THE proportion of high-growth companies in Scotland is growing faster than anywhere else in the UK thanks to the lower costs of setting up in business, according to a study published today.
The report shows that Northern Ireland was the only other part of the UK last year to see an increase in high-growth firms, defined as those that have enjoyed a 33 per cent increase in turnover during the past three years.
Scotland is putting students through world-class coursesLiz Cameron
In Scotland, 400 companies met that criteria – an increase of 5.7 per cent compared with the 12 months to March 2013. Data compiled by Barclays and the Business Growth Fund (BGF) show Northern Ireland saw a rise of 5.5 per cent, but in London the rate fell by 5.8 per cent.
Calum Brewster, head of wealth and investment management for Barclays in Scotland, highlighted efforts such as the Scottish Government’s “Can Do” entrepreneurship initiative, launched in November 2013, in helping to create a “favourable climate” for budding business owners.
He added: “Scotland remains a key location to do business for many reasons, but one that stands out is that, by comparison, the country is less expensive. As a result of that, it is increasingly common for a company to have a satellite London office, with their main headquarters north of the Border. It’s cost effective and a model that works well.”
However, Scottish Chambers of Commerce chief executive Liz Cameron said access to funding remains a “significant challenge” for entrepreneurs and businesses, many of whom are funding capital and training investment through retained profits and cash rather than applying for new credit.
She said: “We are aware of an increase in the activities of angel investor networks but it is not clear if this has transpired into improved credit conditions for business.”
Nevertheless, Cameron said companies seeking to set up operations north of the Border have access to a “very skilled and diverse workforce on their doorstep”, and the country’s compactness makes tapping into this talent even easier.
“Scotland has excellent universities that are putting students through world-class courses and delivering highly sought-after qualifications,” she added.
Today’s “entrepreneurs index” study shows there were 157,000 enterprises in Scotland as of March 2014, an increase of 4 per cent on a year earlier, although this overall growth figure lagged behind other areas such as London and north-east England.
It also highlighted that 2014 saw a 5.6 per cent increase to 75 in the number of deals in Scotland where the sale of a business or stake resulted in individual wealth creation of at least £200,000.
The report added: “When the UK’s new government is formed following May’s general election, the key challenge in the entrepreneurial space will be to help translate an increasing start-up population into a greater number of high-growth businesses.
“Currently, we see signs that entrepreneurs and business owners are not achieving their maximum growth potential. For instance, only 4 per cent of UK start-ups achieve £1 million turnover after three years.”
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