Businesses in Scotland: 2018

This publication is a source of information on the number of businesses (also known as enterprises) operating in Scotland.

This document is part of a collection


Businesses in Scotland - Headline Figures

  • As at March 2018, there were an estimated 345,915 private sector businesses operating in Scotland – representing a decrease of 8,830 businesses (-2.5%) since March 2017.
  • The decrease over the latest year was driven by a fall in the number of unregistered businesses (those not registered for VAT and/or PAYE). The number of unregistered businesses decreased from 178,340 in 2017 to 169,620 in 2018 – a decrease of 8,720 unregistered businesses (-4.9%).
  • The number of VAT/PAYE registered businesses has decreased over the latest year also - down by 105 businesses (-0.1%) from 174,600 in 2017 to 176,295 in 2018 – this is the first fall in the registered business stock since 2011. 
  • Overall, the number of employers has increased by 915 (0.9%) from 107,465 employers in 2017 to 108,380 employers in 2018 – there are now more private sector employers operating in Scotland than at any other time in the series (back to 2000).
  • As at March 2018, there were 343,535 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 businesses in 2018, accounting for 54.9% of private sector employment and 41.5% of private sector turnover.

Scottish Economy – Gross Domestic Product (GDP) Trends

In 2017, Scotland’s onshore GDP grew by 1.4% compared to 2016. Growth has picked up from lower levels in 2015 and 2016, but remains below the longer-term average of around 2% per year.  By broad industry sector, there was growth of 1.0% for the Services sector between 2016 and 2017 – compared to 4.4% for the Construction sector and 2.0% for the Production sector.  

Businesses in Scotland as at March 2018

As at March 2018, there were an estimated 345,915 private sector businesses operating in Scotland. Almost all of these businesses (98.2%) were small (0 to 49 employees); 3,925 (1.1%) were medium-sized (50 to 249 employees) and 2,380 (0.7%) were large (250 or more employees).

As at March 2018, there were 343,535 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, accounting for 54.9% of private sector employment and 41.5% of private sector turnover.

Small (0 to 49 employees) businesses alone accounted for 42.3% of private sector employment and 27.3% of private sector turnover as at March 2018 (see Chart 1).      

The 2,380 large (250+ employees) businesses operating in Scotland, as at March 2018, accounted for 45.1% of private sector employment and 58.5% of private sector turnover (see Chart 1). 

Chart 1: Share of enterprises, employment and turnover by size of enterprise, 2018

As at March 2018, businesses with no employees – that is sole proprietors/partnerships comprising only the owner-managers or companies comprising only the employee director – accounted for 68.7% of all private sector businesses in Scotland, 13.1% of private sector employment and 5.0% of private sector turnover.  Whilst the 108,380 employers in Scotland, as at March 2018, accounted for 86.9% of private sector employment and 95.0% of private sector turnover.  

The total number of businesses operating in Scotland comprises those that are registered for VAT and/or PAYE, and those that are not (so called unregistered enterprises). Unregistered businesses are sole proprietorships and partnerships that are not large enough to be VAT registered (have an annual turnover below the VAT threshold - £85,000 as at March 2018) and are not PAYE registered (i.e. do not employ others).  As at March 2018, unregistered businesses represented 49.0% of all private sector businesses in Scotland.    

Changes in the Scottish business stock over time

March 2018, there were an estimated 345,915 private sector businesses operating in Scotland.  Between 2000 and 2018, the total number of businesses increased by an estimated 45.4% (108,020 businesses).  As shown in the Chart 2 below, this increase over the long term has been driven by a rise in the number of unregistered businesses.  Although there has been a considerable increase in the number of registered businesses over this period also – up 18.6% (27,630 businesses).

Chart 2: Estimated number of private sector enterprises operating in Scotland, 2000 to 2018

Between 2017 and 2018, the total number of private sector businesses in Scotland decreased by 8,830 businesses (-2.5%).  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 178,340 in 2017 to 169,620 in 2018 – a decrease of 8,720 unregistered businesses (-4.9%).

The number of registered businesses (those registered for VAT and/or PAYE) decreased over the latest year also - down by 105 businesses (-0.1%) from 174,600 in 2017 to 176,295 in 2018 – this is the first fall in the registered business stock since 2011.  However, the registered business count for 176,295 is still relatively high – it is the second highest point in the series back to 2000. 

