Scotland Big Small Business Survey
Suzi Nichol Sunshine No.1
Foreword
Having taken up the role of FSB Scotland chair on 1 April 2025, I’m pleased to share this comprehensive update of the key issues and topics of interest for the small business and selfemployed community in Scotland.
I use the word community as that’s what I’ve found in engaging with FSB Scotland members. Whether it’s speaking with my fellow Scotland Volunteer Member Council members or at FSB networking sessions, I’m often struck that, despite the challenges facing small business owners (of which there are many, as this report lays bare), there’s a persistent desire to work together – as businesses, with FSB Scotland – to try and tackle at least some of these challenges.
Now in its second edition, the Big Small Business Survey offers an important update on the small business view and experience across a wide range of topics, covering business support services, visitor levies, town centres, procurement, and growth ambitions, to name just a few. As we always tell government, small business owners are not a homogenous bunch, so the report also includes analysis by gender, sector, employer size, age of business, and Scottish Parliamentary region. Some of the findings make for difficult reading. For example, it’s disappointing to see that the proportion of businesses planning to close, shrink or sell has remained at just over two fifths since 2023. The regulatory burden on small businesses also doesn’t appear to have reduced, despite government commitments to tackle this.
Economic growth is the key thing needed to boost the confidence and resilience of our small business community. Government at all levels agree on this, which is a start. However, economic growth shouldn’t just mean chasing ‘the next big thing’. Rather, it should focus on investing in and supporting the small businesses that make up 98% of our economy in Scotland, employ over 900,000 people, and turn over £93bn annually. Because that’s not just an investment in economic growth - it’s an investment in communities, in employment opportunities, and current and future generations.
If you’d like to join our community of small businesses, you can find out more information here And I look forward to engaging with many more of you throughout my tenure as FSB Scotland chair.
Guy Hinks
FSB Scotland chair
Acknowledgements
This report was written by Stacey Dingwall (Head of Policy and External Affairs, Scotland). However, it could not have been produced without the support and guidance of the entire Scottish team, and, of course, our volunteer members. Thanks are also extended to the Scottish Volunteer Member Council and colleagues across the devolved nations, Westminster and head office teams for their support along the way, and our friends and stakeholders who helped the survey reach as large an audience as possible.
Most importantly, thank you to the hundreds of small businesses across Scotland who took part in this latest edition of the Big Small Business Survey.
Methodology
This report is based on the Q1 2025 research survey of FSB members carried out via Smart Survey. Scottish small businesses were invited to take part in an online survey via an open link shared by FSB Scotland and key stakeholders. We received 478 responses to the survey, which was live between 27 January – 21 March 2025.
Who we are
The Federation of Small Businesses (FSB) is the UK’s grassroots business organisation. We are a cross-party non-profit body that represents small business and self-employed members in every nation and region.
For over 50 years, we have been the authoritative voice on policy issues affecting the UK’s 5.5 million small businesses, micro businesses and the self-employed. FSB is the UK’s largest business group and leading business campaigner, focused on achieving change which supports smaller businesses to grow and succeed.
We also provide our members with a wide range of vital business services, helping them to start, run, and grow successful businesses through high quality protection and support. This includes 24/7 legal support, financial expertise, training and events, debt recovery and employment/HR advice – alongside a powerful voice heard by governments at all levels.
Our local, national and international campaigning helps shape policy decisions that have a direct impact on the day-to-day running of smaller businesses. We work for their interests through research and engagement with our members and by effective campaigning - influencing those in power through policy analysis, government affairs and, media and public relations activity.
Demographics
Which gender do you identify as?
Male: 49.5%
Female: 48.0%
Transgender: 0.0%
Prefer not to say: 2.6%
Non-binary: 0.0%
Other: 0.0%
What is your age?
16-34: 5.4%
35-44: 15.1%
45-54: 30.1%
55-64: 30.1%
65+: 19.3%
Are your day-to-day activities limited because of a health problem or disability which has lasted or is expected to last at least 12 months?
Yes - limited a lot: 3.7%
Yes - limited a little: 12.1%
No: 81.2%
Would rather not say: 3.0%
What is your ethnic group?
White - English/Welsh/Scottish/Northern Irish/ British: 90.7%
White – Irish: 0.9%
White - Gypsy or Irish Traveller: 0.2%
White - Any other White background, please describe: 2.6%
Mixed/Multiple ethnic groups - White and Black Caribbean: 0.0%
Mixed/Multiple ethnic groups - White and Black African: 0.0%
Mixed/Multiple ethnic groups - White and Asian: 0.2%
Mixed/Multiple ethnic groups - Any other Mixed/ Multiple ethnic background, please describe: 0.4%
Asian/Asian British – Indian: 0.2%
Asian/Asian British – Pakistani: 0.2%
Asian/Asian British – Bangladeshi: 0.0%
Asian/Asian British – Chinese: 0.0%
Asian/Asian British - Any other Asian background, please describe: 0.0%
Black/ African/Caribbean/Black British
–African: 0.2%
Black/ African/Caribbean/Black British
–Caribbean: 0.2%
Black/ African/Caribbean/Black British - Any other Black/African/Caribbean background, please describe: 0.0%
Other ethnic group - Arab: 0.2%
Any other ethnic group, please describe: 0.2%
Rather not say: 3.7%
Which of the following best describes the nature of your business?
Agriculture, Forestry and Fishing: 2.3%
Manufacturing: 8.3%
Electricity, gas, steam and conditioning supply: 0.4%
Water supply, sewage, waste management and remediation activities: 0.4%
Construction: 4.9%
Wholesale and retail trade; repair of motor vehicles and motorcycles: 13.8%
Transportation and Storage: 1.3%
Accommodation and food service activities: 11.0%
Information and communication: 5.5%
Financial and Insurance activities: 2.8%
Real estate activities: 1.9%
Professional, scientific and technical activities: 10.1%
Administrative and support service activities: 1.3%
Public Administration and defence; compulsory social security: 0.2%
Education: 5.1%
Human Health and social work activities: 3.4%
Arts, entertainment and recreation: 5.1%
Other service activities: 21 2%
Activities of households as employers; undifferentiated goods – and services – producing activities of households for own use: 1.1%
How is your business structured?
Sole Trader: 28.4%
Limited Company: 59.8%
Partnership: 9.8%
Charity: 0.9%
Other (please specify): 1.3%
Thinking about your main business, where do you normally operate?
Home: 33.9%
Public space – e.g. café/restaurant/hotel: 9.3%
Industrial park/unit: 17.2%
Shared workspace: 4.9%
Shop: 16.1%
Vehicle: 1.9%
Office: 16.7%
How many staff do you employ (across all your businesses, if applicable)?
