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Businesses in Scotland - Key Facts 2012

 

Headline Figures

  • As at March 2016, there were an estimated 350,410 private sector enterprises operating in Scotland.
  • Between March 2015 and March 2016, the estimated number of enterprises decreased by 3.0% (10,935 enterprises).
  • The decrease over the latest year is driven by a fall in the number of unregistered businesses (the smallest sole traders and partnerships that are not registered for VAT/PAYE) – unregistered businesses fell by 14,590 (-7.6%). 
  • The number of VAT/PAYE registered businesses has increased - up by 3,660 (+2.1%) from 170,335 in 2015 to 173,995 in 2016 – the highest figure since the time series began (in 2000).
  • As at March 2016, there were 348,045 Small and Medium-sized Enterprises (SMEs) operating in Scotland, providing an estimated 1.2 million jobs. SMEs accounted for 99.3% of all private sector enterprises and accounted for 54.6% of private sector employment and 40.5% of private sector turnover.

Scottish Economy – Gross Domestic Product (GDP) Trends - 1998 to 2016

Scottish Gross Domestic Product (GDP) in constant basic prices grew each year from 1998 reaching a peak in Q2 of 2008. Scotland then entered recession, which lasted six quarters, and returned to growth in Q1 of 2010. Further short periods of economic contraction occurred in Q4 2010 and Q1 2012. Between Q3 2012 and Q1 2015 there was sustained quarter-on-quarter growth, taking output 4.7% above the pre-recession peak. The most recent quarterly GDP figures show that the output of the Scottish economy remained flat during the second quarter of 2015, this was followed by growth in the second half of 2015. There was a slight contraction in Q1 2016, but the economy picked up in the second quarter of 2016, with GDP growing 0.4%.

Businesses in Scotland as at March 2016

As at March 2016, there were an estimated 350,410 private sector enterprises operating in Scotland. Almost all of these enterprises (98.2%) were small (0 to 49 employees); 3,920 (1.1%) were medium-sized (50 to 249 employees) and 2,365 (0.7%) were large (250 or more employees).

As at March 2016, there were 348,045 Small and Medium-sized Enterprises (SMEs) operating in Scotland, providing an estimated 1.2 million jobs. SMEs accounted for 99.3% of all private sector enterprises and accounted for 54.6% of private sector employment and 40.5% of private sector turnover.

Small (0 to 49 employees) enterprises alone accounted for 42.0% of private sector employment and 27.2% of private sector turnover as at March 2016 (see Chart 1).    
 
The 2,365 large (250+ employees) enterprises operating in Scotland, as at March 2016, accounted for 45.4% of private sector employment and 59.5% of private sector turnover (see Chart 1). 

Chart 1: Share of enterprises, employment and turnover by size of enterprise, 2016

Enterprises, employment and turnover by size of enterprise 2016

As at March 2016, enterprises with no employees – that is sole proprietors/partnerships comprising only the owner-managers or companies comprising only the employee director – accounted for 69.4% of all private sector enterprises in Scotland, 12.8% of private sector employment and 4.7% 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 - £82,000 as at March 2016) and are not PAYE registered (i.e. do not employ others).  As at March 2016, unregistered enterprises represented 50.3% of all private sector enterprises in Scotland.      

Changes in the Scottish business stock over time

As at March 2016, there were an estimated 350,410 private sector enterprises operating in Scotland - a fall from 2015 but the 2016 business count is still relatively high (with it being the second highest figure in the series back to 2000).

Between 2000 and 2016, the total number of private sector enterprises has increased by an estimated 46.0% (+110,440 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 increased by 93.2% since 2000 (up from 91,305 in 2000 to 176,420 in 2016).  However, the number of registered enterprises increased also - from 148,665 in 2000 to 173,995 in 2016 (an increase of 17.0%) - driven by an increase in the number of small (0 to 49 employees) registered enterprises.

Chart 2: Estimated number of private sector enterprises operating in Scotland, 2000 to 2016

Enterprises 2000 to 2016

Between 2015 and 2016, the total number of private sector businesses in Scotland dropped by 10,935 businesses (-3.0%).  This follows an increase in the previous annual period. 

The decrease over the latest year was driven by a fall in the number of unregistered businesses. The number of unregistered businesses decreased from 191,010 in 2015 to 176,420 in 2016 – a decrease of 14,590 businesses (-7.6%). 

The number of registered businesses (those registered for VAT and/or PAYE) increased over the latest year - from 170,335 businesses in 2015 to 173,995 business in 2016, a rise of 3,660 registered businesses (+2.1%).  With five years of sustained 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 2.2% (+3,540 enterprises) between 2015 and 2016.  Looking within the group of small registered enterprises, the number of registered enterprises without employees grew by 6.0% from 63,035 in 2015 to 66,825 in 2016 but the number of registered small employers (1-49 employees) decreased by 0.2% from 101,135 in 2015 to 100,885 in 2016.

The number of medium-sized (50 to 249 employees) enterprises increased, between 2015 and 2016, to 3,920 enterprises – representing an increase of 50 enterprises. There has been an increase of 570 medium-sized enterprises since 2000 and the 2016 estimate is now higher than at any time since then.

The number of large (250 or more employees) enterprises also increased, over the latest year, to 2,365 - an increase of 70 since 2015.  There has been an increase of 120 large-sized enterprises since 2000 and the 2016 estimate is now higher than at any time since then.

Following the recession there was 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 44.4% in 2015. However, these latest figures for 2016 show that the large business share of private sector employment has increased over the last year to 45.4%.

