Federation of Small Business
Rocket Science were commissioned by the Federation of Small Businesses to explore the employment potential of micro-businesses (employing fewer than 10 people) and the extent to which there was scope to enhance recruitment by micro-businesses by providing appropriate recruitment-focused support. We reviewed statistical evidence from across Europe and our findings included:
- Micro-businesses make up nearly 94% of Scottish businesses and provide 27% of the private sector jobs in Scotland.
- This underplays their significance in tackling unemployment:
- Over 40% of unemployed people who find work in the private sector go to work in a micro-business or become self-employed.
- 26% of recruits to micro-businesses across the EU are long-term unemployed people.
- Micro-businesses, therefore, provide a disproportionate number of opportunities for those previously unemployed and a significant part of Scotland’s ‘demand side’.
We surveyed 580 micro-businesses and interviewed over 70 micro-business owners. Our findings included:
- Micro-businesses are a particularly diverse customer group
- There are distinctive issues around recruitment for micro-businesses
- Micro-business owners develop highly-flexible approaches to employment
- Recruitment presents micro-businesses with a range of risks and difficulties
- The level of risks perceived by micro-business owners far exceed the reality of those risks and often, in themselves, lead to decisions not to recruit – despite the fact that the business needs to recruit
- Micro-businesses often have limited capacity to manage staff.
We uncovered significant under-employment by micro-businesses and clear evidence that a support service that focused on helping micro-businesses grow through recruitment would help to tackle the risks around recruitment that micro-business owners perceived. On the basis of these findings we developed a range of detailed recommendations for national and local organisations about what an appropriate service should look like.
Outcome: Micros Untapped has proved to be highly influential report and in Scotland there are now ‘growth through recruitment’ programmes in place in over 5 local authority areas, with more in the pipeline. Glasgow’s economic development arm, ‘Jobs and Business Glasgow’ reoriented their whole strategy to focus on micro-businesses. Early results show a significant upturn in recruitment by micro-businesses in the areas where such a service has been put in place, and in two of the areas the project has been significantly expanded.
Contact Richard for more information
 Scottish Corporate Sector Statistics (2011), p.27
 Urwin, P and Buscha, F (2012). Back to Work: The role of small businesses in unemployment and enterprise. Federation of Small Businesses.
 cf 14% for Small and Medium and 9% for those employing over 250, de Kok et al, 2011