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The County You Live, Work And Play

Small Businesses Play Vital Role In Improving Economy


15/02/15



A survey reveals small businesses are more likely to have a broader customer base and use e-commerce better than many larger firms.

Businesses based in the home are playing a significant role in helping to drive Lanarkshire’s economy forward.

That’s the promising news from a new report that has been released by the Federation of Small Businesses (FSB).

And the chairman of the organisation’s Lanarkshire branch has welcomed the “immense” contribution that small firms are making.


Tony Higgins said: “When it comes to growing our economy, you might think about finding big investors and developers outside Lanarkshire, often outside Scotland. But maybe it’s not necessary to look out for them. As this report shows, a significant part of our economy is small home-based businesses, here in Lanarkshire.

“This army of businesses is vital to our economy. Despite the recession, many of them have grown over the last two years and plan to employ new staff. Their contribution to Lanarkshire’s economy is absolutely immense. We need to focus our efforts to help them grow and prosper.”


The FSB studied data from 999 business owners, 39 per cent of whom were home-based and a further 19 per cent owned businesses that grew out of the home. The research highlights that these firms operate across every sector and geography.

More than one in three respondents in Lanarkshire (38 per cent) say they expect to employ full-time staff over the next two years, whilst over two-fifths (45 per cent) plan to take on part-time employees.


Almost half of them (48 per cent) have seen their turnover increase in the past two years, with around one in ten (9 per cent) growing their turnover by more than 50 per cent. The survey also finds that around three-quarters (74 per cent) of Lanarkshire home-based businesses are located in towns, with two-fifths (40 per cent) thinking that they will or could move out of the home at some point in the future.

The survey also challenges ideas of home-based businesses being parochial. In fact, they are more likely to have a broader customer base than other businesses – with a larger proportion trading nationally and internationally and utilising e-commerce compared to firms in commercial premises.


The report argues that local government, regulators, banks and enterprise support agencies can’t ignore these businesses and should adapt their approach to better meet their needs.

Mr Higgins added: “As these home-based firms grow, some of them consider moving out of the home, but many find commercial premises too expensive. Why don’t we, then, make those empty units in our high streets cheaper and more attractive for them?

“Now we know how important this sector’s economic contribution is, regulators and local authorities need to make sure that their policies and regulations are right for those based in the home. We also need to tackle these firms’ biggest bugbears: unreliable broadband and a lack of suitable finance products.”


According to the FSB, half of Scottish businesses are home-based, accounting for 291,000 jobs and £19.7bn turnover. Believed to be the first in-depth profile of Scottish home-based businesses, the study was conducted by Professor Colin Mason from Adam Smith Business School at the University of Glasgow and Dr Darja Reuschke of the University of St Andrews.

Professor Mason said: “Policymakers have been slow to appreciate the importance of home-based businesses to the Scottish economy. This report shows that Acacia Avenue is as much the home of entrepreneurship as any business park.

“These are serious businesses, accounting for 10 per cent of private sector turnover and 17 per cent of private sector employment. If our economic salvation lies in broadening and strengthening our small business base, we ignore their contribution and their needs at our peril.”


The biggest concentrations of these enterprises are in catering, leisure, tourism, hotels and entertainment (24 per cent), and providing business services (12 per cent). Smaller clusters were found in creative services (8 per cent) and construction (7 per cent). However, up to six per cent of all enterprises in all other business sectors (including engineering, real estate, and health and social work) are based in the home.