0: 31.2% 1-5: 39.3% 6-10: 13.9% 11-50: 12.6%
51-100: 1.9%
101-250: 1.1%
What is the age of your main business?
0 -1 year: 7.6% 2-4 years: 14.8% 5-7 years: 12.3% 8-10 years: 9.5% 11-20 years: 23.7% More than 20 years: 32.0%
Ian McWhinney Dry Island Shellfish Safari
Trading Conditions
The last two years have seen businesses continue to experience challenging economic conditions, with input prices and utilities costs, for example, continuing to rise. Small businesses frequently tell us that while revenue may be the same, or better, ever increasing costs mean that they are unable to achieve any sort of profit margin.
The last year has seen governments in both Holyrood and Westminster place an emphasis on economic growth and commitments to ensuring their policies support this. This section of the survey sought to understand whether there are signs of this growth in Scottish small businesses’ turnover in the last year.
Did you see an increase or decrease in turnover in the last year?
Businesses in the Financial and Insurance Activities (28.6%), Professional, Scientific and Technical Activities (26.3%), and Education (21.4%) sectors were most likely to have seen larger increases (more than 30%) in their turnovers.
If your business turnover has increased, to what do you attribute this?
Increased sales –physical
Increased sales –online
Increased product/ service offer
Lower input costs
More small businesses saw an increase than a decrease in their turnover last year.
The number of small businesses indicating an increase in their turnover has remained static since 2023.
More female-owned businesses (50.0%) reported an increase in their turnover than male (44.0%).
Businesses in the Transportation and Storage (83.3%), Agriculture, Forestry and Fishing (63.6%), and Human Health and Social Work Activities (62.5%) sectors were most likely to indicate an increase in turnover.
Reduced competition
Other (please specify)
Physical sales are driving an increase in small business turnover, while a third have seen results from an increase in their product/service offer.
Qualitative responses to this question also found that some businesses were only able to increase their turnover due to increasing their prices. Increase
In responding ‘increase’ to the above question, what was the percentage increase in your turnover? 20252023
Of those small businesses who have increased their turnover in the last year, the majority seen it rise by less than 30%. 0-10%
In responding ‘decrease’ to the above question, what was the percentage decrease in your turnover? 20252023
Over two fifths of those businesses who reported a decrease in turnover in the last year lost between 11-30% of that turnover.
Turnover reductions have decreased slightly in the last two years, however, with more businesses experiencing reductions in the 0-10% range than was the case in 2023.
If your business turnover has increased, to what do you attribute this?
Cost of doing business crisis
Decline in customers/ footfall
Issues relating to transport
Overall economic uncertainty
Increased competition
Deterioration in town/city centre
Other (please specify)
Business input costs and overall economic uncertainty remain the biggest factors for those businesses experiencing a decrease in turnover.
The number of respondents selecting ‘Increased competition’ as a factor increased by 9% on 2023, with those in the Human Health and Social Work Activities (27.2%), and Arts, Entertainment and Recreation (22.2%) sectors most likely to select this response.
Looking at the last three years, which of the following years would you say has been the most difficult in terms of trading conditions?
Not applicable
Small businesses in 2025 were more likely to view the immediately preceding year as the most difficult in terms of trading conditions.
This is understandable, given that 2020 was an option in the 2023 edition of the survey.
Businesses in the Retail (56.1%) and Other Service Activities (46.2%) sectors were most likely to cite 2024 as their most challenging year.
Which payment methods do you accept?
Cash payments
Card payments
Bank transfer Invoice
Direct Debit
Other (please specify)
Cash remains an important payment method for small businesses, with over half accepting it as a form of payment.
Sarah Aoki Perfect Cleaning Solutions
Qualitative answers also highlighted a number of businesses still willing to accept cheques.
Have you experienced late payment(s) from any of your clients in the last year?
Yes No
Over half of Scottish small businesses were paid late last year.
Late payments were particularly prevalent in the Construction (76.2%) and Manufacturing 73.7%) sectors. 61% of male-owned businesses reported experiencing late payments in the last year, compared to 48% of female-owned firms.
Did the late payment(s) come from:
Public sector client(s)
Private sector client(s)
Third sector client(s)
The vast majority of those experiencing late payment indicated this involved private sector clients.
Sophia Gibson Active Outdoor Pursuits
Net Zero
The last couple of years have seen changes to the targets and policies set by the Scottish Government in relation to Net Zero. The journey to Net Zero will require significant changes in our behaviours, not only on a personal basis but also in terms of business operations and processes. It’s important small businesses are provided with clear direction and support to help them navigate the transition.
This section sought to update our understanding of how engaged Scottish small businesses currently are in the transition to Net Zero, and their views on the current support offering from government.
How would you describe your understanding of government targets related to Net Zero?
Clear understanding of how this will impact my business
Reasonable understanding but would like more information on specific impact on my business
Limited/no understanding of how my business will be impacted
Scottish SMEs’ understanding of government targets related to Net Zero and how these will impact their business has not significantly improved in the last two years.
As was the case in 2023, awareness seems to grow with time in business, with start-ups less likely to have a clear understanding: 13% reported they did, compared to 24% of businesses operating for two years or longer.
Have you made any changes to your business with regards to Net Zero?
Yes - have installed zero/low emissions heating system (e.g. solar panels, heat pump)
Yes - other actions to reduce carbon emissions (e.g. reduction in use or supply of single use plastics/increased recycling/waste management initiatives)
Yes - increased insulation
No
Other (please specify)
More than half of small businesses have made changes to their operations relating to Net Zero, up from two fifths in 2023.
As was the case in 2023, start-ups were less likely to have made changes (11.2% had), compared to businesses operating for five years or longer (34.8%).
Have you engaged with any government support initiatives with regards to the transition to Net Zero?
Yes
No
Engagement with government support initiatives with regards to the transition to Net Zero has dropped even lower since 2023.
Employers were still more likely to have engaged than those with no employees; 17% of respondents with at least one employee had, compared to 6% of the selfemployed.
Do you feel enough support is available to you with regards to the impact the transition to Net Zero will have on your business?
Yes - and I don't need any more information/support
Yes - but I would like access to ongoing information/support
No
Three fifths of Scottish SMEs still do not feel enough support is available to them with regards to the impact the transition to Net Zero will have on their business.
Although they were more likely to engage with government support initiatives, businesses with at least one employee (69.3%) were still more likely to feel not enough support is available than self-employed individuals (56.1%).
Regulation and Tax
Regulatory compliance has been a key issue for small businesses in recent years, with concerns around the cumulative impact of different regulations coming from across different areas and spheres of government. FSB has also raised issues around regulations being designed without taking into consideration the specific impact on small businesses.
