Scotland SME update
Welcome to the Close Brothers Asset Finance update of the Scottish SME sector; in this article we highlight a wide range of issues relevant to businesses in Scotland.
The results are based on the Close Brothers Business Barometer, a quarterly survey of close to 1,000 SMEs across the UK conducted by a specialist independent researcher.
While we focus on the Scottish results, where relevant, comparisons are made with national sentiment.
Economic outlook
As more certainty has returned, Scotland’s SME business owners are a great deal more positive about both their own prospects and those of the broader UK economy than they were only 12 months ago.
Six out of 10 business owners are either ‘far more’ or ‘marginally more’ optimistic about their future. A third feel the same as before.
Q: In general, how do you expect your business to perform over the next 12 months?
Yes, far more optimistic | 21.10% |
Yes, marginally more optimistic | 38.60% |
The same as 12 months ago | 31.60% |
No, marginally less optimistic | 7.00% |
No, far less optimistic | 1.80% |
Finance requirements
Many businesses in Scotland (60%) are continuing to find it a ‘challenge’ to access the funding they need and are saying that it hasn’t become any easier to get hold of finance and is as problematic as it’s ever been. The remaining 40% say it’s either becoming easier or they’ve ‘never had a problem accessing finance’.
Despite the challenges, 61.4% of business owners maintain they will be seeking funding for investment in the coming 12 months.
Concerns and priorities
Brexit and maintaining cash flow top the list of biggest concern for businesses in Scotland, along with hiring skilled staff and access to funding.
Q What is the single biggest issue that will affect your firm’s growth?
UK | SCOTLAND | |
Brexit | 20.70% | 19.30% |
Cashflow | 19.30% | 17.50% |
Access to funding | 10.60% | 15.80% |
Hiring skilled staff | 13.20% | 15.80% |
Ongoing impact of the pandemic | 19.10% | 14.00% |
Changing consumer spending habits | 9.10% | 3.50% |
New regulation | 5.60% | 10.50% |
Removal of government financial support | 2.40% | 3.50% |
For 35% of business owners, ‘achieving growth’ is their main priority, followed by ‘paying down debts’ (28%) and ‘business consolidation’ (17.5%).
Government funding schemes
Despite the availability of Government funding schemes, 47.4% of Scottish firms chose not to apply. Of those who did, 30% applied for the Bounce Back Loan Scheme; 12.3% the Coronavirus Business Interruption Loan Scheme, and 7% the Recovery Loan Scheme.
Contrary to the UK as a whole, many business owners (45%) did not feel the schemes went ‘far enough’ – the UK sentiment is 26%.
With uptake relatively low in Scotland, there is confidence (75%) they can survive and thrive after all the schemes come to an end.
Furlough
Over half of Scottish businesses had all or some of their workforce on furlough during the pandemic; 30% ‘did not need to’.
Over three quarters of participating firms found it very useful, with many saying they would have closed down without it. The remaining number felt it did not go ‘far enough’.
Brexit
The UK’s departure from the European Union is continuing to concern business owners, with 28% saying it is making it more difficult to buy from the EU; 21% saying it is making it more difficult to sell to the EU, and 8.8% saying it’s impacting all areas of trading. The remaining firms either haven’t had their trading impacted or don’t trade with the EU.
Brexit has also increased costs for 54.4% of SMEs, and also raised the time it takes for their goods to reach the EU, while for a further 47.1% it’s impacted their ability to recruit the staff they need.
COVID
Over two thirds of Scottish companies have been actively encouraging their employees to be vaccinated, while 56% will require new employees to provide evidence of vaccination before employing them, if it’s legally possible.
Over four in 10 firms will pay for staff to be vaccinated for COVID on an annual basis, if this becomes an option, while 28.8% will not.
Most workplaces in Scotland (68.4%) will see social distancing measures in the workplace maintained, with masks also being required in 70% of them, well ahead of the UK average of 58%.
Costs have increased for 85% of firms – of these, 33% have passed the increases onto customers, while 53% have not.
Diversity in the workplace
Businesses in Scotland overwhelmingly believe having a diverse workforce (gender/ethnicity/age/sexual orientation, etc.) is beneficial to a business's financial performance (70.2% ‘yes’; 15.8% ‘no’; 14% ‘unsure’), and that having a diverse workforce makes a business more attractive to candidates.
Nearly two thirds of firms are actively working to make their workforce more diverse, while a quarter are not. Of those who are, the primary cited is because ‘it’s the right thing to do’ and it ‘reflects our customers’.
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This blog is one of a series of articles from our commercial partners. The views expressed are those of the author and not necessarily those of ICAS.