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Businesses in Scotland - Headline Figures

  • As at March 2017, there were an estimated 365,600 private sector enterprises operating in Scotland - the highest figure since the time series began (in 2000).

  • Between March 2016 and March 2017, the estimated number of enterprises increased by 3.1% (11,110 enterprises).

  • The increase over the latest year was driven by a rise in the number of unregistered businesses (those not registered for VAT or PAYE). The number of unregistered businesses increased from 180,500 in 2016 to 189,200 in 2017 – an increase of 8,700 businesses (4.8%)

  • The number of VAT/PAYE registered businesses has increased - up by 2,405 (1.4%) from 173,995 in 2016 to 176,400 in 2017 – similarly the highest figure since the time series began (in 2000).

  • As at March 2017, there were 363,235 Small and Medium-sized Enterprises (SMEs) operating in Scotland, providing an estimated 1.2 million jobs. SMEs accounted for 99.4% of all private sector enterprises and accounted for 55.0% of private sector employment and 40.1% of private sector turnover.

Scottish Economy – Recent Gross Domestic Product (GDP) Trends

Between the four quarters ending in Q2 2016 and the four quarters ending in Q2 2017, Scottish GDP grew at a rolling annual rate of 0.4%, with 1.7% growth in the Service sector offsetting contractions of 5.2% in the Construction sector and 3.0% in the Production sector. Service sector growth over the period was driven by Business Services and Finance. The Production sector contraction partly reflects the impact of the slowdown in the oil and gas sector.

Businesses in Scotland as at March 2017

As at March 2017, there were an estimated 365,600 private sector enterprises operating in Scotland. Almost all of these enterprises (98.3%) were small (0 to 49 employees); 3,855 (1.1%) were medium-sized (50 to 249 employees) and 2,365 (0.6%) were large (250 or more employees).

As at March 2017, there were 363,235 Small and Medium-sized Enterprises (SMEs) operating in Scotland, providing an estimated 1.2 million jobs. SMEs accounted for 99.4% of all private sector enterprises, accounting for 55.0% of private sector employment and 40.1% of private sector turnover.

Small (0 to 49 employees) enterprises alone accounted for 42.6% of private sector employment and 26.7% of private sector turnover as at March 2017 (see Chart 1).    

The 2,365 large (250+ employees) enterprises operating in Scotland, as at March 2017, accounted for 45.0% of private sector employment and 59.9% of private sector turnover (see Chart 1). 

Chart 1: Share of enterprises, employment and turnover by size of enterprise, 2017

Businesses in Scotland 2017 by size version 2

As at March 2017, enterprises with no employees – that is sole proprietors/partnerships comprising only the owner-managers or companies comprising only the employee director – accounted for 70.6% of all private sector enterprises in Scotland, 13.5% of private sector employment and 4.9% of private sector turnover. 

The total number of enterprises operating in Scotland comprises those that are registered for VAT and/or PAYE, and those that are not (so called unregistered enterprises). Unregistered enterprises are sole proprietorships and partnerships that are not large enough to be VAT registered (have an annual turnover below the VAT threshold - £83,000 as at March 2017) and are not PAYE registered (i.e. do not employ others).  As at March 2017, unregistered enterprises represented 51.8% of all private sector enterprises in Scotland.   

Changes in the Scottish business stock over time

As at March 2017, there were an estimated 365,600 private sector enterprises operating in Scotland – a rise from 2016. This 2017 figure is the highest stock figure in the series back to 2000.

Between 2000 and 2017, the total number of private sector enterprises has increased by an estimated 52.4% (125,630 enterprises).  As shown in Chart 2 below this increase has been driven by a rise in the smallest unregistered enterprises – the number of unregistered enterprises in Scotland has more than  doubled since 2000 (up from 91,305 in 2000 to 189,200 in 2017).  The number of registered enterprises has increased also – from 148,665 in 2000 to 176,400 in 2017 (an increase of 18.7%) - driven by a rise in the number of small (0 to 49 employees) registered enterprises.

Chart 2: Estimated number of private sector enterprises operating in Scotland, 2000 to 2017

Businesses in Scotland 2017 by years version 2

Between 2016 and 2017, the total number of private sector businesses in Scotland increased by 11,110 businesses (3.1%).  This follows a decrease in the previous annual period. 

The increase over the latest year was driven by a rise in the number of unregistered businesses. The number of unregistered businesses increased from 180,500 in 2016 to 189,200 in 2017 – an increase of 8,700 businesses (4.8%).

The number of registered businesses (those registered for VAT and/or PAYE) increased over the latest year - from 173,995 businesses in 2016 to 176,400 business in 2017, a rise of 2,405 registered businesses (1.4%).  With six years of sustained annual growth, this takes the number of registered businesses to a new series high.

