Businesses in Scotland - Key Facts 2012

 

Headline Figures

  • As at March 2015, there were an estimated 361,345 private sector enterprises operating in Scotland - the highest figure since the time series began (in 2000).
  • Between March 2014 and March 2015, the estimated number of enterprises increased by 7.8% (26,090 enterprises).
  • The increase over the latest year is driven by a rise in the number of unregistered businesses (the smallest sole traders and partnerships that are not registered for VAT/PAYE) – unregistered businesses are up by 22,280 (+13.2%). 
  • The number of VAT/PAYE registered businesses has increased also - up by 3,810 (+2.3%) from 166,525 in 2014 to 170,335 in 2015 – taking the number of registered businesses in Scotland to its highest level in the series.
  • As at March 2015, there were 359,050 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 55.6% of private sector employment and 39.4% of private sector turnover.

Scottish Economy – Gross Domestic Product (GDP) Trends - 1998 to 2015

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 6 quarters, and returned to growth in Q1 of 2010. Further short periods of economic contraction occurred in Q4 2010 and Q1 2012. However, since late 2012 there has been sustained growth and the most recent quarterly GDP figures show that Scottish output expanded by 0.1% in Q2 2015, taking output 3.0% above the pre-recession peak.

Businesses in Scotland as at March 2015

As at March 2015, there were an estimated 361,345 private sector enterprises operating in Scotland. Almost all of these enterprises (98.3%) were small (0 to 49 employees); 3,870 (1.1%) were medium-sized (50 to 249 employees) and 2,295 (0.6%) were large (250 or more employees).

As at March 2015, there were 359,050 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 55.6% of private sector employment and 39.4% of private sector turnover.

Small (0 to 49 employees) enterprises alone accounted for 43.1% of private sector employment and 26.0% of private sector turnover as at March 2015 (see Chart 1).    
 
The 2,295 large (250+ employees) enterprises operating in Scotland, as at March 2015, accounted for 44.4% of private sector employment and 60.6% of private sector turnover (see Chart 1). 

Chart 1: Share of enterprises, employment and turnover by size of enterprise, 2015

Share of enterprises, employment and turnover by size of enterprise, 2015

As at March 2015, enterprises with no employees – that is sole proprietors/partnerships comprising only the owner-managers or companies comprising only the employee director – accounted for 70.3% of all private sector enterprises in Scotland, 13.5% of private sector employment and 4.6% 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 - £81,000 as at March 2015) and are not PAYE registered (i.e. do not employ others).  As at March 2015, unregistered enterprises represented 52.9% of all private sector enterprises in Scotland.      

Changes in the Scottish business stock over time

As at March 2015, there were an estimated 361,345 private sector enterprises operating in Scotland - the highest figure since the time series began (in 2000).

Between 2000 and 2015, the total number of private sector enterprises has increased by an estimated 50.6% (+121,375 enterprises).  As shown in Chart 2 below this increase has been driven by an increase 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 191,010 in 2015).  The number of registered enterprises increased between 2000 and 2015 also, from 148,665 to 170,335 (a 14.6% increase) - 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 2015

Estimated number of private sector enterprises operating in Scotland, 2000 to 2015

Between 2014 and 2015, the total number of private sector businesses in Scotland grew by 26,090 businesses (+7.8%).  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 168,730 in 2014 to 191,010 in 2015 – an increase of 22,280 businesses (+13.2%).  Following a dip between 2013 and 2014, the increase between 2014 and 2015 takes the unregistered business count to the highest level in the series.

The number of registered businesses (those registered for VAT and/or PAYE) increased also - from 166,525 businesses in 2014 to 170,335 business in 2015, a rise of 3,810 registered businesses (+2.3%).  With four 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 2.3% (+3,720 enterprises) between 2014 and 2015.  Looking within the group of small registered enterprises, the number of registered enterprises without employees grew by 3.1% from 61,135 in 2014 to 63,035 in 2015 and the number of registered small employers (1-49 employees) increased by 1.8% from 99,315 in 2014 to 101,135 in 2015.

The number of medium-sized (50 to 249 employees) enterprises increased, between 2014 and 2015, to 3,870 enterprises – representing an increase of 90 enterprises. There has been an increase of 520 medium-sized enterprises since 2000 and the 2015 estimate is now higher than at any time since 2000.

The number of large (250 or more employees) enterprises was unchanged over the latest year, remaining at 2,295 enterprises.  The 2015 estimate is still lower than the large enterprise peak level of 2,345 enterprises experienced in 2001.

Since the recession, there has been a slight shift in employment from large businesses (250+ employees) to small businesses – and this in turn is reflected in the record number of businesses.  In 2015, large businesses accounted for 44.4% of private sector employment, compared to 47.1% in 2010.

The number of employers increased, between 2014 and 2015, to 107,300 – representing an increase of 1,910 employers (+1.8%).  There has been an increase of 13,485 employers (+14.4%) since 2000 and the 2015 estimate is now higher than at any time since 2000.

Enterprises by legal status

As at March 2015, private sector enterprises in Scotland, as per the ‘Businesses in Scotland’ definition, fell into the following categories:

Sole Proprietors/Partnerships     (69.5% of enterprises, 21.7% of employment)
Companies                               (28.4% of enterprises, 70.4% of employment)
Non-Profit Making Bodies             (2.0% of enterprises, 7.9% 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 five years. The number of Companies has increased from 77,060 in 2010 to 102,745 in 2015 – an increase of 25,685 (+33.3%).