A lot of activity has taken place in this space since 2023, primarily through the New Deal for Business Group. As part of this group, FSB Scotland worked with the Scottish Government to redraft its Business and Regulatory Impact Assessment (BRIA) to ensure greater analysis of the impact of new policies and regulations on small businesses is carried out before their introduction.
This section of the survey sought to understand how long SMEs are spending on regulatory compliance in 2025, and where they perceive most of the regulatory demands on their time to be coming from. The last couple of years has also seen increased discussion on the future of the non-domestic rates system in Scotland, therefore we were keen to understand views on this.
How much time (roughly) do you spend on paperwork associated with regulatory compliance each week?
0-3 hours
4-7 hours
8-10 hours
Over 10 hours
Over a tenth of Scottish small businesses are still spending more than eight hours per week on regulatory compliance.
Over half spent up to three hours per week (down from two thirds in 2023), while those spending 8–10 hours almost doubled from 5% to 9%.
Thinking about the regulations you need to comply with, where do you perceive the majority of these come from?
UK Government
Scottish Government
Local authority
EU
Industry regulator
–UK
Industry regulator
–Scotland
Not sure
Other (please specify)
Two fifths of businesses identified the UK Government as the main source of regulatory requirements.
This is to be expected, given HMRC reporting requirements.
Do you believe that businesses in your industry would:
Benefit from more regulation
Benefit from less regulation
Not sure
Almost half of Scottish small businesses believe they would benefit from being less heavily regulated.
However, almost the same number were unsure about the appropriateness of the level of small business regulation.
Do you qualify for the Small Business Bonus Scheme?
Yes - I don’t pay any non-domestic rates
Yes - I qualify for a reduction on non-domestic rates
No - I pay non-domestic rates in full
No - my business doesn’t operate from a premises
Not sure
Two fifths of Scottish SMEs benefit from some level of Small Business Bonus Scheme relief.
These findings reinforce the characterisation of the SBBS as a “lifeline” for Scottish small businesses.
Do you think the Scottish Government should:
Maintain the Small Business Bonus Scheme at its current levels
Return the Small Business Bonus Scheme back to the levels of relief it offered before the 23/24 Budget
Completely reform the Small Business Bonus Scheme
Discontinue the Small Business Bonus Scheme
Not sure
Scottish SMEs are unsure about what the future of the Small Business Bonus Scheme should look like.
Kevin Stacey 42Cycling
At a time when many businesses are struggling with spiralling costs, and stagnant economic growth it would be helpful to the survival of many small businesses if the Scottish government returned the Small business Bonus Scheme back to the levels of relief offered before 2023/24”.
Revaluation, reduction of thresholds and changes to rules regarding cumulative [rateable value] over multiple properties have resulted in the net annual costs of our office and storage facilities increasing by 30%. This was unaffordable, so we had to lay off staff and reduce our premises footprint”.
As a hospitality business, the struggles of ongoing and increasing costs are hitting the industry. As more regulations and costs come in the
form of increased wages and NI contributions more help towards the sector needs to come from the government”.
We compete against Amazon and £ per sq ft favours them as they are not on high street. My business, a Bookshop, provides free events and community support for the arts but our contribution is not recognised in our rates liability”.
Rent and rates are a serious challenge for us. We needed more space so took on additional premises which, of course, incurred rates. First year relief was helpful, but even with reduced rates it’s a big expense. The council are not helpful - you have to know what schemes you are applicable for and how to competently find an access them. It’s all done by sending paper forms and there is a real lack of clarity”.
Do you think the Scottish Government should:
Completely reform the non-domestic rates system for all sectors
Make changes to the non-domestic rates system which only affect certain sectors
Make no changes to the current nondomestic rates system
Not sure
Scottish SMEs are unsure about what the future of the overall non-domestic rates system should look like, however around a third support an overhaul of the system.
I believe that all micro- and many small businesses should be taken out of the non-domestic rates system all together in light of the changing high street and online retail sectors. Many small businesses in the hospitality and accommodation sectors should also be exempt”.
There’s talk of reductions for hospitality, but all sectors are struggling with high rates. No business should be treated differently just because it’s in a different sector”.
Rather that have many people pay nothing, then a cliff-edge of high charges, everyone should pay something, but at a lower rate. A charge based on turnover or profit would be fairer”.
If they are going to make a change, make it for good reason, and not just because another change might win some votes. It has got to have a real, business reason, to support small businesses”.
Taking into account the huge amount of resources used by some companies and the tiny amount used by others... the size of your premises is not always reflective of your impact on resources or services. The nature of the business should be looked at more closely along with the type of building and its interior facilities not just the size”.
What is the main change you would like to see to the non-domestic rates system in Scotland?
Introduction of permanent, additional reliefs for businesses in the retail, hospitality and leisure sectors
Introduction of permanent, additional reliefs for businesses operating on high streets
Reform of how rateable values are calculated
Eligible reliefs automatically applied to bills
Reform of appeals system
Other
Of those businesses that support reform to the non-domestic rates system, there is equal support for additional reliefs for retail, hospitality and leisure businesses, and establishing an alternative method for calculating rateable values.
Realistically what is fair is for caps and incentives to be moved in line with rising rents and inflation”.
My business fell into the category where we just missed out on the Small Business Bonus Scheme as our RV was £1k over the limit. Over the past years RV has increased dramatically but the benefits for small businesses have stayed the same - time to catch up!”.
Property values have changed massively even in 10 years and the assessor’s valuation database doesn’t seem to bear much resemblance to reality in
terms of what a business can afford to pay. The system has been tinkered with so many times and doesn’t make sense in its current state”.
It is fair that all business pay rates, but the new system where the tax goes off a cliff-edge from zero to £6k bill is a barrier to growth. Also the changes in rules to penalise those with multiple properties regardless of the cumulative value penalises those who have separate requirement for offices and storage / workshop facilities, regardless of how small”.
Community Wealth Building and Procurement
Community Wealth Building continues to be a key priority of the current Scottish Government, with proposed legislation making its way through the parliamentary process. It also remains a key area of interest for small businesses in Scotland due to the opportunities it could offer to boost local prosperity and address some of the issues which currently prevent small businesses from winning a larger share of government contracts, including those from local authorities.
In this section of the survey, we sought to update our understanding of SMEs’ current experiences around community wealth building/planning and procurement.
Do you believe that the key players in your local community (e.g. local authority) understand the needs of local businesses like yours, and your importance to community wellbeing?
Yes No
To some extent
Don't know
The number of Scottish SMEs who don’t believe the key players in their local community understand the needs of local businesses like theirs, and their importance to community wellbeing has increased since 2023.
In a change from 2023, start-up businesses were more likely to believe their needs/importance are understood (19.2%) when compared to those operating for more than two years (5.5%).
