Sharp fall in small businesses working on new initiatives
The percentage of Scottish small businesses working on initiatives to power future growth has fallen sharply from 70% to 55% since the start of the year – and is well below the national average of 65% - according to research from Novuna Business Finance.
The national tracking study of a representative sample of 1,235 small business owners also revealed significant sector falls (compared to Q1 2025) in manufacturing (down from 83% to 69%), transport and distribution (down from 76% to 73%), real estate (from 72% to 44%), media (falling from 86% to 61%).
Significantly, over the last decade, Novuna’s data has revealed that low-points in Scottish small business growth forecasts were usually offset by resilience for the longer-term, with enterprises working on initiatives to secure future growth.
This quarter, and for the first time, there are falls on both counts. Following Novuna data earlier in the month - which revealed a five-year low in the percentage of Scottish enterprises currently forecasting growth (22%) - the number of small businesses in Scotland working on initiatives to secure future growth for the longer-term is also down, hitting a nine-year low.
Percentage of Scottish small businesses working on longer term growth plans: Results over time
| Q3 2016 | Q3 2017 | Q3 2018 | Q3 2019 | Q3 2020 | Q3 2021 | Q3 2022 | Q3 2023 | Q3 2024 | Q3 2025 |
| 71% | 71% | 67% | 66% | 74% | 71% | 65% | 71% | 67% | 53% |
Of those small businesses in Scotland that were working on initiatives to unlock future growth potential, the most common steps taken were largely defensive measures to control spiralling costs and cash flow – and here there were significant rises on July 2024. Initiatives backed included:keeping fixed costs down (70% - up from 49%), improving cash flow (44% - up from 18%) and tackling late payments (30% - up from 12%).
Set against this, there was a year-on-year fall in the percentage of Scottish enterprises that were looking to hire new staff (10% - down from 25%) or to expand into overseas markets (11% - down from 18%).
While there was little change in the percentage of enterprises that were looking to invest in new machinery or equipment, the number of Scottish businesses looking to free up working capital by reassessing finance commitment has doubled on this time last year.
Top initiatives in Scotland to secure future growth: Results over time
| Q3 2025 | Q3 2024 | |
| Keeping fixed costs down | 70% | 49% |
| Improving cash flow | 44% | 18% |
| Tackling late payment | 30% | 12% |
| Investing in new machinery and equipment | 18% | 22% |
| Streamlining supply chain | 15% | 9% |
| Reassessing finance commitments | 12% | 6% |
| Expanding into new overseas markets - | 11% | 18% |
| Hiring more people | 10% | 25% |
Joanna Morris, head of insight at Novuna Business Finance said: “After the surge in small business confidence this time last year, there has been a slide in the percentage of Scottish small business owners predicting growth this year.
"Across Scotland, the fall in the percentage of small businesses offsetting this by working on new projects to unlock future growth potential is a concern. We have seen from our research over the last 12-months that geo-political uncertainty is impacting small business confidence together with high running costs and fears over tax rises later this year.”
“One positive take from this quarter’s findings is an upturn in the percentage of small businesses that are using this uncertain period to reassess their finance commitments to free up working capital – a trend that is up across six industry sectors this quarter."