- 26% of Scottish energy SMEs say supply chain disruptions are biggest financial challenge to operations;
- 39% noted Scottish Government policy changes as biggest challenge to business growth;
- 58% said that Brexit impact on staff retention was still being felt, with 33% stating that growing workforce is a key priority.
Two thirds (67%) of small and medium-sized enterprises (SMEs) in the Scottish energy sector believe the viability of their business is at risk over the next 12 months, according to new research from Aberdein Considine.
The survey, carried out by Censuswide on behalf of the legal firm, highlights the mounting economic pressures and uncertain market conditions faced by small to medium businesses in key sectors across the country, including the energy industry. SMEs account for over 99% of all private sector businesses in Scotland, and the survey captures their views one year out from the next Holyrood election, as candidate selection has begun.
Respondents pointed to several factors that present financial challenges, including increased costs, supply chain disruption, access to finance and uncertainty arising from policy and regulatory changes, with the findings indicating that these challenges are being felt by businesses of varying sizes within the SME category.
The report also found that concerns around business viability were not limited to specific industries, with high levels of risk perception present across the retail, hospitality and food and drink sectors, in addition to energy. The findings suggest that a broad cross-section of Scotland’s SME community is currently operating in an environment they view as unstable or unpredictable over the coming year.
Scottish energy SMEs poised for a return to full-time office working
The appetite for a full office return stands out against wider workforce trends, with 84% of energy-sector respondents noting a return to full-time office working as a priority over the next 12 months. This figure was higher when looking at all the sectors surveyed, with 90% of respondents prioritising a return to full-time office work.
This marks a notable shift in workplace planning, with the majority of businesses indicating a move away from hybrid or remote arrangements.
Scottish Government policy changes biggest challenge to business growth
Equally significant is the pressure from policy and taxation, with over a third of energy businesses surveyed (39%) listing Scottish Government policy changes as the biggest challenge to business growth.
Respondents reported that ongoing policy shifts have created difficulties in planning and investment, suggesting a widespread concern among firms about the impact of regulatory uncertainty on their ability to grow and operate effectively in the current environment.
Supply chain disruptions have also put strain on Scottish energy SMEs, with a quarter (26%) stating that this was the biggest financial challenge they faced.
Despite political and regulatory challenges facing the energy sector, 66% of Scottish energy SMEs remain optimistic about the benefits associated with the energy transition, with more than half (53%) planning to invest in sustainability and ESG initiatives over the next 12 months, while a third (33%) are actively planning to planning to grow their workforce.
Rod Hutchison, Partner and Energy Sector Lead at Aberdein Considine, said: “Our survey’s findings reflect the increasing uncertainty around the future of the energy sector in Scotland, with more than two thirds of the country’s energy SMEs currently questioning their viability. This highlights the urgent need for targeted and practical support to ensure the sector not only survives but is well-positioned to thrive in the years ahead.
“With over a third of respondents citing shifts in Scottish Government policy as the biggest obstacle to continued growth, we hope policymakers take this on board in the run-up to the next Holyrood election and work collaboratively with industry to provide greater clarity and confidence for the future.”
Ritchie Whyte, Partner and Head of Corporate and Business Advisory, Aberdein Considine, said: “While the findings show that a significant number of Scottish SMEs – many of which are family-owned and run – are facing real concerns about viability in the short term, they also point to a business community actively planning for the future.
“The result that more than 90% of respondents say they are prioritising a return to full-time office working seems to run counter to broader workforce trends, but it perhaps highlights a focus across the industry towards strengthening collaboration and enhancing productivity. While approaches may vary, there is a shared intent among firms to stabilise operations and support long-term future growth.”
The full survey findings can be accessed here.