Have you tendered for any public contracts?
Sole traders remain less likely to have been involved in public procurement (14.7%) when compared to limited companies (27.7%). Businesses with five or fewer employees were less likely to have had experience of the public procurement process (20.2%) than those with 6-50 employees (30.9%).
In a change from 2023, start ups were equally as likely to have tendered for a public contract (23.1%) as longerrunning businesses (23.3%).
If you have tendered for a public contract, how would you describe the process?
Smooth and clear, very satisfactory
A little challenging but overall satisfactory
Complex and challenging to navigate, not satisfactory
The vast majority of Scottish SMEs have never tendered for or run any public contracts. The number who have has decreased by 7% since 2023.
Businesses in the Construction (47.4%), and Education sectors (47.1%) were more likely to have tendered for public contracts.
Scottish SMEs who have tendered for a public contract are even more dissatisfied with the process than in 2023.
Christopher Graham of The Marketing Department, Glasgow, with Martin McTague
Sole traders were more likely to find the process complex and challenging to navigate (85.7%) than limited companies (70.3%).
What was the main factor that made the experience negative?
System and paperwork used in the processfelt these were more geared towards larger businesses/too complex
Support and communication available from the purchasing authority
Support available from agencies/bodies
Other (please specify)
Over three quarters of Scottish SMEs continue to find the public procurement process too complex and geared towards larger businesses.
When we did look at a local authority tender document it was clearly not geared towards local suppliers”.
We have tried to reach out to our local councils to engage and win work but have been unsuccessful in opening dialogue”.
It’s [a] challenge for them, there are real champions in LA[s] but [they] face barriers and pressures. We should celebrate the role these people play”.
The website to even find procurement opportunities is so unhelpful that I have stopped looking to see if I can find any that I would want to tender for”.
One of my clients tried to get on the list for [local authority] but the application document was 35 pages long and if accepted any works would have to be quoted for within 7 days and started within 2 weeks. Given that the auto-response to emails is ‘we will reply in 5 working days’ the council seem to be wanting everything to go their way with no understanding that many small businesses have parttime staff who are not available to turn things round in such a short time”.
Some individuals in some departments have fought to get local businesses added to the procurement list but it is not easy”.
Do you believe procurement spend by your local authority/public sector bodies is sufficient with small/micro businesses?
Yes
No
Don't know
Over half of Scottish SMEs do not believe procurement spend with small/micro businesses by local authorities/public sector bodies is sufficient.
Small businesses in the Lothians were most likely to believe public sector spend with small businesses was sufficient (5.9%).
Are you aware of any efforts by the local authority areas in which you operate to increase their amount of procurement spend with local businesses?
Don't know
Two thirds of Scottish SMEs are not aware of any efforts by the local authorities in the areas in which they operate to increase their amount of procurement spend with local businesses.
Small businesses in the Lothians were also most likely to know about efforts being made by their local authorities to increase local spending, with 21.2% reporting an awareness.
Claudia Kirkwood Super Simple Websites
Staffing
In this section of the survey, we wanted to gain a clearer picture of SMEs’ staffing levels and the challenges they are currently facing in terms of recruitment.
There have been some notable developments in the last year in this area, with the UK Government bringing forward its Employment Rights Bill and increasing the rate of employer National Insurance Contributions while reducing thresholds. Scotland has also seen stubbornly high rates of economic inactivity. These are all factors that impact on small businesses’ ability to recruit and retain staff.
If you employ staff, do you feel have had enough staff to meet your business needs over the past year?
Yes No
Two thirds of respondents indicated they have had enough staff to meet their business needs over the past year, up from 50% in 2023.
More established businesses (operating for two years or longer) were less likely (63.0%) than start ups (80%) to say they’d had enough staff to meet their business needs.
If you answered no to the above question, do you feel the lack of staff has had an impact on the way your business operates? (Please select all that apply)
Yes - I had to reduce the range of services on offer
Yes - I had to reduce opening hours
Yes - other operational changes have been made (please specify)
No - I have not had to change my business operations due to lack of staffing
20252023
Almost half of small businesses with insufficient staff numbers said this has resulted in them reducing their service offer.
This is an increase of a fifth on 2023. The proportion who have had to make other operational changes has also increased by 15%.
I have had to be considerably more involved in operational duties than I had planned due to lack of available staff”.
We find that it is becoming increasingly difficult to retain staff after 18 months as they seek higher salaries with larger consultancies/ businesses. In effect, there is a transfer of economic value from Microbusiness/SME who have invested in staff development into the broader economy [to] larger businesses [who obtain] skilled and trained staff”.
Although I have not changed any hours of opening or the way we operate, lack of staff has loaded extra work on myself and current staff to maintain expected level of service to our customers”.
We are not able to grow in the way that we would like. The direction of the business is going to continue to change. Far greater a concern, is the impact it has on staff wellbeing. We’re all trying to do more and more with limited resources”.
We have added automation and robotics to reduce the need for extra employment”.
Businesses in the Construction sector were most likely to not feel confident they could employ enough appropriately skilled staff, if needed (52.6%). Businesses in the Information and Communication sector were most likely to say they did not intend to hire any staff this year (56.5%).
Thinking about your current and future staffing needs, please tick all of the following indicators that are relevant in affecting your ability to recruit/retain the staff you need for your business:
Absence of available local workers
Absence of cost-effective access to migrant workers
Ability to offer competitive wages
Lack of affordable transport to take staff to/from their place of work
Not confident in sustained customer demand to justify increasing staff hours/ recruiting more staff
Limited/no opportunity for remote working is discouraging potential employees
I don't currently employ staff and have no plans to do so
Other (please specify)
Do you feel confident you can employ enough appropriately skilled staff, if necessary, this year?
Due to wage increases I have had to lose one member of staff, putting a greater workload on others”. Yes No
Not sure
I don't plan to hire any staff this year
Confidence in being able to employ enough appropriately skilled staff is down 15% on 2023.
2023
Some recruitment challenges appear to have eased since 2023, however challenges remain around consumer demand and an ability to offer competitive wages.
Notably, respondents in 2025 were significantly less likely to indicate that an absence of available local workers was an issue. This issue persists in the Highlands and Islands, however, with 43.5% of respondents located there citing it as a problem.
It is difficult to recruit suitable staff. Despite being in an area of high unemployment, it is difficult to find staff with the right skills and aptitude.”
New living wage means we won’t take on low skilled and just look for skilled.”
Cannot afford to hire more staff - burden will be on existing team to do more to their disadvantage and reduced wellbeing.”
Frustrated that talented workers from overseas cannot get visas to stay long-term.”
Costs of employment rising and expected to rise more so cannot plan to recruit anyone.”
