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New research reveals £1.23 billion growth potential for Scotland’s economy

Posted: 6th November 2014

Scottish Family Business Week 1

To coincide with the first Scottish Family Business Week (10th-14th November), a major new research project has revealed how family businesses and SMEs in Scotland have the potential to boost the country’s annual economy by up to £1.23 billion. The study, involving universities, government bodies, businesses and professional advisers, indicates that Scotland needs to do more to build and protect this important sector. There is an opportunity for Scotland to lead America and parts of Europe in providing the knowledge, skills and support needed to become a world-wide centre of excellence.

In Scotland, SMEs account for 99.3% of all private sector enterprises and 63% of these are family businesses. 73% of Scottish family businesses want to keep the business in the family. In 2012, only 12% of family owned businesses in Scotland were passed down to the second generation and only 7% of family owned SMEs had been in the family for three generations or more. This new research is raising awareness of the impact of poor succession, lack of exit strategies, failure to successfully transfer a family business from one generation to another and how this could be damaging the Scottish economy.

In 2012, 17,385 new enterprises were set up in Scotland, but 16,760 of these have now ceased to exist. A number of these business closures resulted from failed business succession. Surprisingly, the survival rate of new businesses after five years is around 35-50%. In contrast, the survival rate of business transfers is around 90-96%. The research is also beginning to show that transferred businesses outperform new start-ups in terms of turnover, profit, innovation and employment.

The Goodison Group in Scotland and Scotland’s Futures Forum is working with a number of partners in an effort to discuss these issues, influence thinking on future policy and practice and to identify practical interventions. Over 100 representatives from SMEs and family business, government agencies, education and professional advisers from around Scotland attended two landmark conferences held in Edinburgh and Inverness to discuss what the research means for Scotland.

The conclusion of the research, involving organisations from the conference, suggests that more focus needs to be placed on successful family business and SME transfer to help maintain and boost Scotland’s economy. Researchers agree that improved infrastructure and support mechanisms can help protect jobs, increase employment, widen business ownership and maintain existing local supply chains.

David C Watt, Director of Goodison Group in Scotland, said: “There is a fantastic opportunity here. The results of the research project will be used to engage with Scotland’s SME and family business policy makers and practitioners. Scotland has the potential to be a world leader in this field.”

Dr Claire Seaman, Senior Lecturer in Enterprise & Family Business at QMU, said: “Feedback from this latest study has confirmed that family businesses are crying out for the right kind of support to help them succeed beyond the first generation.  “This collaborative research has explored ways of improving the growth and sustainability of Scottish SMEs and family businesses, but more specialist support is required.“If we want to change thinking and practice and improve business succession across these businesses, we need an integrated approach to learning, research and influencing policy.”

Grant Bell, Owner of East Links Family Park in Dunbar, East Lothian, said: “Queen Margaret University is currently working with us on the next phase of development in the Park with the intention to enter into a Knowledge Transfer Partnership with the University and a postgraduate student.

“There is a great support network out there for family businesses and SMEs in Scotland. East Links Family Park has joined many networking events hosted by East Lothian Council, the Midlothian and East Lothian Chamber of Commerce and Queen Margaret University, as well as industry specific events held by VisitScotland and the National Farm Attractions Group. It’s an exciting time for family and small businesses – there’s a lot of help out there and much of it is free.

East Links Family Park has just received the Family Business Award from Midlothian and East Lothian Chambers of Commerce. The award highlights the importance of family businesses to the Scottish economy.

Two short films, which have been produced by GGiS and Scotland’s Futures Forum as part of the project, which can be viewed online at and The films showcase the two landmark conferences that were held in Edinburgh and inverness earlier this year. The conferences addressed the challenges faced by SMEs and family businesses and put forward recommendations from delegates as to how this sector could be better supported.

The research project: ‘Sustainability: The challenge facing Scotland’s SME and family businesses’ is a partnership project between Goodison Group in Scotland (GGiS) and its strategic partner Scotland’s Futures Forum, in collaboration with Queen Margaret University, Edinburgh; Scottish Family Business Association; Bank of Scotland; University of Strathclyde; University of the Highlands and Islands; Highlands and Islands Enterprise and Wright, Johnston and MacKenzie LLP.

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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