Scotland lost nearly 20,000 businesses during a single year of the Covid crisis, official figures show.
According to the Businesses in Scotland statistical release between March 2020 and March 2021, the estimated number of companies fell by 19,805, a drop of 5.4%.
There are now 344,505 enterprises in Scotland, the smallest number since 2014 when there were 329,765.
The Federation of Small Businesses (FSB) is urging the Scottish Government to outline new measures to aid the recovery of small and medium-sized enterprises (SMEs) in its budget on Thursday (December 9).
What we need to see from the Scottish Government this week are commitments to help Scotland’s small business community get back on its feet.”
Andrew McRaee, FSB,
FSB Scotland policy chairman Andrew McRae said: “Almost 20,000 Scottish enterprises vanished over a single year of the covid crisis.
“And the statistics suggest the bulk of these were the very smallest operators, like self-employed individuals and new-start businesses.”
Mr McRae added: “The stories behind these figures will all be different.
“But they’ll include the tour guide who had to get a job as he couldn’t run the business he loved while there were no tourists.
“Or the migrant business owner who decided to return to their country of origin during the crisis and then never came back.
“And the person who ran the local cafe, but couldn’t make it turn a profit when faced with restrictions.”
He continued: “While the public health measures that were taken were necessary, there’s no doubt that they took a huge toll on local firms and the self-employed.
“That’s why we believe policymakers have a duty to help these operators recover from the crisis.”
The bulk of the fall in business numbers is among unregistered Scottish businesses – those not registered for VAT and/or Pay-As-You-Earn – which account for 19,015 of the decline.
FSB says this trend implies the crisis has been particularly difficult for the self-employed and new-start businesses.
But Scotland also saw a decline in registered businesses over the same period, with 790 of these firms lost.
In a letter to Finance Secretary Kate Forbes about the budget, FSB urges the government to earmark funds for grants to help SMEs build digital skills and reduce their environmental impact.
The small business campaign group also wants Holyrood to commit to another year of business rates relief for those businesses hit hardest by the Covid crisis.
In addition, it has asked the government to investigate a collective insurance scheme for the country’s self-employed, taking inspiration from similar initiatives on the continent.
We’re urging the Scottish Government to deliver bold new initiatives to build the resilience of our self-employed community.”
Mr McRae said: “What we need to see from the Scottish Government this week are commitments to help Scotland’s small business community get back on its feet.
“That means help for the current crop of businesses, and efforts to encourage and support the next generation of people who want to set up on their own.
“It is critical that ministers support debt-laden firms by keeping in place Covid rates-relief for smaller firms for another financial year.
‘Bold new initiatives’
“And we want to see new grant funding to help local firms build their digital capabilities and reduce their carbon emissions.
“Further, we’re urging the Scottish Government to deliver bold new initiatives to build the resilience of our self-employed community.
“Independent businesses and the self-employed are part of the fabric of our local communities.
“But they’ve been stretched to breaking point by this crisis. Renewed help is urgently required from decision-makers in Edinburgh.”