This rise in registered enterprises over the latest year was driven by an increase in the number of small (0 to 49 employees) enterprises – up 1.5% (2,470 enterprises) between 2016 and 2017.  Looking within the group of small registered enterprises, the number of registered enterprises without employees grew by 3.2% from 66,825 in 2016 to 68,940 in 2017, and the number of registered small employers (1-49 employees) increased by 0.4% from 100,885 in 2016 to 101,245 in 2017.

The number of medium-sized (50 to 249 employees) enterprises decreased between 2016 and 2017 to 3,855 enterprises – representing a decrease of 65 enterprises. There has been an increase of 505 medium-sized enterprises since 2000.

The number of large (250 or more employees) enterprises remains unchanged, as 2,365 in 2017. There has been an increase of 120 large-sized enterprises since 2000.

Following the recession, from mid-2008 to the end of 2009, there has been 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 44.3% in 2015.  The latest figures for 2017 show that the large business share of private sector employment has decreased slightly over the latest year from 45.3% in 2016 to 45.0% in 2017.

The number of employers increased slightly, between 2016 and 2017, from 107,170 to 107,465 – representing an increase of 295 employers (0.3%). This takes the number of employers in Scotland to the highest level in the series (back to 2000).

Enterprises by legal status

As at March 2017, private sector enterprises in Scotland, as per the ‘Businesses in Scotland’ definition, fell into the following categories:

  • Sole Proprietors/Partnerships[1]    (67.2% of enterprises, 20.2% of employment)

  • Companies[2]                              (30.7% of enterprises, 71.4% of employment)

  • Non-Profit Making Bodies              (2.1% of enterprises, 8.3% of employment)

Although Sole Proprietors/Partnerships continue to make up the majority of private sector enterprises; there has been sustained high growth in the number of Companies over the last seven years. The number of Companies has increased from 76,995 in 2010 to 112,170 in 2017 – an increase of 35,175 (45.7%).

 

[1] Note that the Sole Proprietorships/Partnerships legal status group includes unregistered enterprises.

[2] Includes a small number of public corporations.

Enterprises by broad industry sector

As at March 2017, the two largest industry sectors were ‘Professional, Scientific & Technical Activities’ (52,985 enterprises) and Construction (45,940 enterprises). Together, these two sectors make up 27.1% of all private sector enterprises in Scotland.  In terms of private sector registered enterprises - these two sectors are also the largest, ‘Professional, Scientific & Technical Activities’ (32,750 registered enterprises) and Construction (19,925 registered enterprises)

Between 2016 and 2017, the number of registered enterprises in the ‘Transportation and storage’ sector increased by 6.5% (355 enterprises) – the sector with the highest relative growth over the latest year.  In contrast, the number of enterprises in the ‘Mining and Quarrying’ sector decreased by 7.3% (20 enterprises) - the sector with the lowest relative growth over the latest year.      

Between 2016 and 2017, the number of registered enterprises in the ‘Construction’ sector increased by 750 enterprises (3.9%) – the sector with the highest absolute growth over the latest year.  In contrast, the number of enterprises in the ‘Retail trade’ sector decreased by 160 enterprises (1.1%) - the sector with the lowest absolute growth over the latest year.      

The number of registered enterprises in March 2016 and March 2017, by broad industry group, is shown in Chart 3:

Chart 3: Estimated number of private sector enterprises operating in Scotland, by industry sector, 2016 and 2017

Businesses in Scotland 2017 by sector version 3

Ownership (registered enterprises only)

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 2017, registered private sector enterprises with ultimate base outside Scotland (RUK based or Abroad owned) represented 2.9% of enterprises, accounting for 34.4% of employment and 53.3% of turnover. Within large firms (250+ employees) they represented 81.2% of enterprises, accounting for 62.4% of employment and 73.7% of turnover.

As at March 2017, 34.4% of private sector employment was in enterprises with ultimate base outside Scotland. Breaking this down, 17.9% of Scottish private sector employment was in enterprises with ultimate base in the RUK with 16.5% 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 2017, 29.4% of Scottish manufacturing employment was in Abroad-owned enterprises, compared to 3.2% of Scottish real estate activities employment (see Chart 4).   

Chart 4: Share of employment by ownership, by industry sector, 2017

Businesses in Scotland 2017 by ownership version 2

Between 2016 and 2017, the number of foreign-owned enterprises in Scotland increased from 2,305 to 2,350.  However, the foreign-owned share of turnover dropped from 34.1% to 32.6% between 2016 and 2017 - reflecting the slowdown in the oil and gas sector with foreign-owned turnover falling significantly in the ‘Mining & Quarrying’ and ‘Manufacturing’ sectors.  

As at March 2017, there were 1,040 EU abroad-owned enterprises operating in Scotland – employing 121,610 people and generating a turnover of around £35 billion (13.4% of all turnover from registered businesses in Scotland or 41.1% 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 foreign-owned enterprises, foreign-owned employment and foreign-owned turnover. As at March 2017, there were 550 USA-owned enterprises operating in Scotland – employing 106,340 people and generating a turnover of around £30 billion (35.1% of all turnover from abroad-owned registered businesses in Scotland).

