Home truth for Scottish businesses

Half of all Scottish businesses are based in the home, according to new research by the Universities of St Andrews and Glasgow.

Believed to be the first in-depth profile of its kind, the study reveals Scottish home-based businesses sustain around one in five private sector jobs and turn over £19.7 billion a year.

A new report released by the Federation of Small Businesses’ (FSB) dispels many of the popular myths about these 188,000 firms and argues that local government, regulators, banks and enterprise support agencies can’t ignore these businesses and should adapt their approach to better meet their needs.

Dr Darja Reuschke, a lecturer at the School of Geography and Geosciences at the University of St Andrews, crunched the figures behind the report. In her analysis of the data and estimation of its relevance in Scotland, she said, “These are serious businesses, accounting for 10% of private sector turnover and 17% of private sector employment. If our economic salvation lies in broadening and strengthening our small business base, we ignore their contribution and their needs at our peril.”

The report examined data from 999 business owners, 39 per cent of whom were home-based and a further 19 per cent owned businesses that grew out of the home. The research highlights that these firms operate across every sector and geography.

The biggest concentrations of these enterprises are in catering, leisure, tourism, hotels and entertainment (24%), and providing business services (12%). Smaller clusters were found in creative services (8%) and construction (7%).  However, up to six per cent of all enterprises in all other business sectors (including engineering; real estate; and health & social work) are based in the home.

Further, far from being start-ups, more than half of Scotland’s home-based businesses (54%) have been established for ten years or more. Around three quarters (73%) of these enterprises turn over less than £100,000 a year, and 3 per cent generate more than £500,000.

The study also found that, for a majority of businesses, home is seen as being the permanent location for their operations. The most frequently cited reasons to operate a home-based business were the nature of the business (65%), convenience (61%) and to reduce costs (56%).

One in three (31%) specifically highlighted the high cost of commercial premises, with the same number citing improved work-life balance (31%) and over a quarter (27%) saying they wanted to avoid commuting. Motivations for male and female home-based business owners were generally similar, but childcare considerations were cited more frequently by women than by men.

The survey also challenges ideas of home-based businesses being parochial.  In fact, they are more likely to have a broader customer base than other businesses – with a larger proportion trading nationally and internationally and utilising e-commerce compared to firms in commercial premises.

Dr Reuschke worked with Professor Colin Mason of the Adam Smith Business School at the University of Glasgow on the data.  He commented, “Policymakers have been slow to appreciate the importance of home-based businesses to the Scottish economy.  This report shows that Acacia Avenue is as much the home of entrepreneurship as any business park.

“These are serious businesses, accounting for 10 per cent of private sector turnover and 17 per cent of private sector employment.  If our economic salvation lies in broadening and strengthening our small business base, we ignore their contribution and their needs at our peril.”

Ends

Notes to Editors

The researchers are available for interview:

Dr Darja Reuschke; email [email protected] or call 01334 463902.

Professor Colin Mason; email [email protected] or call 0141 330 2728.

For further information on the FSB, please contact Stuart Mackinnon on 0141 226 7914 or 07917 628 995, or email [email protected]. Alternatively, contact Colin Borland on 0141 226 7913 or 07917 628 939, or email  [email protected].