Our recent survey of over 400 Scottish firms reveals a business community that, while facing real challenges, is also full of resilience, ambition and potential.

Scotland’s small to medium-sized enterprises (SMEs) are navigating a demanding environment – but they are also ready to thrive, given the right conditions and support.

While more than 80% of SMEs expressed concerns about their viability over the next 12 months, this is a clear signal, not of defeat, but of a strong desire for change, clarity, and action. With the next Holyrood election on the horizon, SMEs are hopeful that policymakers will respond to this call and work collaboratively to foster a more supportive landscape, one that allows them to flourish.

Our survey encapsulates the views from SMEs in the energy, retail, food and drink, and hospitality sectors, to provide a comprehensive snapshot of the current business climate. While financial pressures and regulatory complexity are undeniable, so too is the entrepreneurial spirit that drives these businesses forward. Many are family-run, deeply rooted in local communities, and key employers across Scotland.

Government data shows that SMEs account for 99.3% of private sector employment in Scotland, highlighting the critical importance of the viability of these businesses to the country’s economic performance. It’s an investment in people, places, and prosperity.

So, what do these businesses see as the biggest obstacle to that growth?

According to our respondents, it’s not just the cost of living or global uncertainty – it’s policy. More than a third of Scottish SMEs responding to our survey cited government policy changes, creating widespread regulatory uncertainty, as the main barrier to growth.

On the positive side, Scottish SMEs appreciate financial reliefs, funding access and efforts to support innovation and public procurement. However, many are frustrated by complex bureaucracy, inconsistent policy implementation, and a perceived bias toward urban areas. Challenges in accessing skilled labour and navigating government schemes also fuel scepticism.

But this is also an opportunity: businesses are clearly articulating what they need – greater stability, consistency and consultation in the policymaking process.

By fostering a predictable, collaborative policy environment, we can empower SMEs to look beyond survival and toward sustainable growth. With greater clarity, businesses can plan with confidence, invest in their workforce and innovate for the future. Without it, a stop/start dynamic stifles forward planning, halts investment and undermines the resilience that SMEs are famed for.

As we look ahead to the 2026 Holyrood election, there is a powerful opportunity to put Scotland’s SMEs at the heart of economic strategy. It begins with listening to their voices—and responding with practical, future-proof policies that reflect their needs and aspirations.

Scotland’s economic future is bright, and it will be built by the determination of its SME community. With the right conditions, they are not only ready to overcome today’s challenges but to lead the way in delivering inclusive, long-term growth for the nation.