Local Authority Area breakdown (registered enterprises only)

Between 2016 and 2017, the majority of local authority areas saw an increase in the number of registered enterprises. However, eight of Scotland’s 32 local authority areas experienced a falling registered business count between 2016 and 2017 – including Aberdeen City (down 325 businesses, a reduction of 3.2%) and Aberdeenshire (down 160 businesses, a reduction of 1.1%). Glasgow City local authority area experienced the greatest increase with a rise of 735 (up 3.9%) enterprises between 2016 and 2017 – followed by the City of Edinburgh local authority area with an increase of 415 enterprises (up 2.2%).

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 foreign-owned enterprises varies significantly by local authority area. For example, as at March 2017, 30.2% of Aberdeen City’s private sector employment was in foreign-owned enterprises, compared to 4.2% 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 2017, SMEs accounted for 83.6% of private sector employment in the Orkney Islands local authority area compared to 37.6% in the Glasgow City local authority area.

Urban/Rural Area breakdown (registered enterprises only)

SMEs account for a larger share of private sector employment in rural areas, compared to urban areas. As at March 2017, SMEs accounted for 78.9% of private sector employment in remote rural areas compared to 68.4% in accessible rural areas and 45.9% in the rest of Scotland.

In remote rural areas, the ‘Accommodation and food service activities’ industrial sector had the largest share of private sector employment (17.9%), in accessible rural areas the Manufacturing sector was largest (16.1%) and in the rest of Scotland, the ‘Wholesale, Retail and Repair’ sector was largest (20.1%).  

Changes to Scotland's registered business stock rate

The registered business stock rate, the total stock of private sector registered enterprises per 10,000 resident adults in Scotland, is the basis of the Scottish Government National Indicator: “Increase the number of businesses”.

Between 2016 and 2017, the number of registered enterprises increased by 1.4% - this has increased the business stock rate from 388 to 393. 

Table 1 – Registered private sector businesses per 10,000 adults, Scotland, 2006-2016

Year

Registered
Enterprises

Annual Change

Resident Adult Population 

Businesses per 10,000 adults

2006

147,745

-

4,206,900

351

2007

151,145

2.3%

4,246,400

356

2008

155,285

2.7%

4,281,300

363

2009

155,320

0.0%

4,311,700

360

2010

155,045

-0.2%

4,344,400

357

2011

154,365

-0.4%

4,383,800

352

2012

159,580

3.4%

4,398,900

363

2013

160,050

0.3%

4,416,000

362

2014

166,525

4.0%

4,436,600

375

2015

170,335

2.3%

4,460,700

382

2016

173,995

2.1%

4,488,800

388

2017

176,400

1.4%

Not Yet Available

393*

 
Sources - Businesses in Scotland 2017. NRS Mid-year population estimates.
*The provisional business stock rate for 2017 is based on the 2016 Mid-year population estimates.
 

The 2017 estimate for the indicator is provisional and is based on the currently available mid-year population estimates for 2016. This will be updated in April 2018 when the 2017 mid-year population estimates, needed to form the ‘per 10,000 adults’ rate, will become available. Further information can be found at:

http://www.gov.scot/About/Performance/scotPerforms/indicator/businesses 

Comparisons with the UK Business Stock

The Businesses in Scotland publication usually includes comparisons to the UK total business stock estimates as published by the Department for Business, Energy and Industrial Strategy (BEIS). However, the BEIS publication estimates for 2017 are not yet published – and therefore this section focusses on comparing Scotland’s registered business stock with that of the UK as published by the Office for National Statistics (ONS) in the UK business; activity, size and location: 2017 publication.

The latest ONS figures show that for the UK as a whole the number of registered businesses increased by 4.5% between 2016 and 2017. This compares to an increase of 1.4% for Scotland between March 2016 and March 2017 (as per the Businesses in Scotland 2017 results). 

Scotland has a different business stock make-up compared to the UK as a whole. The table below shows that, in 2017, Scotland had a registered business stock rate of 393 registered enterprises per 10,000 adults, compared to 499 registered enterprises per 10,000 adults in the UK as a whole. 

Scotland has a lower rate of small businesses (particularly micro businesses) but a higher rate of medium and large businesses compared to the UK as a whole – see the table below.

Table 2 – Private sector VAT/PAYE registered businesses per 10,000 adults, 2017

Country Resident Adults
Mid-year 2016 (aged 16+)
Private Sector
Enterprises
Private Sector per 10,000 adults
Enterprise Size (number of employees) All
Sizes
None

Small
(1-49)

Medium
(50-249)

Large
(250+)
UK 53,258,000 2,656,280 447 43 7 2 499
Scotland 4,488,800 176,400 343 37 9 5 393

Source:   UK Business: Activity, Size and Location 2017, Office for National Statistics, Scotland – Businesses in Scotland 2017, Scottish Government