Kenneth McKenzie Highland Farm Cottages
Exporting and Markets
This section of the survey looked at levels of exporting activity among Scottish SMEs, and from which parts of the world they are generating sales. We were also keen to understand the impact of more recent changes relating to Brexit on exporting activity.
Do you export any goods or services? If so, please select export destinations below. (NB this includes posting orders to customers outside the UK)
Rest of the
United Kingdom
International (EU)
International (outside EU)
I don't export any good or services
Almost three quarters of respondents do not export any goods or services outside of Scotland.
Of those that did, they were almost as likely to export internationally than they were domestically (to the rest of the UK).
Businesses operating for more than two years were significantly more likely to be exporters (44.7%) than start-ups (16.7%).
Has the recent introduction of the General Product Safety Regulation (GPSR) affected your operations?
Yes – I will no longer export to the EU
No – I will continue to export to the EU
No - I don't export to the EU anyway
Not sure/haven’t decided yet
I have never heard of this
The EU’s General Product Safety Regulation (GPSR), which came into effect in December 2024, adds obligations on UK businesses selling non-food goods intended for consumers into the EU. It also affects businesses selling into Northern Ireland.
Despite the potential for added complications and costs for exporting businesses, the survey found almost a third of current exporters were unaware of the GSPR. Just under 10% of respondents indicated they would stop exporting to the EU as a result, while a quarter said they would continue as is.
FSB members at the Scottish Parliament reception celebrating 50 years of FSB.
Fair Work, Skills and Employment
Skills has become even more of a key issue in Scotland in the last couple of years, with discussions around shortages, gaps and future needs now ubiquitous in public policy discourse. Significant changes around skills provision, apprenticeships, and the further and higher education systems in Scotland are now in train.
At the same time, further increases to the National Living Wage have seen this reach £12.21 per hour for those aged 21 and over. Coupled with increases to employer National Insurance Contributions, the cost of employing someone in the UK has increased from 1 April 2025.
In this section of the survey, we sought to understand SMEs’ experiences in investing their time and financial resources in delivering fair work, staff training, and engaging with the wider skills system across Scotland.
Do you engage with schools and/or colleges/ universities with regards to careers/recruitment?
Businesses in the Construction (52.6%) and Agriculture, Forestry, and Fishing (44.4) sectors were most likely to take on an apprentice.
If you answered yes to the above, did you find taking on an apprentice to be:
Positive experience - I would do it again (option to explain why)
Somewhat positive experience - but I would not do it again (option to explain why)
Negative experience (option to explain why)
Almost four fifths of Scotland’s businesses do not engage with schools/ colleges/universities with regards to careers and recruitment.
Companies with at least six employees were twice as likely to engage (33.3%) than those with five or fewer employees (16.1%).
Do you employ (or have you previously employed) an apprentice?
Three quarters of businesses do not (and have not) employed an apprentice.
Businesses operating for longer than five years were almost three times more likely to report taking on an apprentice, with over a quarter (26%) doing so, compared to those businesses operating for five years or less (9%).
Of those business who do (or have previously) employed an apprentice, more than half found it to be a positive experience; however, this reading declined by 10 percentage points compared to the 2023.
Great opportunity to bring in fresh ideas and unjaded eyes, fully recommend it”.
Rewarding to provide training and useful employment to a young person with great potential”.
It was enjoyable and fulfilling but demanded a lot of time and energy from me. I was also quite stunned by the lack of IT skills all of them showed”.
Great experience, but expensive compared to ROI of hiring a fully qualified staff member”.
Have had mixed experiences - some are keen workers and want to succeed whereas others have just been pushed into the role to leave school so don’t apply themselves and don’t finish their apprenticeships which wastes the position for someone who could’ve taken the role”.
If you have never offered an apprenticeship, please select the reason(s) why this may be the case.
Do not have the time to do so
Do not have the financial resources to do so
Discouraged by the possibility of failing to retain the apprentice once they are fully qualified
The process for hiring an apprenticeship is too complex and lengthy
Other (please specify)
Financial capacity remains the key barrier for small businesses who have never offered an apprenticeship.
Start up businesses were more likely to cite not having the financial resources to do so (44.4%), than businesses operating for more than five years (28.4%).
Despite many past apprentices leaving us to move on to other employment we still engage in the process and are committed to training.”
We have tried this a few times now and it’s been an extremely painful experience mainly due to attitude, we would not do this again.”
The apprentices were focussed and delivered for our business as well as us delivering for their learning.”
Very positive, having an apprentice changed the workplace dynamic and I feel it keeps the longer serving workers fresh by teaching an apprentice.”
I have tried several times, it seems impossible for a sole trader, only available for ltd companies.”
What would encourage you to employ apprentices in the future? Please select all that apply.
Enhanced funding incentives for doing so
Support with apprenticeship pay
Reduced admin/paperwork
Lower costs to train apprentices
Better training providers
More relevant apprenticeship qualifications
Better information, advice, and guidance from Government
Improved course quality
More flexibility in apprenticeship delivery
A shorter apprenticeship
Other (please specify)
More than two fifths of small businesses require more financial incentives and support to be in place before they would take on an apprentice.
Almost a third of respondents indicated a reduction in admin/paperwork would enable them to consider taking on an apprentice.
Businesses in the Agriculture, Forestry and Fishing sector (20.0%) were most likely to say that more relevant apprenticeship qualifications would encourage them to take on an apprentice.
Are you an accredited Real Living Wage (£10.90 p/h) employer?
Yes - I pay at least the Real Living Wage and I am accredited
Yes - I pay at the least the Real Living Wage but I am NOT accredited
No - I am not an employer
No - I am an employer and do not pay the Real Living Wage
Over half of Scotland’s SME employers pay at least the Real Living Wage.
Levels of accreditation remain low, however.
More male employers (62.6%) indicated they paid the Real Living Wage than female employers (44.1%).
Start ups were less likely to be Real Living Wage employers (22.7%) than businesses operating for at least two years (56.8%).
If you don’t offer the Real Living Wage as a minimum to employees, what is the main barrier for you?
I do not know what the Real Living Wage is
Do not have financial capacity to do so
Other (please specify)
Financial capacity as a barrier to paying the Real Living Wage was cited by three quarters of businesses in 2025, up from two fifths in 2023.
I
can’t pay myself a wage. £5000 increase on rent this year alone.”
Where do you believe there are skills gaps in your workforce?
Digital/AI
Marketing
Technical
Soft skills (communication, teamwork, time management)
Customer service/sales
Leadership
Literacy/numeracy
I don't have any skills gaps in my workforce
Other (please specify)
Small businesses were most likely to identify gaps in marketing, and digital/AI skills in their workforces.
A fifth of respondents had not identified any skills gaps in their workforces.
