Scottish micro-businesses set to bounce back as trading rises
Nine in ten (86%) Scottish micro-businesses expect activity levels to bounce back over the next 12 months as consumer demand rises, according to new research into one of the most important parts of the Scottish economy.
Shawbrook Bank’s Micro Business Monitor surveyed Scottish businesses with 25 employees or fewer – known as the backbone of the economy – in a bid to understand the opportunities and challenges that lie ahead for more than 360,000 micro-business in Scotland.
It found that two thirds (65%) say their business diversifying and introducing new revenue streams will drive this bounce back, while 68% say this will come from increasing consumer demand for products and services.
Almost a third (32%) also intend to hire additional full-time or part-time employees in the next six to 12 months.
Positive impacts of the pandemic
Three quarters (75%) of Scottish micro-businesses felt optimistic when reflecting on their trading prospects over the past six months. Despite the challenges, 58% said that demand for their businesses’ products or services had increased.
For those that did see a drop in demand, this was due to a decrease in consumer demand (73%), trading being paused during lockdown (55%), and staff isolating or shielding (9%).
Alun Williams, commercial director of Savings at Shawbrook Bank, said: “It’s extremely encouraging to see Scottish micro-businesses have a positive outlook for the next 12 months, a reflection of the agility that allows them to adapt more easily to external factors. However, in the short-term, micro-businesses need to think about upcoming opportunities or challenges and how they will be funded.
“Many firms have experienced huge changes over the past 18 months but have learned to adapt or innovate and are now in a position to expand their offering. Having the availability of business savings will help these firms invest in their future, create new jobs, or train staff.
I’d urge any business to include savings as part of their long-term strategy and planning as having this pot of money can provide great reassurance, which after recent headwinds, can only be a good thing.”
Encouragingly, more than half (51%) of Scottish businesses know exactly where every penny is coming from and going to. Almost three quarters (74%) also have a business savings account in place with 34% upskilling staff, 31% hoping to improve cyber resilience, and 29% saving for expansion of new products or services,
Despite the challenges of the past 18 months, 91% of Scottish micro-businesses say having a business account in place gives them the confidence needed to operate successfully.
Looking forward, 83% expect their business to grow over the next 6-12 months with more than half (54%) planning to use savings to expand their offering, and 49% using surplus profits towards future opportunities.
Almost half (47%) also plan to invest in new equipment over the same period while 30% will introduce new training for employees or invest in digital, technology or automation.