Small Business Survey Scotland: 2017

Sets out the findings for Scotland of the Small Business Survey 2017.

This document is part of a collection

1. Introduction and Key Results


This report sets out the findings from the Longitudinal Small Business Survey ( LSBS) 2017 for Scotland. It outlines the key characteristics of small and medium-sized enterprises ( SMEs) with employees in Scotland and provides an overview of the perceptions of SMEs on a range of themes including innovation, fair work and access to finance. In addition, the report provides an insight into business performance and outlook, including perceptions of the impact of the UK’s exit from the European Union ( EU).

As at March 2017, there were an estimated 363,235 SMEs operating in Scotland, of which those with employees represented 29 per cent (105,095 enterprises) [1] . SMEs with employees accounted for 41 per cent of total Scottish employment and 35 per cent of turnover.

Survey method and reporting

The survey for Scotland is part of a UK-wide large-scale telephone survey of 6,619 owners and managers of SMEs, commissioned by the Department for Business, Energy and Industrial Strategy ( BEIS) and was conducted between August 2017 and January 2018.

The survey is the latest of a series of annual and biennial Small Business Surveys dating back to 2003. From 2015 onwards, the survey introduced a longitudinal tracking element and is now carried out on an annual basis [2] .

This report provides a snap shot of the state of all SMEs with employees (defined as businesses with between one and 249 employees) surveyed in Scotland in 2017. Enterprises with no employees have been excluded from the dataset on which this report is based. This is consistent with the reporting of the survey from 2015 onwards.

In 2017, 739 SMEs with employees took part in the survey in Scotland. The survey sample is stratified [3] by business size (micro businesses with 1-9 employees, small businesses with 10-49 employees and medium-sized businesses with 50-249 employees) and by sector (defined by Standard Industrial Classification ( SIC) 2007). The sample breakdown is presented in Table 1 below:

Table 1: Sample Breakdown, Longitudinal Small Business Survey 2017, Scotland

Sector ( SIC 2007)

Micro (1-9)

Small (10-49)

Medium (50-249)


ABDE Primary [4]





C Manufacturing





F Construction





GHI Transport/Retail/Distribution [5]





J Information and communication





KLM Business services [6]





N Administrative services





PQRS Other services [7]










The data have been weighted to ensure that the results are representative of the overall Scottish SME population. Because of changes in terms of sampling and changes to the questionnaire in 2017, data cannot always be compared with previous editions of the Small Business Survey.

Where possible, the report provides disaggregated results by size band (micro, small and medium-sized businesses) and sector and provides comparisons with the UK as a whole and prior year findings. Where comparisons are drawn between sub-groups (e.g. size band), findings are reported in terms of differences between a particular sub-group (e.g. micro firms) and the overall finding ( SMEs as a whole). Due to smaller sample sizes for sub-groups, the survey's estimates may be affected by sampling errors and therefore apparent differences of a few percentage points between sub-samples may not reflect real differences in the population. Therefore, sub-group comparisons (e.g. Scotland vs. UK; 2017 results vs. 2016 results; size band; and sector) in the report are displayed only when the difference with the overall finding is statistically significant at 95 per cent confidence level [8] .

Key Results

Business Demographics

  • 68 per cent of SMEs were family-owned.
  • 62 per cent were urban-based while 38 per cent of SMEs were rural-based.
  • 35 per cent of SMEs were home-based.
  • 21 per cent of SMEs were women-led.
  • Three per cent of SMEs were Minority Ethnic Group ( MEG)-led.

Trade Activities

  • 14 per cent of SMEs had exported goods or services outside of the UK in the last 12 months, broadly in line with the prior year.
  • The proportion of SME exporters exporting to EU countries (70 per cent of SME exporters) and non- EU countries (71 per cent) was broadly similar. 18 per cent of SME exporters exported to EU countries only.
  • 31 per cent of SMEs had sold goods or services to the rest of the UK, lower than the proportion in the prior year (44 per cent).
  • 19 per cent of SMEs had directly imported goods or services from countries outside the UK in the previous 12 months.
  • A higher proportion of SMEs imported from EU countries (16 per cent) than non- EU countries (11 per cent).

Business Practice

  • 40 per cent of SMEs had innovated (i.e. introduced new or improved goods, services or processes) in the last three years, broadly in line with the prior year.
  • 51 per cent of SMEs had arranged or funded training in the past 12 months.
  • 12 per cent of SMEs offered formal apprenticeships.
  • 32 per cent of SMEs had used external information or advice on matters affecting their business in the past 12 months.
  • 70 per cent of SMEs paid all their employees aged 18 or over (excluding volunteers, apprentices and interns) the Living Wage as defined by the Living Wage Foundation.
  • 16 per cent of SMEs were aware of the Scottish Business Pledge.

Access to External Finance

  • The most common forms of external finance currently used by SMEs were credit cards (33 per cent of SMEs) and bank overdraft facilities (31 per cent).
  • 17 per cent of SMEs had sought external finance in the last 12 months.
  • Over half of SMEs that had applied for finance (53 per cent) did so for working capital or cashflow reasons.
  • The most common forms of external finance applied for were bank overdraft facilities (35 per cent of SMEs that applied for finance) and loans from banks and other financial institutions (34 per cent).
  • 78 per cent of SMEs that applied for external finance were successful in obtaining at least some of the finance sought while 15 per cent did not obtain any.
  • 13 per cent of SMEs were discouraged borrowers (i.e. they had a need for external finance in the last 12 months that they did not apply for).

Business Performance and Outlook

  • 33 per cent of SMEs that had been interviewed in both 2016 and 2017 employed more people than a year previously. 37 per cent employed the same number and 30 per cent employed fewer.
  • 22 per cent of SMEs expected to employ more people in 12 months’ time, 70 per cent expected to employ about the same number and eight per cent expected to employ fewer.
  • Of all SMEs that had been trading for at least one year, 33 per cent increased their turnover over the past year. 44 per cent had approximately the same turnover and 21 per cent had lower turnover.
  • 37 per cent of SMEs expected turnover to increase in the next 12 months, 50 per cent expected turnover to stay approximately the same and 10 per cent expected turnover to decrease.
  • 80 per cent of SMEs generated a profit in their last financial year.
  • The most commonly reported obstacles to the success of the business were regulations/red tape (47 per cent of SMEs) and competition in the market (43 per cent). UK exit from the EU was noted as an obstacle by 30 per cent of SMEs.
  • Of those SMEs that reported UK exit from the EU as a major obstacle to business success, the most commonly reported reasons were uncertainty about future regulatory changes (80 per cent of SMEs reporting UK exit from the EU as a major obstacle), uncertainty about future access to EU markets (60 per cent) and increasing import costs (53 per cent).
  • 60 per cent of SMEs aimed to grow sales over the next three years.

Effect of UK exit from the EU

  • 32 per cent of SMEs believed exiting the EU would be detrimental for their business, whilst five per cent believed it would be beneficial. 48 per cent believed that it would make no difference.
  • 32 per cent of SMEs in Scotland that believed EU exit to be either beneficial or detrimental to their business said they felt unprepared for it, whilst 29 per cent felt prepared. 36 per cent felt neither prepared nor unprepared for EU exit.


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