Denis Pinto Caledonian Flow Systems
Prices
The significant pressures on small businesses’ input costs have continued since 2023. At the same time, the cost-of-living crisis is still with us, meaning pressures on consumers’ disposable income have also continued. Members, particularly those in the retail and hospitality sectors, frequently tell us that while the money coming in is at least equal to what it was pre-pandemic, persistently high input costs mean there’s no profit margin to be seen. Price increases are feasible up to a point, with there being obvious tipping points for what the consumer will pay for certain products and services.
This section of the survey looked at how Scotland’s small businesses have reflected this challenge within their current pricing strategies, as well as their plans for the near future.
Did you increase prices across your operations in the last year?
In 2023, almost a third indicated they had raised their prices by more than 10% in the last year.
Larger price increases (more than 10%) were most likely to be seen in the Manufacturing sector (30.4% of respondents indicated price increases of more than 10%).
Do you plan to increase your prices for 2025?
Yes No
Not sure
The number of Scottish SMEs who increased prices across their operations in the last year has fallen slightly since 2023.
Businesses in the Manufacturing (85.7%), Accommodation and Food Service Activities (84.2%), and Human Health and Social Work Activities (81.8%) sectors were most likely to have raised prices in the last year.
Longer running businesses were more likely to have increased their prices; 76.0% of those operating for 5+years had, compared to 18.2% of start-ups.
If you answered yes to the above, can you please specify how much (roughly) you increased your prices overall in 2024?
Less than 5%
5% - 10%
11% - 15%
16% - 20%
21% - 25%
More than 25%
Price rises by Scottish SMEs were more modest in 2024 than in 2022, with over four fifths opting for an increase of 10% or less.
More than half of Scottish SMEs plan to increase their prices in 2025.
Findings on price increase plans remain in line with those for 2023.
Businesses in the Manufacturing (81.5%), Accommodation and Food Service Activities (71.1%), and Construction (68.4%) sectors were most likely to say they would raise prices in 2025.
Longer running businesses were more likely to be planning to increase their prices in 2025; 61.8% of those operating for 5+ years were planning to, compared to 37.5% of start-ups.
If you do intend to increase your prices for 2025, can you please specify how much (roughly) you intend to do so:
Less than 5% 5% - 10% 11% - 15%
16% - 20%
21% - 25%
More than 25%
Scottish SMEs are planning more modest price increases in 2025.
If you do intend to increase your prices for 2025, can you please specify how much (roughly) you intend to do so:
Less than 5%
5% - 10%
11% - 15%
16% - 20%
21% - 25%
Scottish SMEs are planning more modest price increases in 2025.
Just over 12% are planning to increase their prices by more than 10% this year, compared to almost a quarter in 2023.
Businesses in the Other Service Activities (20.0%), Accommodation and Food Service Activities (14.8%), and Manufacturing (13.6%) sectors were most likely to be intending to increase their prices by more than 10%.
Edward Obi of HR Hub Plus Limited with the FSB Community Award
Tourism and High Streets
Tourism remains a key issue for Scotland’s small businesses, with councils now granted the powers to introduce Visitor Levy schemes from July 2026 onwards. With local authorities including Edinburgh, Glasgow and Aberdeen now confirmed to be introducing schemes, and others consulting on the matter, we were keen to see how attitudes towards the Levy had evolved since 2023.
Equally, the state of city centres and local high streets remains a hot topic for small businesses, as empty units and buildings in various states of disrepair persist. While there may have been a boost to high street retailers as more employees returned to working in an office setting, retail crime and graffiti have become increasing problems for small businesses on the high street.
Are you aware of plans to introduce a Visitor Levy in the local authority area(s) in which your business operates?
Yes – formal consultation is underway
Yes – but formal consultation is yet to take place
No
Not sure
Less than half of small businesses are aware of any plans by the local authority in the area(s) in which they operate to introduce a Visitor Levy.
Unsurprisingly, businesses in the Accommodation and Food Service Activities (73.0%) sector were most likely to be aware on any plans. Equally unsurprising were the high levels of awareness in the Lothians region (74.5%), with Edinburgh being the first council to confirm the introduction of a levy.
Do you believe a Visitor Levy will be beneficial in the local authority area(s) in which your business operates?
Levels of support for the introduction of a Visitor Levy have dipped slightly since 2023, however so have levels of opposition.
The 2025 results show greater uncertainty among small businesses over the pros and cons of introducing a Visitor Levy scheme in the area(s) in which they operate.
Businesses in the Arts, Entertainment and Recreation (33.3%) sector were most likely to believe the introduction would have a positive impact. Businesses in the Accommodation and Food Service Activities (64.9%) sector were most likely to believe the introduction would have a negative impact.
Gillian Frew of Fat Buddha, Glasgow, with Martin McTague
Please rank the following options in terms of your preference for what revenue from a Visitor Levy should be spent on, if it was introduced in the local authority area(s) in which your business operates:
1. Infrastructure - road maintenance and transport links
2. Facilities - public toilets, bin, parking spaces
3. Upkeep of local area/street cleaning
4. Increased local facilities - libraries, community buildings, park areas etc.
5. Business support
6. Local events/festivals/attractions
7. Tourism marketing
As was the case in 2023, Scottish SMEs believe any revenue raised from a visitor levy scheme should be spent on local infrastructure, road maintenance and transport links.
A visitor levy should be used to make sure there are facilities to cope with the visitors expected, and NOT compromise the lives of residents.”
Anti-littering campaigns, especially around local schools. The amount of litter is often commented on by visitors and I don’t feel it’s the visitors who cause the majority of it. We need to look after our places and a mess encourages more mess.”
Visitor Levy should not be used for things that the council should be doing anyway via rates and council tax.”
The levy should be kept within the town it is collected, to do good in that town and support those businesses and locals.”
It is essential that funds raised are spent on additional services and infrastructure to support the visitor economy rather than being sucked into filling the general black hole in local council finances.”
Does your business operate in or near a high street or town centre?
Almost half of Scottish small businesses operate in or near a high street or town centre, but the majority do not.
How do you view the current condition of the high street or town centre your business operates in or near?
Over half of Scottish small businesses operating in or near a high street or town centre perceive its current condition negatively.
Businesses in the Glasgow (68.8%) and Mid Scotland and Fife Scottish Parliamentary regions were most likely to perceive the current condition of the high street/town centre in which they operate negatively. Businesses in the Highlands and Islands (28.0%) were most likely to indicate a positive perception.
[Town centre] is pretty vibrant at the moment - parking and litter are issues of concern but overall it’s a nice place to do business.”
It’s dying. [Town] centre’s main shopping centre has recently closed meaning we have lost about 6 shops in one go. It needs some sort of injection of funding and ideas.”
