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National Indicator: Businesses

 Increase the number of businesses

Indicator Measure
The total number of VAT/PAYE registered private sector enterprises in Scotland per 10,000 adults

Current Status
There were 393 businesses per 10,000 adults in 2017, compared to the 2006 rate of 351 businesses per 10,000 adults.

2005 to 2017

Source: Businesses in Scotland 2016, Scottish Government - for registered enterprise counts. Mid-year population estimates, National Records of Scotland, for 16+ population estimates.
The data for this chart is available at the bottom of the page.

Last Update: 8 November 2017
Next Update: November 2018

Increase the number of businesses

Why is this National Indicator important?
What will influence this National Indicator?
What is the Government's role?
How is Scotland performing?
What more do we know about this National Indicator?
Criteria for recent change
Further information
Who are our partners?
Related Strategic Objectives

Why is this National Indicator important?

Any increase in the business stock is a good indicator of an active entrepreneurship climate in the economy. Also, competition drives innovation, efficiency and quality improvements thereby improving productivity. The number of businesses in Scotland (stock) reflects a combination of both the numbers of new businesses created (start-ups) and the survival of existing businesses. Historically, Scotland has lagged behind the UK in terms of start-ups and has a low level of business stock relative to its population size. A strong private sector is essential for economic growth and wealth creation, and small businesses - which account for 98% of all enterprises - create vital jobs and are often the lifeblood of local communities. That's why a fundamental aim of Government is to improve the business creation, sustainability and growth of small businesses in Scotland.

The provision of good quality support and assistance will remain crucial. But, in the longer term, real improvements in our cultural approach to entrepreneurship and enterprise will provide the greatest and most long lasting benefits. The Curriculum for Excellence enables young learners in schools to develop a knowledge and practical understanding of the world of work including entrepreneurship. Also, the exposure of students in Further and Higher Education to entrepreneurship and the enterprise experience will increase the prospect of graduates forming new businesses and introducing new products and ideas to the marketplace.

What will influence this National Indicator?

Business formation and sustainable growth is determined by a number of factors, including:

  • General economic conditions: a stronger economy leads to a greater demand for products and services, providing both domestic and export opportunities for new enterprises to supply. A strong and stable economy also increases optimism in the future and the chance of a new business succeeding
  • Effective regulation: effective proportionate and targeted regulation creates a stable and supportive business environment, making the start-up process - and subsequent stages of development and growth - simpler and more attractive to potential entrepreneurs
  • Access to finance: businesses require finance and investment to set up and grow
  • Entrepreneurial attitude: the attitude of the Scottish population towards entrepreneurialism influences new business formation. The greater the spirit of entrepreneurialism, more businesses will be started.

What is the Government's role?

Increasing sustainable economic growth is the Scottish Government's (SG) top priority. The Government's role is to ensure that the conditions are right for the creation of new businesses, and for existing businesses to thrive and grow in order to help Scotland's economy become more productive and prosperous.

The Business Gateway (BG) provides support including start-up training, business advice and details of financial support available. The local delivery of the BG is managed by local authorities, ensuring better integration with other services local authorities deliver relevant to business. SG is working with COSLA on the shape of the future BG service, including the potential for greater pre-start support and aftercare provision.

Scottish Enterprise and Highlands and Islands Enterprise now focus their support on the areas where they can have the most economic impact - investment and innovation by companies and sectors which have growth potential and are of national or regional significance. In addition, the Scottish Investment Bank, with private sector partners, invests equity in early stage innovative technology based businesses with growth ambitions.

How is Scotland performing?

The 2017 registered business stock rate of 393 businesses per 10,000 adults has increased from the 2016 rate of 388 businesses per 10,000 adults. The 2017 rate is the highest rate recorded since the start of the series in 2006.

The data is available at the bottom of the page.

What more do we know about this National Indicator?

The business stock rate, used to measure this indicator, will increase when the stock of private sector VAT/PAYE registered businesses grows at a quicker rate than the resident adult population – or the stock of businesses falls at a slower rate than the resident adult population.

Between 2006 (the baseline year) and 2008 the business stock increased by 5.1% while the adult population increased by 1.8% - as a result the business stock rate increased from 351 per 10,000 adults in 2006 to 363 per 10,000 adults in 2008. 

From 2008, when Scotland entered recession, until 2013, the increase in Scotland’s business stock was marginally below the increase in the adult population. This resulted in a small change to the business stock rate, down from 363 to 362 per 10,000 adults over the period. 

Between 2011 and 2016 the business stock increased by 12.7% while the adult population increased by 2.4% - as a result the business stock rate increased from 352 per 10,000 adults in 2011 to 388 per 10,000 adults in 2016. 

In 2017, there were 176,400 registered businesses in Scotland, up by 1.4% from 2016. The provisional business stock rate for 2017 is based on the adult population estimates for 2016, and has risen to 393 per 10,000 adults. The rate for 2016 is above the 2006 baseline of 351 registered businesses per 10,000 adults and is higher than at any time since then. 

Business Stock Change – Business Size Breakdown

Between 2006 and 2017, the total number of registered businesses increased by 28,655 (19.4%). There was an increase in registered businesses across all size bands, with the largest increase being in sole-traders/partnerships (businesses that do not employ others).  The number of businesses in this size band rose from 54,410 in 2006 to 68,940 in 2017, an increase of 25.8% over the period. 

Between 2006 and 2017, the number of the small employers (1 to 49 employees) increased by 14,030 (16.1%), the number of medium employers (50 to 249 employees) increased by 375 (10.8%) and the number of large employers (250+ employees) increased by 110 (4.9%).

Note, specifically, that changes in the business stock by size band can be affected by business start-ups, business growth/contraction and business survival.   

Business Stock Change – Ownership Breakdown

Between 2006 and 2017, there was an increase in the number of Scottish-owned businesses, up by 19.7% from 143,140 to 171,270. Abroad-owned businesses operating in Scotland also increased, by 38.2%, from 1,700 to 2,350. By contrast there was a fall of 4.1% in the number of ‘Rest of the UK’ owned businesses operating in Scotland, decreasing from 2,905 to 2,785.

Full data for business size, ownership and sector can be found in the data download section.

Note that the VAT/PAYE registered enterprise count (business stock) cannot be broken down by equality strand (e.g. gender of business owner).  However, self-employment estimates from the Annual Population Survey (APS) and data from the Small Business Survey can be used to analyse business ownership by equality group–these estimates are published at: 

http://www.gov.scot/Topics/People/Equality/Equalities/BusinessEntEnergy

Criteria for recent change

The evaluation is based on: any difference within +/- 4 businesses per 10,000 adults suggests that the position is more likely to be maintaining than showing any change. An increase of 4 businesses per 10,000 adults or more suggests the position is improving; whereas a decrease of 4 businesses per 10,000 adults or more suggests the position is worsening.  The 4 businesses per 10,000 adults is effectively a difference of 1%.

Note that the rate is provisional, it is possible that the arrow direction will change from improving to maintaining once the 2017 population estimates are available.  The adult population would only need to increase by 23,000 to change the provisional direction of the arrow (from improving to maintaining). The increase in Scotland’s adult population, over the past available year (2015 to 2016) was 28,000.

Further Information

For information on general methodological approach, please click here.

Scotland Performs Technical Note

Who are our partners?

Highlands and Islands Enterprise

Local Authorities

Scottish Enterprise

Related Strategic Objectives

Wealthier and Fairer

View National Indicator Data

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Title:Increase the number of businesses
Description:Increase the number of businesses
File:Increase the number of businesses [XLSX, 367.8 kb: 08 Nov 2017]
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