This slight fall in the registered business stock over the latest year was as a result of a decrease in the number of small (0 to 49 employees) registered businesses – down 0.1% (-190 businesses) between 2017 and 2018.  Within this group, there was a decrease in the number of non-employing registered businesses (down 1,025 businesses) but an increase in the number of small employers (1 to 49 employees) from 101,245 in 2017 to 102,075 in 2018 (up 830 businesses).

The number of medium-sized (50 to 249 employees) businesses increased between 2017 and 2018 to 3,925 – representing an increase of 70 businesses. There has been an increase of 575 medium-sized businesses since 2000 and the 2018 medium-sized business count is a series high.

The number of large (250 or more employees) businesses also increased, over the latest year, to 2,380 – an increase of 15 since 2017.  There has been an increase of 135 large businesses since 2000 and the 2018 large business count is a series high also.  Following the recession, from mid-2008 to 2009, 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 a low of 44.2% in 2015.  The latest figures for 2018 show that the large business share of private sector employment has increased slightly over the latest year from 44.9% in 2017 to 45.1% in 2018.

The number of employers increased, between 2017 and 2018, from 107,465 to 108,830 – representing an increase of 915 employers (0.9%). This takes the number of private sector employers in Scotland to the highest level in the series (back to 2000).

Chart 3: Private sector employers operating in Scotland, 2000-2018​

 

Enterprises by legal status

As at March 2018, private sector enterprises in Scotland, as per the ‘Businesses in Scotland’ definition, fell into the following categories:

  • Sole Proprietors/Partnerships[1]    (64.9% of enterprises, 19.5% of employment)

  • Companies[2]                              (32.9% of enterprises, 72.0% of employment)

  • Non-Profit Making Bodies              (2.3% of enterprises, 8.5% of employment)

Although Sole Proprietors/Partnerships continue to make up the majority of private sector enterprises; there has been sustained growth in the number of Companies over the last eight years. The number of Companies has increased from 76,995 in 2010 to 113,705 in 2018 – an increase of 36,710 (47.7%).

 

[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 2018, the two largest industry sectors were ‘Professional, Scientific & Technical Activities’ (48,155 enterprises) and Construction (47,800 enterprises). Together, these two sectors make up 27.7% 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’ (31,650 registered enterprises) and Construction (20,355 registered enterprises).

Between 2017 and 2018, the number of registered enterprises in the ‘Electricity, gas, steam and air conditioning supply’ sector increased by 11.8% (75 enterprises) – the sector with the highest relative growth over the latest year.  In contrast, the number of registered enterprises in the Professional, Scientific & Technical Activities’ sector decreased by 3.4% (-1,100 enterprises) - the sector with the lowest relative growth over the latest year.  

Between 2017 and 2018, the number of registered enterprises in the ‘Construction’ sector increased by 425 enterprises (+2.9%) – the sector with the highest absolute growth over the latest year.  Note that the Professional, Scientific & Technical Activities’ sector was the sector with the lowest absolute growth over the latest year, as well as lowest relative growth over the latest year.      

Chart 4: Estimated number of private sector enterprises operating in Scotland, by industry sector, 2017 and 2018

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 2018, registered private sector enterprises with ultimate base outside Scotland (RUK based or Abroad owned) represented 3.1% of enterprises, accounting for 34.5% of employment and 53.7% of turnover. Within large firms (250+ employees) they represented 81.5% of enterprises, accounting for 62.3% of employment and 74.8% of turnover.

As at March 2018, 34.5% 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 17.0% 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 2018, 31.4% of Scottish manufacturing employment was in Abroad-owned enterprises, compared to 3.3% of Scottish ‘Arts, entertainment and recreation’ employment (see Chart 5).  Between 2017 and 2018, the number of Abroad-owned enterprises in Scotland increased from 2,350 to 2,610.    

Chart 5: Share of employment by ownership, by industry sector, 2018

As at March 2018, there were 1,100 EU Abroad-owned enterprises operating in Scotland – employing 121,790 people and generating a turnover of £33 billion (12.6% of all turnover from registered businesses in Scotland or 38.6% 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 Abroad-owned enterprises, Abroad-owned employment and Abroad-owned turnover. As at March 2018, there were 590 USA-owned enterprises operating in Scotland – employing 107,750 people and generating a turnover of around £31 billion (36.6% of all turnover from abroad-owned registered businesses in Scotland).