[City] centre is quite dirty and run down and empty due to so much empty space and remote working.”
So many empty premises - doesn’t feel good and doesn’t attract people.”
Parking has become extortionate. I sometimes need to bring a car to work to assist the business - parking at £20 per day is not sustainable for a small independent business.”
Pioneering startup CCU International celebrate winning UK Small Business of the Year with FSB Awards host Tess Daly
Entrepreneurship
The Scottish Government’s National Strategy for Economic Transformation sets out an aim to, “establish Scotland as a world-class entrepreneurial nation founded on a culture that encourages, promotes, and celebrates entrepreneurial activity in every sector of our economy”.
With this in mind, we wanted to better understand experiences of starting your own business in Scotland, and how attitudes and experiences in 2025 compared to those in 2023. This year, we also added some questions around business support in order to better understand the small business experience of accessing that support.
Reflecting on your own experience, do you feel there is enough support to start your own business in Scotland?
Female business owners (37.6%) were more likely to believe Scotland is an attractive place to start up a business than male business owners (25.4%).
Please select any of the following options that you would believe are the main barriers to starting up a business in Scotland.
Lack of finance
Lack of guidance/ know how
Labour market
State of the economy
Lack of government support
Two fifths of Scotland’s small businesses don’t believe there is enough support to start your own business in Scotland.
Almost a third were unsure about whether enough support was available, however.
Male-owned (44.5%) businesses were more likely than female-owned (32.2%) businesses to say they did not believe enough support is available. Female business owners (34.9%) were more likely to express uncertainty than male owners (27.2%), however.
As in 2023, those in the Arts, Entertainment and Recreation sector were most likely (41.2%) to believe there was enough support.
In the current climate, do you feel Scotland is an attractive place to start up a business?
Other (please specify)
2025 2023
Almost three quarters of small businesses now believe the state of the economy ss the main barrier to starting up a business in Scotland.
Female-owned businesses were more inclined to cite lack of finance as a main barrier to starting up a business (22.3%) than male-owned businesses (16.7%).
Businesses in the Education (27.3%), Financial and Insurance Activities (26.7%) and Retail (26.0%) sectors were most likely to cite lack of government support as the main barrier.
Almost half of small businesses do not feel Scotland is currently an attractive place to start up a business.
Disproportionate cost/tax pressures on small business versus national/international companies.”
It’s an expensive market to attract clients and the capital required to be “premium” is unachievable for most.”
Lack of entrepreneurial experience in the local council, high costs to rural communities and lack of support for seasonal businesses.”
It seems all the support is geared towards large businesses. Small business owners are on their own.”
Have you sought business support from any of the following organisations? (Please select all that apply).
Local authority
Business Gateway
Solicitor/Lawyer/ Accountant
Peer Networks (i.e. other businesses)
Scottish Enterprise
Highlands & Islands Enterprise
South of Scotland Enterprise
British Business Bank
Scottish National Investment Bank
UK Government
High Street Bank
Private Sector
Business consultants
Skills Development Scotland
Business Angel investor
Elevator
Federation of Small Businesses
Family or friends:
Education institutions (e.g. colleges, universities in accessing skills or training)
None of the above
Other (please specify)
Almost two thirds of Scottish small businesses have accessed support from Business Gateway.
FSB, legal sources, and peer networks were the next most popular sources of business support. The enterprise agencies – Scottish Enterprise, Highlands & Islands Enterprise, and South of Scotland Enterprise –ranked further down the list of popular sources (while noting the latter pair’s limited geographic reach).
Please rank the following factors in terms of their importance to you when engaging with business advice services:
1. A single point of contact to act as advisor
2. Being able to talk to a specialist who understands my sector
3. Digital platforms to access business support services
4. Clear and accessible language (i.e. jargon-free)
5. Face to face contact with advisers
6. An annual check in, assessing what support services available could help my bespoke business needs – a ‘Business MOT’
7. Contact virtually (e.g. through zoom, teams, facetime etc)
Having a single point of contact was the most important factor to small businesses when accessing advice services.
Virtual contact was ranked as the least important option.
How have business support services helped your business, if at all? (Please select all that apply)
It helped my business to become more productive
It helped my business become more environmentally sustainable
It helped my business to become more digital
It helped my business to grow
It helped my business to survive
It helped my business be compliant with regulation (e.g. health and safety; employment law)
It helped my business to improve employee support
It helped my business to become more innovative
It didn’t help my business
Other (please specify)
Small businesses have had most success in using business support services to help their business grow and survive, however almost a third said accessing support had not helped their business at all.
Qualitative answers indicated respondents had also found business support services useful when starting up, as well as with networking and funding opportunities.
For which of your business needs have you used business support services to address? (Please select all that apply)
Financial advice
Help with tenders
Export support
Employment advice
Help with tax and/or regulation
Succession planning
Marketing advice
Training/skills advice
Enhancing my business's digital capacity
Legal advice
Innovation
None of the above
Other (please specify)
Small businesses are most likely to engage with business support services for advice on finance or marketing.
Female respondents were slightly more likely (12.2%) than male (8.1%) to seek support on training/skills advice, while male respondents were more likely (16.2%) to say they hadn’t accessed business support services than female (9.4%).
Mairi Curle of Boogie Beats Music and Movement celebrates her UK Franchise Business of the Year Award with Mairi McAllan MSP
Finance
In this section of the survey, we wanted to update our understanding of how business profits have fared over the last year and if small businesses feel adequate financial support is available to them.
Small businesses disproportionately rely on external finances for their business operations, cashflow and investment opportunities. Therefore, access to finance is crucial for small businesses and, in turn, economic prosperity.
Taking into account all sources of income in the last year, did you:
Generate a profit
Break even
Sustain a loss
Over three fifths of Scottish small businesses generated a profit last year, an increase of almost 5% on 2023.
The number who reported sustaining a loss also decreased slightly on 2023’s figures, dropping by 7 percentage points.
As in 2023, male-owned businesses were more likely to have generated a profit in the last year (66.1%) than female-owned businesses (57.9%).
17.6% of start-ups generated a profit, while 52.9% sustained a loss. 62.9% of businesses operating for more than two years were profitable, while 15.9% were loss-making.
Those in the Transportation and Storage (80.0%) and Financial and Insurance Activities (75.0%) sectors were most likely to have made a profit. Businesses operating in the Agriculture, Forestry and Fishing (33.3%) and Arts, Entertainment and Recreation (29.4%) sectors were most likely to have sustained losses.
Do you feel you have access to sufficient financial advice?
A third of Scottish SMEs do not feel they have access to sufficient financial advice.
