Or in this case, the proof is in the data – which is drastically less delicious but nevertheless interesting.
In November of last year, the Office for National Statistics published Business Demography for the UK. This publication provides annual data on birth, deaths, and survival rates of businesses across the United Kingdom.
The Scottish Government also published Business in Scotland 2022. This dataset provides an estimate of the number of businesses operating across the country, and breaks down the business stock by business size, industry sector, local authority area and ownership.
Both datasets are crucial in measuring the pulse of businesses across the Scottish economy. They are a mine of invaluable information which, alongside the invaluable intelligence we get from our members through sources such as our Big Small Business Survey, help shape the policy recommendations FSB puts forward to government and other decision makers.
So, let’s sink our teeth into some of the key statistics from these resources in order to better understand Scotland’s small business community.
Turning to the ONS dataset first, we can begin with a look at the business birth and death rates.
The number of Scottish business births increased by 12.2% between 2020 and 2021 to 18,910, resulting in a birth rate of 10.7%. Whilst this birth rate has improved from 9.5% in 2020, it is still one of the lowest birth rates in 11 years.
The number of Scottish business deaths increased by 8.2% from 18,210 to 19,705 in the same year, resulting in a death rate of 11.2% in 2021. This is the highest death rate since 2010.
|
Active Count |
Birth Count |
Birth Rate |
Death Count |
Death Rate |
|
|
2010 |
155,695 |
15,530 |
10.0% |
15,185 |
10.0% |
|
2011 |
155,655 |
16,940 |
11.0% |
13,970 |
9.0% |
|
2012 |
158,320 |
17,385 |
11.0% |
16,545 |
10.0% |
|
2013 |
162,230 |
21,540 |
13.0% |
14,850 |
9.0% |
|
2014 |
167,860 |
21,235 |
12.7% |
15,615 |
9.3% |
|
2015 |
172,890 |
21,725 |
12.6% |
18,260 |
10.6% |
|
2016 |
178,435 |
22,270 |
12.5% |
18,550 |
10.4% |
|
2017 |
180,280 |
20,770 |
11.5% |
19,540 |
10.8% |
|
2018 |
180,165 |
20,575 |
11.4% |
18,120 |
10.1% |
|
2019 |
183,485 |
21,665 |
11.8% |
19,415 |
10.6% |
|
2020 |
176,450 |
16,850 |
9.5% |
18,210 |
10.3% |
|
2021 |
176,350 |
18,910 |
10.7% |
19,705 |
11.2% |
In 2013, businesses were born at a rate which was 4.1 percentage points higher than the death rate; by 2021 this gap had fallen to 0.5 percentage points.
With the gap narrowing, we can clearly identify the lag effect of the economic downturn from the pandemic and other economic conditions.
Moving onto the Scottish Government statistics, we can see that as of March 2022, there were 358,575 Small and Medium-sized Enterprises (registered and unregistered) operating in Scotland. This is a welcome increase on the number of SMEs from 2021 (340,625).
However, there are still over 2,300 fewer businesses operating in Scotland in 2022 than there were at the start the pandemic in 2020 (360,895).
Scotland has also seen a dip in the number of high growth businesses. The National Performance Framework, which measures Scotland’s progress against national outcomes, includes an indicator on 'High Growth Businesses'.
The number of these highflyer businesses decreased by 520 from 2,050 as of March 2021 to 1,530 as of March 2022. This resulted in a decrease in the high growth business share from 1.2% to 0.9%. National performance is therefore worsening against framework indicators for the number of businesses in Scotland, as well as for the number of high growth businesses.
These figures suggest the impact of COVID-19, coupled with other economic uncertainty, has been particularly difficult on the small business community and, in turn, on Scotland’s economic performance.
This dataset not only provides an overview of the number of businesses across Scotland, but it also lets us better understand the value of small businesses to Scotland’s wider economy.
SMEs provided an estimated 1.2 million jobs, or 55.9% of private sector employment, as of March 2022. They also accounted for 99.4% of all private sector businesses and 40.2% of private sector turnover – contributing over £110 billion to the economy.
Identifying value such as this is important when assessing the role small businesses play in delivering economic growth.
GDP and employment have long been recognised as the key indicators of economic success, yet a main driver of economic growth lies within Scotland’s business base. Despite this, it is often overlooked. Only by understanding the trends and characteristics of Scotland’s business base can we begin to leverage good economic policy. As they say, you can bake a cake without sugar, but it never tastes quite as sweet. Business base data is the sugar of economic policy and at FSB we certainly have a sweet tooth for it!
