Scottish SMEs want more support to scale, by Nick Freer

A recent survey of Scottish SMEs by enterprise and business support group Elevator, which has supported over 3,500 SMEs over the last few years, revealed findings indicating that business owners are in a relatively confident mood in spite of rising costs and funding challenges. 

According to the survey, 72 per cent of SMEs said their running costs have increased this year.  Meanwhile, two-thirds of SMEs want more external support, while 40 per cent said access to finance is their biggest roadblock to growth.

60 per cent of respondents said grants are their primary source of external finance, 21 per cent said debt finance, with 14 per cent securing equity finance as their primary source.  43 per cent have received support from Business Gateway, 28 per cent from Scottish Enterprise, 13 per cent from Scottish Government, 11 per cent from UK Government, and 6 per cent from Highlands and Islands Enterprise.

51 per cent of respondents said their revenue increased in their last financial year, 23 per cent said revenue decreased, and 26 per cent said turnover stayed at a similar level.

3 out of 4 businesses said they are now using AI, with over half of the sample planning to invest in technology over the next 12 months.  

Commenting on the survey, Graham Ramsay, Director of Lochgilphead-based Midton Acrylics, a design and manufacturing firm that includes Formula 1, Red Bull, and Universal Music among its client base, said: “We have embedded AI and new technologies into our processes, freeing our team up to focus on creativity, innovation, and delivering even more value to our clients.” 

What the survey also mapped out, as discussed by Elevator CEO Rachel Ross on publication, is that innovation in Scotland is not confined to our cities and tech hubs, with innovation happening in every corner of the country. Place and community is important to Scottish SMEs, with 80 per cent citing its impact on business success. 

Asked what effects stronger local entrepreneurship would have in their area, Scottish SME leaders said more local jobs (77 per cent), more opportunities for young people (68 per cent), increased local pride and confidence (62 per cent), better local services (57 per cent), and stronger local supply chains (55 per cent). 

As written about quite extensively in this column, there has been a notable increase in the narrative recently around how we can do better at scaling our startups and SMEs into globally competitive companies. 

I joined CEOs and business leaders at a roundtable event run by Insider Media, a sister title to The Scotsman, at RBS in Edinburgh this week.  While funding routes are never too far down the agenda for scaleups, as they are for SMEs, the chat on the day centred more on the challenges around accessing leadership and NXD talent at the scaleup stage. 

Watch this space for more on that next week.