38.9% of start-ups feel they have access to sufficient financial advice, compared to two thirds of those operating for 20 years or longer. The gap between sole traders and limited companies has narrowed since 2023, as neither were more likely than the other to say they didn’t feel they had access to sufficient financial advice.
Male business owners remain more likely to feel they have access to sufficient financial advice (59.1%), than female business owners (45.2%).
Have you tried to obtain external finance for your business in the last twelve months?
The number of Scottish SMEs who tried to obtain external finance for their business in the last twelve months has not increased since 2023.
Male-owned businesses remained slightly more likely to have tried to obtain external finance (25.3%) than female-owned firms (22.1%). Meanwhile, 38.9% of start-ups had tried to obtain finance in the last year, compared to a quarter of businesses operating for 2+ years.
31.7% of limited companies had tried to obtain finance in the last year, compared to 12.4% of sole traders.
Where / for what did you apply? (Please select all that apply)
Overdraft
Bank loan
Asset-based finance/invoice finance/factoring/ trade finance – where you secure the loan with an asset you own
Export/import finance – loan secured by bond/ guarantee or letter of credit from bank
Seed finance – where investor provides funding to start your business
Angel finance – where investor provides funding to business with growth potential
Peer-to-peer lending
Crowdfunding
Venture finance – where investor provides funding to business with potential for high returns
Other loan, e.g. government backed start-up loan
Other (please specify)
Small businesses are most likely to choose a bank loan when looking for external finance for their business.
Over a third chose this option, while overdrafts and asset-backed loans (a quarter of respondents each) were the next most popular options.
Suzi Nichol Sunshine No.1
Transport
Transport connectivity is vital to wider economic growth and plays an important role in SMEs’ day-to-day operations. Small businesses recognise the important role transport will play in helping to reach net zero, improving sustainable and inclusive economic growth, and addressing inequalities and accessibility.
In this section of the survey, we wanted to update our understanding of how small businesses make use of vehicles and public transport.
Do you use a vehicle (or vehicles) as part of your business operation?
Electric car use increased slightly on 2023, by just under 4 percentage points.
Do you rely on public transport as part of your business operations?
More than two thirds of Scottish SMEs use a vehicle or vehicles as part of their business operations.
Male-owned businesses were more likely (75.1%) to use a vehicle than female-owned businesses (63.9%).
Younger businesses (operating for less than five years) were less likely to use a vehicle; 56.5% did so, compared to 72.4% of businesses operating 5 years+.
If you answered yes to the above question, what type(s) of vehicle(s) do you use?
Car (petrol/diesel)
Van (petrol/diesel)
HGV (petrol/diesel)
Car (electric)
Van (electric)
HGV (electric)
Boat
Bike
E-Bike
Cargo bike
Other (please specify)
The majority of Scottish small businesses who use vehicles for business continue to rely on petrol/diesel vehicles.
The number of Scottish SMEs reliant on public transport as part of their business operations has not changed since 2023.
As in 2023, start-ups were more likely to rely on public transport (44.4%) than those operating for longer (19.3%).
Would you consider public transport to be:
More than half of Scottish SMEs consider public transport to be reliable.
Trains are much more expensive and unreliable within Scotland. Often train is first choice but flights to English cities can be much cheaper.”
Local services are non-existent for any prospective employee, and also for customers, there is no public transport available at night to service restaurants etc.”
The bus services in and around cities is excellent (except rural areas). The train network is poor, cancellations etc but definitely it is too expensive, particularly travel between the major cities.”
Mostly reliable but no suitable bus times for my one employee. Has to finish work at 3.15 to catch the bus. Next one is past 6.00pm! The wonders of rural transport.”
Too infrequent and challenging to co-ordinate when having to catch more than one bus, train or coach etc.”
Future plans and growth
As noted, both the UK and Scottish Governments have emphasised the importance of boosting economic growth. In Scotland, First Minister John Swinney has identified economic growth as one of four key pillars guiding the work of his administration.
Since the last survey report, the Scottish Government introduced its New Deal for Business, which aimed to reset the relationship between business and government. Therefore, we were keen to examine what impact – if any – government policy over the last two years has had on Scottish SMEs’ plans for the future, and particularly on their ambitions to grow their business.
Over the next two years (2025 and 2026), do you plan to grow your business?
Businesses in the Construction sector (44.4%) were most likely to say they were planning to grow by employing more staff.
What is the key driver of your ambition for growth?
Customer demand
Change of consumer habits
Need to diversify streams of income from the business
Other (please specify)
More than half of Scottish SMEs plan to grow their business in the next two years.
Male (55.9%) and female (56.2%) business owners were equally as likely to have growth ambitions.
Businesses in the Education (90.9%), Transportation and Storage (75.0%), and Information and Communication (66.7%) sectors were most likely to be planning growth.
How do you plan to grow your business? (Please select all that apply)
By employing more staff
By exporting to new markets
By offering more products/ services
Not sure yet
Other (please specify)
The majority of small businesses are planning to grow their businesses by offering more products/services.
Almost half of those businesses planning to grow in the next two years are doing so due to a need to diversify income streams.
The key drivers of growth for small businesses have remained the same since 2023.
Need to have a bigger customer base to provide more stable turnover/earnings.”
Grow enough to be able to afford some time away from the business.”
Costs for family have risen hugely, need to increase our income.”
Do you perceive there are any obstacles that might divert you from this ambition?
(Please select all that apply)
Change of consumer habits
Cost-of-living crisis
Not able to retain necessary staff
Lack of finance
Operational costs
Lack of guidance/know how
Fear of future
Increasing government regulation of business
Other (please specify)
The cost-of-living crisis remains the key obstacle to growth for Scottish SMEs in 2025.
While findings remained broadly in line with 2023, there was an almost 10 percentage point increase in those identifying lack of finance as a barrier. There was also a 7 percentage point decrease in the number of respondents citing a fear of the future.
What is the main reason why you don’t intend to grow your business?
I am planning to close my business
I am planning to downsize my business
I am planning to sell my business
I want to stay the same
Not sure
Other (please specify)
More than two fifths (42.8%) of small businesses who said they were not planning to grow, are instead planning to close, downsize, or sell their business.
The number of businesses who said they didn’t have growth ambitions as they were planning to close, shrink or sell has remained the same since 2023, at just over two fifths. The number planning to stay the same in 2025, instead of growing, also remained broadly in line with 2023’s findings.
Due to the visitor levy we may have to think about selling our business. This is due to the levy being included in the VAT threshold.”
I cannot see a way of making sufficient profit to do so, based on the additional costs being passed on to businesses.”
We simply have to survive: another year of budgetary attrition could wipe us out e.g. further wage, NI or other tax rises.”
I downsized last year, laid off staff and went to smaller premises due to the rising costs of running a business and employing staff.”