The number of employers decreased slightly, between 2015 and 2016, to 107,170 – representing a decrease of 130 employers (-0.1%).

Enterprises by legal status

As at March 2016, private sector enterprises in Scotland, as per the ‘Businesses in Scotland’ definition, fell into the following categories:

Sole Proprietors/Partnerships     (66.9% of enterprises, 20.1% of employment)
Companies                               (30.9% of enterprises, 71.5% of employment)
Non-Profit Making Bodies             (2.2% of enterprises, 8.4% 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 six years. The number of Companies has increased from 77,060 in 2010 to 108,150 in 2016 – an increase of 31,090 (+40.3%).

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 2016, the two largest industry sectors were ‘Professional, Scientific & Technical Activities’ (53,240 enterprises) and Construction (43,250 enterprises). Together, these two sectors make up 28% of all private sector enterprises in Scotland. 

Between 2015 and 2016, the number of enterprises in the ‘Professional, Scientific & Technical Activities’ sector decreased by 210 enterprises.  The number of enterprises in the Construction sector decreased by 4,885 enterprises (-10.1%) between 2015 and 2016 – this was driven by a fall in the number of unregistered construction sector enterprises, as the number of registered enterprises in the construction sector increased by 615 over the same period.

The number of enterprises within the broad industry groups in March 2015 and March 2016 can be seen in Chart 3.

Chart 3: Estimated number of private sector enterprises operating in Scotland, by industry sector, 2015 and 2016

Enterprises by industry sector 2015 v 2016

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 2016, registered private sector enterprises with ultimate base outside Scotland (RUK based or Abroad owned) represented 2.9% of enterprises, accounting for 34.2% of employment and 54.1% of turnover. Within large firms (250+ employees) they represented 81.2% of enterprises, accounting for 62.1% of employment and 74.5% of turnover.

As at March 2016, 34.2% of private sector employment was in enterprises with ultimate base outside Scotland. Breaking this down, 17.7% 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 2016, 30.3% of Scottish manufacturing employment was in Abroad-owned enterprises, compared to 3.0% of Scottish real estate activities employment (see Chart 4).

Chart 4: Share of employment by ownership, by industry sector, 2016

Employment by Ownership 2016

As at March 2016, there were 1,000 EU abroad-owned enterprises operating in Scotland – employing 127,110 people and generating a turnover of £36 billion (13.2% of all turnover from registered businesses in Scotland or 38.6% of all turnover from abroad-owned registered businesses in Scotland).

Local Authority Area breakdown (registered enterprises only)

Between 2015 and 2016, the majority of local authority areas saw an increase in the number of registered enterprises. However, five of Scotland’s 32 local authority areas experienced a falling registered business count between 2015 and 2016 – Aberdeen City (down 155 businesses), Argyll and Bute (-10), Dumfries and Galloway (-65), Na h-Eileanan Siar (-10) and the Orkney Islands (-25). The City of Edinburgh local authority area experienced the greatest increase with a rise of 835 enterprises between 2015 and 2016 – followed by Glasgow City local authority area with an increase of 740 enterprises.

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 2016, SMEs accounted for 86.4% of private sector employment in the Orkney Islands local authority area compared to 37.7% 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 2016, SMEs accounted for 79.3% of private sector employment in remote rural areas compared to 69.2% in accessible rural areas and 45.8% in the rest of Scotland.

In remote rural areas, the ‘Agriculture, Forestry & Fishing’ industrial sector had the largest share of private sector employment (18.0%), 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 (20.2%).  

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 2015 and 2016, the number of registered enterprises increased by 2.1%. This has increased the business stock rate from 382 to 390 over the latest year.

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

Year Registered 
Enterprises
Annual
Change
Resident Adult
Population
(aged 16+)
Business
Stock 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% Not Yet Available 390*
Sources - Businesses in Scotland 2016. NRS Mid-year population estimates.
*The provisional business stock rates for 2016 are based on the 2015 Mid-year population estimates.
 

The 2016 estimate for the indicator is provisional and is based on the currently available mid-year population estimates for 2015. This will be updated in April 2017 when the 2016 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

Business stock estimates for the UK as a whole are published by the Department for Business, Energy and Industrial Strategy (BEIS). The BEIS Business Population Estimates 2016 show that for the UK as a whole the total number of businesses (registered and unregistered) increased by 1.8% between the start of 2015 and start of 2016. This compares to a decrease of 3.0% for Scotland between March 2015 and March 2016 (as per the Businesses in Scotland 2016 results). 

Scotland has a different business stock make-up compared to the UK as a whole. The table below shows that, in 2016, Scotland had a business stock rate of 768 enterprises per 10,000 adults, compared to 1,040 enterprises per 10,000 adults in the UK as a whole. 

Scotland has a lower rate of small businesses (particularly those that do not employ others) but a higher rate of medium and large businesses compared to the UK as a whole – see the table below.

Large businesses account for a higher share of Scotland’s private sector employment (45%), compared to the UK as a whole (40%).

Table 2 – Private sector businesses (registered and unregistered) per 10,000 adults, 2016

Country Resident Adults
Mid-year 2015
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 52,852,200 5,497,670 789 243 6 1 1,040
Scotland 4,460,700 342,750 545 210 8 5 768

Source:  UK - Business Population Estimates 2016, BEIS.  Scotland – Businesses in Scotland 2016. Note that the Scotland data, in the table above, is restricted to enterprises that are companies, sole proprietorships, partnerships or public corporations to ensure as much consistency as possible between the UK and Scotland results.