Confidence dips among Scotland’s small businesses

Only 57% of small businesses surveyed in Scotland are confident about the future.
That’s according to a new report released by venture capital investor Albion Ventures LLP, which found Scottish business owners to be the least confident across the whole of the UK.
Scotland fell behind the likes of Yorkshire and the South East, with 66% anticipating growth over the next two years, and those in the North East and London, with 65% and 64% citing future growth respectively.
Overall, 61% of UK SMEs say they plan to grow either dramatically or moderately in the next two years, while just 4% predicted shrinking or winding down.
Transport and distribution businesses reported the highest levels of confidence overall, with 79% of them expecting growth.
The nationwide research further revealed that:
  • 39% of small firms are looking to increase their headcount over the following year compared to just 8% who plan to cut jobs
  • Finding skilled staff is now the second biggest challenge they face, up from fifth place in 2014
  • Small business owners are also increasingly concerned about their shortcomings in management expertise, which has risen up their list of growth barriers from 11th to sixth place
  • 62% of firms have taken steps to improve productivity in the past year – rising to 86% among medium sized firms
  • 50% expect to increase productivity over the next 12 months and 36% expect levels to stagnate, underlining the size and complexity of this particular challenge
  • When asked how the Government can help SMEs to increase productivity, 42% said that investment in fixed line broadband would deliver the biggest benefits, followed by roads (31%) and affordable housing (25%).
  • The proportion of companies that have secured finance to develop their businesses has soared to 44% this year, up from 26% in 2013 and 27% in 2014.
  • Bank loans and overdrafts as a source of external finance have continued to fall in popularity, down to 49% this year from 76% in 2013
  • The popularity of using third party equity or other long term finance has soared from 6% in 2013 to 34% in 2015 and a third of firms would consider raising external equity finance.
  • Companies run by younger entrepreneurs aged under 35 are more confident about their business’s growth prospects than older age groups.  They are also twice as likely to try raising finance compared to more experienced business owners but are more prone to fail to in their attempts
  • Under-35s emerged as more cautious about the EU Referendum and are more inclined to put their expansion plans on hold until there is clarity here
  • Under-35s are more than twice as likely to hire directly from colleges (14%) compared to those between 45-54 years old (6%)