Are home based businesses the future of growth in the Scottish Economy ?

The world is facing an unprecedented re-appraisal of economic thinking following a decade of low growth and a growing movement of people talking about being disenfranchised from any benefits of capitalism.

At an event tomorrow (20th September 2016), called ‘From Homeworking to Co working’, I will examine how the world of global corporations and the political institutions which support them are slowly, but surely, converting into a ground-swell of micro-businesses that make up a powerful economic engine for the future. I will also be revealing the following survey results from the Scottish Government.

The Scottish Government is publishing a series of reports looking at the characteristics of small and medium-sized businesses in Scotland.

Highlights from the report on Home-based Businesses show:

  • 70% of all enterprises in Scotland are sole traders and the survey shows that 55% of these were home-based
  • Almost half (46%) of the SME population were home-based – and 24% of firms with employees operate from their home.
  • 95% of home-businesses were family owned.
  • 65% of home businesses were more than 10 years old.
  • 94% of home-based businesses grew or maintained employment in the past 12 months, and 97% expected to grow or maintain employment over the next 12 months.
  • 69% of home-based businesses grew or maintained turnover in the past 12 months, and 77% expected to grow or maintain turnover rover the next 12 months.
  • Amongst the SME population a similar proportion of home-based as businesses with separate premises exported.
  • 48% of home-based businesses indicated an intention to grow overall sales over the next three years.
  • There is a broad range of types of business operated from a home-base ranging from 5% manufacturing through to 18% of business services to 21% construction.

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The event is one of my Enterprise Talk Oots with entrepreneurs, businesses and thinkers too, looking at how the Scottish idiom “many a mickle maks a muckle” could have vast implications for the way we forge a route to a more secure wealth-creation ethos.

During a large part of the 20th century, people spoke of a ‘job-for-life’ at a large bank, manufacturer or public body. Those days are long gone. We now find one in seven people now work for themselves and by 2020, more people will work in micro-businesses than the public-sector.

The event in Glasgow will be an exciting day of unfolding the new business landscape and hearing stories about how this is manifesting itself.

We are finding people embracing entrepreneurship from a very young age rather than following a ‘career-route’ through large organisations. And why is this? It is because starting a business from home can be much more sustainable – and can help your personal wealth grow faster.

Moreover, as the public sector is whittled down through Government-spending-cuts, many people are finding that they have absolutely no option but to break out and start their own business. The challenge here is that not all of them really choose this route – but find they have become an ‘accidental entrepreneur’. We need to spend far more time supporting them.

Also speaking is Dr Frances Holliss from London Metropolitan University who thinks that many commentators are still stuck in the old era and have not yet recognised what is happening:

“More than 95% of UK businesses employ less than ten people. Although largely invisible and generally ignored, new research shows that these micro-businesses make a major contribution to the economy, currently providing a third of all employment and contributing just under a fifth of annual UK turnover. And they are proliferating – they grew in number by 55% between 2000 and 2013. Most of these micro-businesses are, have been, or were run, at some point, from their owner’s home; this has substantial implications for the way we conceive and design our housing and cities.”

The crucial thing Scotland and the wider economy needs to understand is how the latest statistics are bearing out the size of this change. For instance; micro-businesses contribute almost a fifth of the UK’s annual turnover. Also; the amount of full-time remote workers, many of whom refer to themselves as ‘location independent’, is rising fast.

Maybe its time to take a fresh look at what we mean by growth.