How Does a Business Grow?

Business growth generally refers to expanding the size, revenue, and market presence of a company over time. For a small or medium-sized enterprise (SME), growth might be measured in higher sales turnover, increased profits, a larger customer base, or a growing team of employees. Crucially, growth is about moving forward rather than stagnating. If you are not growing, competitors could overtake you. Staying still while rivals expand and take market share is riskier than pursuing growth. When managed properly, growth brings greater security, stability, and long-term profits to a business. In other words, a growing business is better positioned to weather market changes and seize new opportunities.

Growth is especially important for SMEs in Scotland because it not only benefits the individual business but also contributes to local communities and the broader economy. Research has shown that the vast majority of SMEs want to grow, and about 80% of small businesses intend to expand within a few years. This ambition is well founded. Sustainable growth can create jobs and increase profitability. Conversely, failing to grow can mean losing ground in competitive markets. Of course, growth has risks and challenges, but the alternative, stagnation, often poses a greater threat to an SME’s long-term survival.

Before a business can achieve sustainable growth, it must first strengthen its foundation. Think of this as business consolidation: shoring up what you have so that expansion is built on rock. It is wise to strengthen your core operations and customer base first. Loyal customers and steady cash flow from existing sales are what underpin future growth. For example, make sure your current customers are happy and that your operations can handle more demand before chasing new markets. Growth should not come at the cost of service or quality for your existing clientele. This firm base will provide the cash and stability needed to support expansion.

Planning is also critical. As your business grows, yesterday’s tactics might not work today. It is important to update your business plan regularly to reflect changing market conditions and new goals. SMEs that maintain a business plan are more likely to achieve growth than those that do not. Consider whether you have the time, staff, and systems in place to support growth. Will you need to hire additional people or train your team with new skills? Do you need to invest in better technology or larger premises? These questions should be addressed early so that when growth opportunities arise, your business is prepared to capitalize on them.

Strategies for Business Growth in Scottish SMEs

Strategies for Business Growth in Scottish SMEs Every business’s growth journey will look
a bit different, but there are several proven strategies that SME owners in Scotland can
consider.

Understand Your Market and Customers Continually research your market and listen to
your customers. Markets evolve, and so should your understanding of customer needs.
Regular market research and customer feedback will help you spot opportunities and
adapt. By knowing your market, you can refine your offerings and marketing tactics to fuel
growth.

Increase Your Market Share One classic way to grow is by winning more business in your
current market. This can mean attracting new customers or drawing customers away from
competitors with a better offer. Improving your product or service quality, adjusting pricing,
or upping your marketing game can help here.

Diversify Products and Markets Diversifying into new products or services, or expanding
into new markets, is crucial for reducing risk. For instance, if your current market is
saturating, you might explore selling in another region or country, or develop a new
product line to reach a different customer segment. Diversification can cushion your
business against downturns in any single market. Just be sure to research and perhaps
test new markets on a small scale first to gauge demand and challenges.

Innovate and Improve Continuous improvement and innovation are powerful drivers of
growth. Introducing new or improved products, services, or more efficient processes can
set you apart. Evidence strongly links innovation to business growth. Companies that
innovate are more likely to grow and even to expand internationally. Even simple
innovations, like adopting a new technology that improves efficiency or customer
experience, can contribute to development and growth of the business.

Build Partnerships and Networks Sometimes growth comes faster by joining forces with
others. Entering a partnership, joint venture or pursuing a strategic merger or acquisition
can provide your business with new skills, people, or technologies, and access to another
firm’s customer network. A collaboration with a complementary business could allow both
parties to open new markets together or enhance what you offer to existing customers.

Manage Finance and Cashflow for Growth Growth often requires investment, whether it’s
funding new product development, hiring staff, or expanding facilities. A solid financial
strategy underpins any growth plan. Calculate how much capital you need for your growth
project and plan where it will come from. Detailed forecasts of your cashflow and working
capital needs are essential to avoid overstretching. Lack of access to finance is frequently
cited as the largest barrier preventing SMEs from growing, so explore the funding options
available. Additionally, keep a close eye on cashflow. Growth can put strain on cash
resources if sales lag behind expenses. Ensure your existing operations continue to
generate cash to support new initiatives.

Develop Skills and Leadership Don’t overlook the human side of growth. As your business
grows, you and your team may need new skills. Investing in training, leadership
development, and hiring the right talent can drive growth from within. Strong management
capability is linked to higher growth ambition and performance in SMEs. A capable and
adaptable team will execute growth plans more effectively and innovate when challenges
arise.

