Scotland National Strategy for Economic Transformation: industry leadership groups and sector groups - evidence

8. Employee Ownership Industry Leadership Group

Industry Aspirations to 2030

The industry plans to have 500 employee-owned businesses (EOBs) in Scotland by 2030, up from 150 in 2021.

Industry Opportunities

The EO model and support for companies wishing to use this model provide a number of opportunities for Scotland’s economy:

• since June 2020, the EOB sector in Scotland has grown 13%, making Scotland the third highest growth region for EOB in the UK;
• EOBs frequently outperform their non-EOB counterparts in terms of higher levels of profitability, benefit from improved business resilience during times of recession, and enjoy increased productivity brought about by higher levels of engagement and enhanced employee wellbeing;
• Scottish Enterprise’s experts have the experience, knowledge and existing mechanism to successfully support EOB transitions. Scaling the service will be critical both to stimulate interest and meet demand for a resilient post COVID wellbeing economy; and,
• Employee ownership allows owners to manage their exit while achieving a competitive price for their business. It safeguards the long-term future of their company and keeps it rooted in its local community, retaining jobs, skills and investment.

Industry Challenges

The EOB sector’s biggest barrier to growth is the lack of awareness of the model amongst the business start-up market, existing business owners looking to sell their business and amongst lawyers, accountants and bankers required to manage the employee ownership transitions. The majority of existing specialist funds for EOBs have higher than average interest rates. A fund that understands the unique differences and benefits of employee ownership is key.

Ongoing and Planned Activity for Industry

The sector comprises businesses from a variety of industrial sectors with the common interest of a shared business model. Supporting greater recognition of the benefits of employee ownership and a shared understanding of the needs of employee owned businesses is the key to growth of the sector. The Industry Leadership Group will work closely with public sector partners to create the conditions for growth in the sector and support the ambition of growing the sector to 500 businesses by 2030.