Almost a third of Scottish small businesses are predicting growth in the next three months (29%) – an increase of 5% on last quarter, according to Novuna Business Finance.
Despite the current economic climate, with many regions reporting lower levels of expansion as a result, Scotland was amongst those few areas that reported an increase in growth prospects, with 29% of Scottish firms forecasting either significant or modest expansion this quarter. This represented a marked increase on the last quarter (24% Q3’22) and made them one of few regions forecasting increased levels of growth.
This data comes from research conducted by Novuna Business Finance, who have been tracking small business growth outlook every quarter for the last decade with their Business Barometer, in order to understand and provide insight into the small business community, and how they respond to various obstacles.
Cost-of-living crisis was a cause for concern
- In response to the cost-of-living crisis, more than nine in 10 Scottish small businesses reported that it threatened their business prospects (96%). This included concerns about the impact of rising energy costs on both running their business (56%) and transport and travel (38%). They also worried about decreasing profits due to customers being unable to spend as much (39%) and increasing expenditure as a result of suppliers passing on increased rates (39%).
- They were also more concerned that other areas about the lack of governmental support throughout the crisis, with 29% of Scottish businesses sighting this as a threat to their business (vs 24% national average) – this was true for both the devolved nations, with Wales also reporting greater concerns surrounding the government’s response to cost-of-living (28%).
Plans to strengthen focused on securing new business and investment
- Scottish small businesses were more likely to be setting plans in place in order to strengthen their business as we go into winter, with 85% of firms reporting this as a focus for the next three months (compared to 79% national average).
- Their key focuses were increasing income from new business (42%) and offering new products and services (26%). Unlike many other areas, Scottish businesses also placed great importance on exposure and brand awareness, with one in four increasing their online presence to enhance sales (23%) and one in five investing more money in marketing the business to increase awareness of products and services available (20%).
- They were also twice as likely to be hiring new, junior staff to train and develop (8%) as opposed to making senior hires (4%), showing a focus on innovation over experience.
Funding was key to ensure continued growth and development
- Despite Scottish businesses reporting positive growth prospects, the majority of firms also said they would be unable to achieve some of their business goals should finance not be secured (55%).
- The majority of business activities that would have to be put on hold should funding not be secured were methods of expansion and modernization, including launching new products and services (11%), running new advertising and marketing campaigns (11%), modernizing IT capabilities (8%) and purchasing new products lines and machinery (8%).
Despite the story for many small businesses being one of struggle and contraction, small firms in Scotland have found growth and expansion on the cards this year – beating the odds that were against them. With a cost-of-living crisis, rising energy prices and various periods of political uncertainty to contend with, the growth prospects for this region are a real reassurance to see.
However, to ensure growth for the long-term and maintain a positive outlook it is key to plan carefully and sensibly. We at Novuna Business Finance work with the small business community to help them plan for the future, looking into how they can maintain or restore growth for their business and therefore be in better stead, should any obstacles come their way.
Head of Insight
Novuna Business Finance
Note to editors
The research was conducted by YouGov among a representative sample of 1,196 small business decision makers, spanning all key industry sectors.