Growing consumer demand is driving confidence at Scottish micro-businesses, with 86% expecting activity levels to bounce back over the next 12 months.
According to new research by Shawbrook Bank’s Micro Business Monitor, 65% of micro-businesses say that diversifying and introducing new revenue streams will drive this bounce back. In addition, 68% say new growth 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.
Shawbrook surveyed 47 Scottish businesses with 25 employees or fewer to understand the opportunities and challenges that lie ahead for more than 360,000 micro-business in the country.
The group’s research also found that 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%).
Commercial Director of Savings at Shawbrook Bank Alun Williams 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.
He added: “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.”
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The group also discovered some of the micro-businesses’ priorities for the coming year, with 34% upskilling staff, 31% hoping to improve cyber resilience, and 29% saving for expansion of new products or services.
Most companies have a business savings account in place at 74%, while 91% said 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.