Local Authority Area breakdown (registered enterprises only)

Between 2017 and 2018, the registered business stock decreased in 18 of Scotland’s 32 local authority areas – with the registered business stock falling the most in Aberdeen City (down 210 businesses, -2.2%) and Aberdeenshire (down 140 businesses, -1.0%).  Over the latest year, Glasgow City local authority area experienced the greatest increase in the registered business stock with a rise of 335 businesses (up 1.7%) – followed by Fife (up 190 businesses, +1.9%) and then the City of Edinburgh (up 145 businesses, +0.7%).

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 Abroad-owned enterprises varies significantly by local authority area. For example, as at March 2018, 29.7% of West Dunbartonshire’s private sector employment was in Abroad-owned enterprises, compared to 4.8% 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 2018, SMEs accounted for 81.8% of private sector employment in the Orkney Islands local authority area compared to 38.3% 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 2018, SMEs accounted for 78.3% of private sector employment in remote rural areas compared to 69.0% in accessible rural areas and 46.4% in the rest of Scotland.

In remote rural areas, the ‘Agriculture, forestry and fishing’ industrial sector had the largest share of private sector employment (17.8%) in 2018, this was also the case in accessible rural areas (14.7%).  However, in Scotland’s urban areas the ‘Wholesale, Retail and Repair’ sector accounted for the largest share of private sector employment (19.6%) in 2018.  

National Performance Framework - National Indicators

The National Performance Framework (NPF) ‘Number of Businesses’ Indicator measures the total number of registered businesses operating in Scotland per 10,000 adults (the business stock rate).  The provisional business stock rate for 2018 shows that there were 391 businesses per 10,000 adults, the same rate as 2017.

The provisional business stock rate for 2018 is based on the March 2018 estimate of registered businesses and the 2017 mid-year population estimates.  This rate will be revised when the 2018 mid-year population estimates are published in 2019.

Year

Registered
Business Stock

Resident Adult Population 

(aged 16+)

National Indicator - Registered Business Stock per 10,000 resident adults

2010

155,045

4,344,402

357

2011

154,365

4,383,797

352

2012

159,580

4,398,974

363

2013

160,050

4,416,121

362

2014

166,525

4,436,559

375

2015

170,335

4,460,738

382

2016

173,995

4,488,783

388

2017

176,400

4,507,358

391

2018

176,295

4,507,358

391

 

The National Performance Framework (NPF) ‘High Growth Businesses’ Indicator measures high growth businesses as a share of all registered businesses operating in Scotland.  The number of high growth businesses decreased by 255 from 2,075 in 2017 to 1,820 in 2018.  This results in a decrease in the high growth business share from 1.2% in 2017 to 1.0% in 2018. Note that although the latest business counts are as at the position in March 2018, the latest turnover data (used to measure high growth) are lagged and will be for the 2016 year for most businesses.   

 

For the indicator a high growth business is an enterprise with 10+ employees in the base year (x-3) exhibiting an average of 20% annual growth in turnover over three years.

Year

High Growth Businesses

Registered Business Stock

National Indicator - 

High Growth Businesses

as share of Registered Business Stock 

2010-2013

1,255

160,050

0.8%

2011-2014

1,515

166,525

0.9%

2012-2015

1,925

170,335

1.1%

2013-2016

2,060

173,995

1.2%

2014-2017

2,075

176,400

1.2%

2015-2018

1,820

176,295

1.0%

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 2018 show that for the UK as a whole the total number of businesses (registered and unregistered) decreased by 0.5% between the start of 2017 and start of 2018. This compares to a decrease of 2.5% for Scotland between March 2017 and March 2018 (as per the Businesses in Scotland 2018 results). 

Scotland has a different business stock make-up compared to the UK as a whole. The table below shows that, in 2018, Scotland had a business stock rate of 750 (registered and unregistered) enterprises per 10,000 adults, compared to 1,059 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%).

Country

Resident Adults
 

Mid-year 2017

Private Sector
Enterprises

(registered &

unregistered)

Private Sector per 10,000 adults
Enterprise Size (number of employees) All
Sizes
None

Small
(1-49)

Medium
(50-249)

Large
(250+)
UK 53,534,872 5,667,510 799 252 7 1 1,059
Scotland 4,507,358 338,110 527 210 8 5 750

Source:  UK - Business Population Estimates 2018, BEIS.  Scotland – Businesses in Scotland 2018. 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.

Contact

Email

industrystatistics@gov.scot

Telephone
0131 244 6813

Post
Scottish Government
Business and Innovation Statistics
Office of the Chief Economic Adviser
5 Atlantic Quay
150 Broomielaw
Glasgow
G2 8LU

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