1st February 2024
Most businesses in the Highlands and Islands consider their links with the local community as either equal to or more important than their profitable growth.
This is one of the key findings of the most recent rural business survey commissioned by Highlands and Islands Enterprise (HIE) in partnership with South of Scotland Enterprise (SOSE).
The survey was carried out by Ipsos in November and December 2023. There were 1,002 responses received from enterprises across the Highlands and Islands region and in a wide range of sectors.
For the first time the study explored the role of businesses in community wealth building and found that 92% of respondents were taking actions that reflect the tenets of community wealth building.
Two thirds (69%) were using or increasing their use of local suppliers, driven by a desire to support local businesses. Sixty four percent were collaborating to share ideas and best practice and reach new markets.
Almost eight in ten (79%) were taking specific action to benefit their community. Within this, more than half (54%) were providing financial support or donations to community groups or initiatives.
Almost two in five were engaging with schools, colleges or universities on career opportunities (37%), providing expertise or delivery support to community organisations (37%), allowing the community to use facilities (36%) and a third (32%) were supporting their staff to volunteer.
The survey again explored confidence in Scotland's economic outlook and found this to be down slightly since the previous round in May and June 2023, from 55% to 50%, the same as it was in February and March 2023. Confidence in the Highlands and Islands economy was slightly greater at 53%.
Business performance was broadly in line with the previous survey. Most had either performed well or had been fairly steady, though one-in-five had struggled.
Looking ahead, around half of businesses said they were striving for growth, while over a third were content with their current level of performance. One-in-ten expected to downsize in the future, higher still among the construction sector (20%) and primary industries (18%).
Tourism and visitors coming to the area was perceived as a key place-based opportunity for business, followed by renewable energy or large construction or infrastructure projects.
Most businesses (85%) were taking action to make the most of growth opportunities locally, including investing in equipment (55%), investing in technology (43%), and upskilling employees (43%).
The main barriers preventing businesses from making the most of opportunities in their localities were a lack of people or skills in the area (38% to a large extent), transport infrastructure (32%), access to housing (29%), complying with regulation and legislation (28%) and access to specialist skills (26%).
While contributing to the local community was clearly important to businesses, the findings suggest that concerns continued.
The most immediate-term priorities were satisfying existing customer demand (39%), surviving current financial challenges (37%), building resilience to future challenges (29%), and making cost savings (27%).
Businesses were asked about changes to import arrangements between the UK and the EU due to be phased in over 2024. One-in-five (20%) felt these changes would have mainly negative impacts on them, while 3% anticipated positive impacts and 24% no impacts. Almost a third (31%) were unclear on what it would mean for them. Among those expecting negative impacts, the main concerns were cost (86%), delays (78%), paperwork (62%) and additional time and effort required to comply with changes (62%).
Martin Johnson, HIE’s director of strategy and regional economy, said:
"As is always the case, this survey provides an extremely valuable insight into the perceptions, performance and priorities of rural businesses, the challenges they currently face and where they need support the most.
“This particular report highlights the inextricable nature of the relationship between our region’s businesses and communities and the value of each to the other. It also helps clarify where businesses need the most support in order to make the most of new opportunities in the region. This is something we can use to inform business support policies and priorities going forward."
The rural business survey report for the Highlands and Islands is available on the HIE website Business Panel page
The report of the South of Scotland region is available on the SOSE website.