Small Business Survey Scotland: 2021

Key Results

Business Demographics

• 66 per cent were urban-based while 34 per cent of SME employers were rural-based
• 28 per cent of SME employers were home-based
• 23 per cent of SME employers were women-led
• 80 per cent of SME employers were family-owned
• 4 per cent of SME employers were Minority Ethnic Group (MEG)-led

Trade Activities

• 16 per cent of SME employers had exported goods or services outside of the UK in the last 12 months, unchanged from the prior year
• the proportion of SME exporters exporting to EU countries (73 per cent of SME exporters) was lower than non-EU countries (81 per cent). 18 per cent of SME exporters exported to EU countries only
• 40 per cent of SME employers had sold goods or services to the rest of the UK
• 22 per cent of SME employers had directly imported goods or services from countries outside the UK in the previous 12 months
• a higher proportion of SME employers imported from EU countries (43 per cent) than non-EU countries (25 per cent)
• 64 per cent of SME employers imported goods or services from the rest of the UK

Business Practices

• 28 per cent of SME employers had engaged in process innovation (i.e. introduced new or improved processes for producing or supplying goods or services) in the last three years
• 46 per cent of SME employers in 2021 engaged in either products, goods, or process innovation
• 47 per cent of SME employers had arranged or funded training in the past 12 months
• 12 per cent of SME employers engaged with Modern Apprenticeships in the past 12 months
• 24 per cent of SME employers had used external information or advice on matters affecting their business in the past 12 months
• 84 per cent of SME employers paid all their employees aged 18 or over (excluding volunteers, apprentices and interns) the Living Wage as defined by the Living Wage Foundation
• 2 per cent of SME employers were signed up to the Scottish Business Pledge and a further 13 per cent were aware of it but not signed up

Access to External Finance

• 78 per cent of SME employers in Scotland were currently using external finance at the time of the 2021 survey
• the most common forms of external finance currently used by SME employers were credit cards (31 per cent of SME employers) and loans from banks or building societies directly related to the Coronavirus (Covid-19) pandemic (29 per cent)
• 11 per cent of SME employers had sought external finance in the last 12 months
• 70 per cent of SME employers that had applied for finance (64 per cent) did so for working capital or cash flow reasons
• the most common forms of external finance applied for were bank overdraft facilities (43 per cent of SME employers that applied for finance) and loans from banks and other financial institutions (28 per cent)
• 9 per cent of SME employers were discouraged borrowers (i.e. they had a need for external finance in the last 12 months that they did not apply for)

Business Performance and Outlook

• 30 per cent of SME employers that had been trading for at least one year had employed more people than a year previously. 52 per cent employed the same number and 18 per cent employed fewer
• 31 per cent of SME employers expected to employ more people in 12 months’ time, and 7 per cent expected to employ fewer
• of all SME employers that had been trading for at least one year, 39 per cent increased their turnover over the past year. 31 per cent had approximately the same turnover and 28 per cent had lower turnover
• 52 per cent of SME employers expected turnover to increase in the next 12 months, 40 per cent expected turnover to stay approximately the same and 6 per cent expected turnover to decrease
• 74 per cent of SME employers generated a profit in their last financial year
• the most commonly reported obstacles to the success of the business were the COVID-19 pandemic (76 per cent) and staff recruitment/skills (43 per cent of SME employers). UK exit from the EU was noted as an obstacle by 40 per cent of SME employers
• of those SME employers that reported UK exit from the EU as a major obstacle to business success, an increase in the cost of EU imports was the most commonly reported difficulty already experienced (56 per cent)
• 77 per cent of SME employers aimed to grow sales over the next three years, a ten percentage point increase from the prior year (74 per cent)

COVID-19

• of SMEs in Scotland in 2021 who received the Small Business Bonus Scheme (SBBS) relief, a large majority received relief of between 91 per cent to 100 per cent, at over two thirds (67 per cent)
• of SMEs that use e-commerce technologies to sell to customers, 22 per cent began selling online as a result of the COVID-19 pandemic
• the share of firms who have reduced their staff count over the year preceding the survey who attribute this reduction mainly to Covid-19 was 24 per cent. This is broadly in line with the UK figure of 32 per cent and significantly lower than in the previous year’s survey, which stood at 42 per cent

Energy

• in 2021, 22 per cent of SME employers in cohort A in Scotland had installed some kind of energy efficiency measure in the prior year. This is broadly in line with the UK
• in 2021, 63 per cent of SMEs in cohort A for Scotland had no smart meter (electrical or gas) installed on their businesses premises. This is significantly higher than the proportion of businesses UK-wide who did not have a smart meter installed, which stood at 53 per cent
• 82 per cent of businesses in Scotland in 2021 had no plans to install a low carbon heating system in the next 12 months preceding the survey, with a total of only 7 per cent planning to install a heating system or energy efficiency measures, or both