Consumer research firm NimbleFins has run a study with new data from the Office for National Statistics, calculating the number of small businesses per 10,000 working-age people in each local authority and region.
It also found Scotland as a whole ranked 11th out of 12 UK regions, and was “out of sync” with the rest of the UK, prompting a leading entrepreneurship academic to call for greater, widespread encouragement north of the Border of the opportunity-driven creation of businesses that boost local prosperity.
The report found the highest-ranking constituency in Scotland was Orkney and Shetland, where 2,945 small businesses yielded a rate of 955 such firms per 10,000 working-age people.
Next were Glasgow Central (950 per 10,000), West Aberdeenshire & Kincardine (792), and Edinburgh North and Leith (781). Bottom of the Scottish list was Glasgow North East at 238.
The highest-ranking area in the UK was Holborn and St Pancras in London at 2,032 – one small business for every five people.
Scotland ranked 11th out of the 12 UK regions for entrepreneurship, with 452 small businesses per 10,000 working-age people – nearly a quarter below the UK average.
Erin Yurday, head of research at NimbleFins, said given Scotland has the fourth-highest average pay in the UK, it was surprising to see it rank 11th.
“This is out of sync with the rest of the UK, where small business creation typically tracks wealth,” she said. “Relative to the rest of the UK, the industries most under-represented in Scotland include construction, wholesale businesses, transport and storage, information and communication, property and business admin and support services."
Ben Spigel, senior lecturer in entrepreneurship at University of Edinburgh Business School, said the findings were not hugely surprising. “While Scotland has had some big success stories like SkyScanner, BrewDog and Genius Foods, we have always known that [it] punches below its weight for overall entrepreneurship,” he told The Scotsman.
“But when we look at stats like this, it’s important to remember that entrepreneurship or business ownership aren’t necessarily good things,” he added, saying many people are forced into self-employment because they lost a job and needed to replace their income.
"What we want is opportunity-driven entrepreneurship — companies started because the entrepreneur saw an unmet need or problem in the market and proactively wanted to solve it.
"These types of firms are more likely to lead to job creation and increase the prosperity of the region they’re located in. Over the next few years, we will see a big rise in necessity-driven entrepreneurship.”
He also said it was hard to see what the mix of opportunity versus necessity-driven entrepreneurship was in these different Scottish regions. “What is clear is that there is a need to look at the barriers entrepreneurs of all kinds face in starting their ventures,” he said.
"Many peripheral places lack local opportunities for entrepreneurs to fulfil, particularly given the downwards trajectories of the tourism and offshore industries. This isn’t something that the government can fix by itself. Increasing Scotland’s levels of opportunity-driven entrepreneurship will take collective action and social change that is difficult to achieve in a short time span.”
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