework (NPF) ‘Number of Businesses’ Indicator measures the total number of registered businesses operating in Scotland per 10,000 adults (the business stock rate).  The provisional business stock rate for 2018 shows that there were 391 businesses per 10,000 adults, the same rate as 2017.

Business stock estimates for the UK as a whole are published by the Department for Business, Energy and Industrial Strategy (BEIS). The BEIS Business Population Estimates 2018 show that for the UK as a whole the total number of businesses (registered and unregistered) decreased by 0.5% between the start of 2017 and start of 2018. This compares to a decrease of 2.5% for Scotland between March 2017 and March 2018 (as per the Businesses in Scotland 2018 results). 

Scotland has a different business stock make-up compared to the UK as a whole. The table below shows that, in 2018, Scotland had a business stock rate of 750 (registered and unregistered) enterprises per 10,000 adults, compared to 1,059 enterprises per 10,000 adults in the UK as a whole. 

Scotland has a lower rate of small businesses (particularly those that do not employ others) but a higher rate of medium and large businesses compared to the UK as a whole – see the table below.

Large businesses account for a higher share of Scotland’s private sector employment (45%), compared to the UK as a whole (40%).

Source:  UK - Business Population Estimates 2018, BEIS.  Scotland – Businesses in Scotland 2018. 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.