Leveraging Scotland’s Support Network for Growth The good news for Scottish SMEs is
that you don’t have to pursue growth alone. Scotland has a robust support ecosystem for
business development and growth strategies. Business Gateway offers free one-to-one
advice, online resources, market research, workshops and more to anyone looking to start
or grow a business. They have offices in every region with experienced advisers who can
help with planning, digital marketing, or finances. Highlands and Islands Enterprise (HIE)
plays a similar role, working closely with businesses and social enterprises to help them
develop and grow sustainably in that region.

At the national level, Scottish Enterprise provides support for innovation, exporting and
scaling up. They focus on helping companies secure R&D; funding, enter international
markets and build talented workforces for sustainable growth. All these services are
designed to remove barriers to growth. If you’re looking to export as a growth strategy,
Scottish Enterprise (and its international arm, SDI) offer training and market intelligence to
help you expand overseas. If innovation is your route, they have grants and expert advice
for that as well.

Finally, don’t forget the value of local business networks and mentorship. Organizations
like Business Gateway, Scottish Enterprise, HIE, local Chambers of Commerce, and
industry associations provide not just information but also connections. By networking with
other entrepreneurs and tapping into mentorship programs, SME owners can learn from
others’ experiences and discover opportunities. The overarching message is that a wealth
of support exists in Scotland. Whether your plan is to increase market share, diversify, or
collaborate, there are advisors ready to guide you on that journey.

Conclusion Business growth is a journey, not a one-time event. For SMEs in Scotland,
achieving growth means clearly defining what growth looks like for your company and then
systematically working toward it with a solid plan. By understanding the definition and
importance of growth, laying down strong foundations, and applying the right strategies
from market expansion and diversification to innovation and partnerships, small
businesses can scale up sustainably. Growing a business involves challenges and risks,
but with careful planning, continuous learning, and the supportive ecosystem available,
SMEs can turn their growth ambitions into reality, building stronger companies that
contribute to a thriving Scottish economy.

For guidance on growing your business sustainably, contact Benson Wood & Co today

Sources:

• Scottish Enterprise – What we do / Business Support Servicesscottish-enterprise.comscottish-enterprise.com

• Business Gateway – Guide: Meeting the Challenges of Growth (online resource)bgateway.combgateway.com

• Business Gateway – “Ready, Steady, Grow” Guidebgateway.combgateway.com

• Business Gateway – Success Stories (Case studies of SME growth)bgateway.combgateway.com

• Highlands and Islands Enterprise – Support for business growth in regionscottish-enterprise.com

• Fraser of Allander Institute – Performance of Scotland’s SMEs (2017)fraserofallander.org

• Scottish Enterprise – Research on SME Growth Ambitions (2012)scottish-enterprise.comscottish-enterprise.com

• Find Business Support Scotland – East Dunbartonshire Business Growth Grantfindbusinesssupport.gov.scot

• Scottish Enterprise – Business Gateway overview

Corporation tax

Corporation tax – the tax companies pay on their profits – has been a hot topic in Scotland over the past few years. Although corporation tax rates are set by the UK Government (making it a reserved matter rather than devolved to Holyrood), the effects are keenly felt by Scottish businesses and industries. From the first hike in the headline rate in almost half a century to intense debates over windfall taxes on North Sea oil profits, recent developments between 2023 and 2025 have sparked discussions about competitiveness, public finances, and Scotland’s economic future.

A Historic Tax Rate Rise and Policy Shifts

In April 2023, the UK’s main corporation tax rate jumped from 19% to 25% for companies with large profits. This was the first increase in 47 years. The policy had been legislated back in 2021, but its journey was dramatic. A 2022 “mini-budget” tried to cancel the rise before market turmoil forced a U-turn.

From the 2023/24 tax year, firms earning over £250,000 in profit now face a 25% tax on those profits. Smaller businesses are shielded: companies with profits below £50,000 continue to pay the Small Profits Rate of 19%. This two-tier system softened the blow on SMEs, and ministers highlighted that most companies would not see any increase at all.

Despite the 6-point jump, business groups noted the UK remains competitive internationally. At 25%, the rate is still below the G7 average and significantly lower than the US, France, or Germany. The Treasury estimated the rise would generate about £18 billion extra per year for public finances.

To offset the higher rate, the government introduced generous investment incentives. A 130% “super-deduction” was available until 2023, followed by a new “full expensing” regime allowing firms to deduct 100% of qualifying capital spending immediately. Originally temporary, this was made permanent in the Autumn 2023 statement, forming part of a new “Corporation Tax Roadmap” which promised stability by capping the main rate at 25% and preserving key reliefs such as R&D credits.