Note that the number of public corporations in Scotland has decreased from 60 businesses in 2014 to 35 businesses in 2015 – this is largely as a result of the reclassification of Lloyds Banking Group plc.  On 30th April 2014, the Office for National Statistics (ONS) announced the reclassification of Lloyds Banking Group plc. (and subsidiaries) as a former Public Corporation into the private sector.  More information on this can be found in Classification of Lloyds Banking Group and Subsidiaries

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 2015, the two largest industry sectors were ‘Professional, Scientific & Technical Activities’ (53,450 enterprises) and Construction (48,135 enterprises). Together, these two sectors make up 28.1% of all private sector enterprises in Scotland. 

Between 2014 and 2015, the number of enterprises in the ‘Professional, Scientific & Technical Activities’ sector increased by 1,330 enterprises (+2.6%).  The number of enterprises in the Construction sector increased by 3,445 enterprises (+7.7%) between 2014 and 2015 – this follows a decline in the previous two annual periods.

The number of enterprises within the broad industry groups in March 2014 and March 2015 can be seen in Chart 3.

Chart 3: Estimated number of private sector enterprises operating in Scotland, by industry sector, 2014 and 2015

Estimated number of private sector enterprises operating in Scotland, by industry sector, 2014 and 2015

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 2015, registered private sector enterprises with ultimate base outside Scotland (RUK based or Abroad owned) represented 3.0% of enterprises, accounting for 34.1% of employment and 54.1% of turnover. Within large firms (250+ employees) they represented 81.7% of enterprises, accounting for 62.3% of employment and 74.9% of turnover.

As at March 2015, 34.1% of private sector employment was in enterprises with ultimate base outside Scotland. Breaking this down, 17.5% of Scottish private sector employment was in enterprises with ultimate base in the RUK with the remaining 16.6% 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 2015, 33.1% of Scottish manufacturing employment was in Abroad-owned enterprises, compared to 6.6% of Scottish construction employment (see Chart 4).

Chart 4: Share of employment by ownership, by industry sector, 2015

Share of employment by ownership, by industry sector, 2015

Local Authority Area breakdown (registered enterprises only)

Between 2014 and 2015, nearly all local authority areas saw an increase in the number of registered enterprises. Only two local authority areas experienced a falling registered business count between 2014 and 2015 – Argyll & Bute (down 25 businesses) and The Scottish Borders (down 5 businesses). The City of Edinburgh local authority area experienced the greatest increase with a rise of 600 enterprises between 2014 and 2015 – followed by Glasgow City local authority area with an increase of 515 enterprises.

SMEs account for a larger share of private sector employment in the more rural local authority areas, compared to the more urban local authority areas.  As at March 2015, SMEs accounted for 87.2% of private sector employment in the Orkney Islands local authority area compared to 37.5% 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 2015, SMEs accounted for 79.9% of private sector employment in remote rural areas compared to 70.7% in accessible rural areas and 46.3% in the rest of Scotland.
 
Between March 2014 and March 2015, private sector employment increased by 2.8% (2,900 jobs) in remote rural areas, by 1.3% (2,470 jobs) in accessible rural areas and by 1.5% (23,910 jobs) in the rest of Scotland.

In remote rural areas, the ‘Agriculture, Forestry & Fishing’ industrial sector had the largest share of private sector employment (18.3%), in accessible rural areas the Manufacturing sector was largest (14.7%) and in the rest of Scotland the ‘Wholesale, Retail and Repair’ sector was largest (20.4%).  

Although, the ‘Agriculture, Forestry & Fishing’ sector accounts for the largest share of private sector employment in remote rural areas, the majority of employment growth over the last five years is attributable to jobs growth in two other sectors: ‘Accommodation and food service activities’ (up 2,650 jobs since 2010) and ‘Professional, scientific and technical activities’ (up 1,490 jobs since 2010).   

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 2014 and 2015, the number of registered enterprises increased by 2.3%. This has increased the business stock rate from 375 to 384 over the latest year.

Table 1 – Registered private sector businesses per 10,000 adults, Scotland, 2006-2015

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% Not Yet Available 384*
Sources - Businesses in Scotland 2015. NRS Mid-year population estimates.
*The provisional business stock rates for 2015 are based on the 2014 mid-year population estimates.
 

The 2015 estimate for the indicator is provisional and is based on the currently available mid-year population estimates for 2014. This will be updated in April 2016 when the 2015 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 Innovation and Skills (DBIS). The DBIS Business Population Estimates 2015 show that for the UK as a whole the total number of businesses (registered and unregistered) increased by 2.8% between the start of 2014 and start of 2015. This compares to an increase of 7.8% for Scotland between March 2014 and March 2015 (as per the Businesses in Scotland 2015 results). 

Over the latest annual period, Scotland’s business stock has increased at a higher rate compared to the UK as a whole.  However, Scotland’s business stock dipped between 2013 and 2014; this was not the case for the UK as a whole.  And therefore, it is helpful to contrast change over a longer period.  Since 2007, Scotland’s total business stock has risen at a similar rate to that for the UK.  Between March 2007 and March 2015, the total number of businesses in Scotland increased by 27.7%, whilst for the UK the business stock increased by 26.2% between the start of 2007 and the start of 2015.

Despite similar growth rates over recent years, Scotland still has a different business stock make-up compared to the UK as a whole. Table 2 below shows that, in 2015, Scotland had a business stock rate of 798 enterprises per 10,000 adults, compared to 1,028 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 Table 2 below.

Large businesses account for a higher share of Scotland’s private sector employment (44%), compared to the UK as a whole (40%).

Table 2 – Private sector businesses (registered and unregistered) per 10,000 adults, 2015

Country Resident Adults
Mid-year 2014
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 52,443,290 5,389,450 778 243 6 1 1,028
Scotland 4,436,600 354,030 573 213 8 5 798

Source:  UK - Business Population Estimates 2015, DBIS.  Scotland – Businesses in Scotland 2015. 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.