EVERY so often and despite the depredations of commentators, Scotland’s government can grasp the right end of the stick. This Wednesday is set to bring just such an example.
Finance minister John Swinney is scheduled to launch Scotland Can Do, a programme to help promote business start-up and encourage innovation within existing businesses to bring forward new products and services.
It aims to encourage entrepreneurialism and innovation within our education system, greater collaboration between business and the academic sector and to bring more focus to bear on opportunities in global markets and exports for young companies.
All too familiar? Of course it is. There has always been more to Scotland’s story than welfare programmes and the maintenance of a large public sector: a long and resonant history of endeavour in enterprise and invention. But such endeavour needs continual support and promotion. It is one thing to grasp the right end of the stick. The real test is to know what to do with it.
There are several reasons why I believe this new initiative stands a better chance of making a difference than its predecessors.
The first is that an economic recovery is well under way and conditions are more conducive to business enterprise and innovation now than for five years. The latest Bank of Scotland PMI report shows Scotland’s private sector economy continuing its recent strong performance into the final quarter, with output and new business growth “remaining sharp in October”.
This recovery is not without its problems. We need to see a much greater improvement in exports. None the less, the CBI’s latest SME Trends Survey out tomorrow is set to show optimism among small and medium-sized manufacturers rising at the fastest pace since records began in 1988. And optimism around export prospects for the next 12 months has increased strongly.
The second reason for hope is the clear evidence of a surge in business start-ups already under way. The total number of businesses in Scotland hit a record 343,000 in the year to end March. Of this total, 341,000 or 99 per cent comprise small and medium-sized businesses (SMEs). These now employ 1.1 million people in Scotland. The biggest element of growth – 73 per cent of the increase in the year to March – was in the ranks of sole traders and unregistered businesses.
This reflects the way in which dramatic advances in electronic communications and information technology have swung open the doors of opportunity for young entrepreneurs. E-commerce shrinks geography. It is now possible for a micro business, such as Rothesay-based Bonnie Bling, to market its products on the internet and build a nascent export-driven business serving the Scottish diaspora overseas.
This new initiative is inspired in large part by the success of the Scottish EDGE Fund. Launched by Swinney in October 2012 to help early-stage entrepreneurs to realise their potential, this £2 million fund has already helped 34 businesses pull in an extra £660,000 in sales and leveraged a further £1.4 million in external financing. Partners include Scottish Enterprise, Business Gateway, Entrepreneurial Spark and Highlands and Islands Enterprise. It is all modest and micro, but a positive foundation on which to build.
However, the third spur for Scotland Can Do is altogether less reassuring. Scotland’s business stock per 10,000 population is notably lower than for the UK as a whole. And there is evidence that we are lagging in the fast growing world of e-business.
Last week, I referred to a survey by business research firm SQW for Scottish Enterprise. This showed that Scottish-based businesses now generate around £31 billion in e-commerce sales each year. It reckoned that e-commerce now accounts for some 200,000 jobs and makes a £9.7 billion contribution to Scotland’s Gross Value Added.
All very encouraging. But the SQW report also raised serious questions about Scotland’s performance relative to the rest of the UK. It found a relatively lower rate of e-commerce activity, a lower rate of related job creation and concluded that it “appears to be clear that Scotland is an order of magnitude behind greater London and the south-east” in the take-up of e-commerce.
It found “a serious gap in current official economic statistics in Scotland” which needed to be addressed. It also recommended greater involvement of Skills Development Scotland and the Scottish Funding Council. Other recommendations included an MSc course in e-commerce in a drive to strengthen the supply of e-business skills.
Scottish Enterprise has already taken steps to improve the range and quality of data on e-commerce and to help the tourism and food and drink sectors through seminars and conferences on digital promotion overseas. It is also working at EU level to simplify cross-border digital business and promote a digital voucher scheme for business.
But there is much still to do. The Swinney initiative is long on ambition and requires more specifics on what exactly the Scottish Government intends to do that is better than or different to previous such declarations. It is described as a “framework”, which begs the question of what exactly it intends to frame, and how.
There is also a reference to “seizing the opportunities presented by Curriculum for Excellence”, a challenge akin to seizing a fog. Outside of the magic circle of those who understand CfE, it is an impenetrable mist of vague and ambiguous buzzwords. It also raises the inevitable question of whether teachers are sufficiently knowledgeable or experienced in teaching “entrepreneurialism”.
And none of this should replace or stand in the way of the helping SMEs with the everyday problems they face in the real world – greater relief on business rates and a more level playing field when it comes to pitching for government and public sector work. It doesn’t help when a perfectly competent micro business employing two or three experienced professionals is sent forms asking for details on their diversity awareness training.
Whether Swinney’s new initiative is fresh start or re-tread matters less than the recognition it bestows on the new business upsurge, the need to help and encourage cross-border e-commerce, and the exhortation it sounds across all agencies in Scotland to promote a new generation of skilled, savvy and ambitious entrepreneurs.