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Scotland SME update

Welcome to the Close Brothers Asset Finance update of the Scottish SME sector where we highlight a wide range of issues relevant to businesses in Scotland.

The results are based on the Close Brothers Business Barometer, a quarterly survey of close to 1,000 SMEs across the UK conducted by specialist independent researcher, Lightspeed, on Close Brothers’ behalf. Where relevant, comparisons are made with national sentiment.

The commentary in this review focuses on:

  • Economic outlook
  • Finance requirements
  • Concerns & priorities
  • Mental health
  • Environmental responsibility
  • Traffic congestion
  • Recycling rates
  • Broadband speeds  

Economic outlook

Scottish SME business owners’ views about the economic outlook are broadly in line with the rest of the UK, with 32% confident the economy will grow (UK: 37%) and a further 31% feeling that while it will take longer, better times are ahead (UK: 29%).

A significant minority (32%) are concerned that the economy could decline and haven’t experienced any true economic growth.

Looking ahead, three in five Scottish firms expect their performance to remain static, while 36% are hoping to expand their operations in 2019, which is marginally less optimistic than the UK average of 38%. Only 4% predict their business will contract or shut down.

Finance requirements

Despite businesses in Scotland showing a strong willingness to invest, almost two thirds (62%) of those polled are finding it a ‘challenge’ to access the funding they need and are saying that it hasn’t become any easier to get hold of finance and is as problematic as it’s ever been.

A combined total of 37% say it’s either becoming easier or they’ve ‘never had a problem accessing finance’.

Regardless of the challenges, 60% of business owners said that they would be seeking funding for investment in the coming 12 months.

Concerns & priorities

Maintaining cash flow is the biggest concern for businesses in the Scotland industry, with 21% selecting this option. ‘Finding extra working capital’, ‘lack of skilled staff’ and ‘competitors’ came in joint second (14%).

For 32% of Scottish businesses, ‘achieving growth’ is their main priority, followed by ‘developing products and services’ and ‘business consolidation’, both 22%.

Traffic congestion

A large majority of Scottish businesses (88%) feel that traffic congestion is a significant problem and it’s only becoming worse, according to 65% of those surveyed.

This is impacting 31% of Scottish companies’ ability to trade or operate at their full capacity; for a further quarter of businesses, traffic congestion has negatively impacted profitability (UK: 41%).

Exactly half feel the current road network is not sufficient to cope with existing traffic levels.

Mental health in the workplace

Almost half (47%) of Scottish business owners believe people with mental ill health continue to be stigmatised in the workplace. To help protect anyone affected in their teams, 67% of firms have the requisite policies in place to support those who work for them.

Less than two out of every three (38%) business owners believe there is sufficient government assistance – including advice services – for SMEs to help support employees with mental ill health.

At 88%, SMEs are overwhelmingly in favour of a mental health helpline, along the lines of the NHS 111 service, to help those in need to be referred to the most suitable service, depending on their requirements. This is because many firms, notably those at the smaller end of the scale, don’t have the resources to offer their employees the relevant support they may need.

Environmental responsibility

Three quarters of businesses in Scotland are actively encouraging their employees to be more environmentally responsible, with 74% going as far as saying they would consider offering employees one day off a year to volunteer for environmental causes.

Many Scottish firms (58%) prioritise the financial cost of goods over their environmental impact when making procurement decisions, which is well below the UK average of 76%, while a further 79% make a conscious effort to separate recyclable materials from the waste they produce.

Social media  

Well over half (58%) of businesses in Scotland use social media as a sales tool, with Facebook being the most popular followed by Twitter and LinkedIn.

Forty two percent of Scotland firms employ someone to drive their online presence, which has had significant success, with 57% having made sales off the back of social media.

Broadband speeds 

Speed of broadband has become so critical that for 61% of firms it would be an influencing factor if they decided to relocate.

In the main (82%), Scottish businesses are content with their broadband speeds; however, a fifth of those polled admit to having lost business because of slow speeds.

Scotland operators are, for the most part, pleased both with their provider’s responsiveness (89%) and value for money (78%).