Economic Implications and Scottish Business Reactions

The rise sparked debate about its impact. The Office for Budget Responsibility warned that, in isolation, higher rates would reduce investment. However, thanks to the new allowances, investment levels held up better than expected.

In Scotland, large companies have had to factor in the higher rate, while many smaller ones continue at 19%. Corporate tax receipts rose by almost 30% in 2022/23, boosting government budgets but also raising business costs.

Scottish business groups voiced mixed opinions. The Scottish Chambers of Commerce said the rise was significant but noted it was introduced gradually and left the UK competitive. At the same time, surveys revealed taxation had become the top concern for Scottish firms by late 2024, overtaking inflation.

Trade unions welcomed the rise. The STUC argued that profitable firms should contribute more, particularly those that thrived during the pandemic. Some even suggested going further with higher rates linked to conditions such as job creation and wage growth.

Meanwhile, entrepreneurs like Sir Tom Hunter called for tax cuts to make Scotland more attractive for investment, pointing to Ireland’s low rates as a model. Former First Minister Humza Yousaf echoed this in early 2024, suggesting an independent Scotland could use targeted lower rates for high-growth industries. Since mid-2024, however, John Swinney has led the Scottish Government with a more cautious focus on economic stability rather than bold tax changes.

North Sea Windfall Taxes and the Oil Sector

The North Sea oil and gas industry has faced its own extraordinary changes. In response to record profits from high energy prices, the UK Government introduced a windfall tax – the Energy Profits Levy. Initially set at 25%, it rose to 35% in 2023 and 38% in 2024. Combined with the sector’s existing 40% rate, this has pushed the effective rate on North Sea profits to 78%.

Supporters argued this was fair, with companies making windfall gains while households struggled with energy bills. Billions in extra revenue helped fund support schemes.

But in Aberdeen and across the oil sector, the response has been fierce. Business groups warned of lost jobs, paused investment, and companies redirecting capital overseas. The Aberdeen & Grampian Chamber of Commerce called the tax burden crippling, reporting tens of thousands of job losses. Even some trade unions criticised the policy for undermining the workforce needed for a green energy transition.

The government introduced a mechanism to scale the levy back if oil prices fell, but as of 2025 the high rates remain. The industry continues to lobby hard for change, warning of long-term damage to the North Sea economy.

Looking Ahead

Scotland cannot set its own corporation tax rate, but the debate is alive. Business leaders call for stability and competitiveness, while unions and campaigners call for fairness and higher contributions from big firms. The SNP has floated the idea of using corporation tax strategically in an independent Scotland, but for now it remains a reserved matter.

What is clear is that tax policy has real consequences. From SMEs in Glasgow to oil firms in Aberdeen, decisions made in Westminster shape Scotland’s economy. Striking the right balance between raising revenue and supporting growth will remain a central challenge in the years ahead.

Sources

• Aberdeen & Grampian Chamber of Commerce (2025) ‘UK Government to blame as Harbour Energy cuts 250 North Sea jobs’. AGCC News. moraychamber.co.uk

• BDO (2025) ‘Scottish family firms brace for “Seismic” tax changes’. Scottish Financial News. scottishfinancialnews.com

• Confederation of British Industry (2024) “Autumn Budget 2024: the CBI impact”. CBI Insight. money.co.uk

• Glasgow Chamber of Commerce (2025) ‘Over 80% of Scottish SMEs see risk to viability over next 12 months’. glasgowchamberofcommerce.com

• HM Treasury (2022) “Government update on Corporation Tax”. Gov.uk. money.co.uk

• Newsquest Scotland Events (2021) “Pause for thought as corporation tax hike takes business by surprise”. Herald Events. moraychamber.co.uk

• Office for Budget Responsibility (2023) “The impact of corporation tax changes on business investment”. OBR, London. money.co.uk

• Paul, M. (2024) “SNP leader looks to Republic in bid to free Scotland from Britain’s flagging economy”. The Irish Times. thebusiness.scot

• Scottish Chambers of Commerce (2025) ‘Quarterly Economic Indicator Q2 2025: rising cost pressures for businesses’. moraychamber.co.uk

• Scottish Parliament Information Centre (2024) “Pre-Budget Scrutiny 2025-26: Summary of Evidence.” SPICe. money.co.uk

• Reuters (2024) “North Sea oil and gas producers say UK windfall tax is a ‘wrecking ball’”. moraychamber.co.uk

UK Businesses still expect growth

From London to Lanarkshire, optimism is making a quiet comeback. Despite persistent inflation, rising costs, and global uncertainty, most UK SMEs are still predicting stronger turnover and profitability as 2025 enters its final quarter. According to Lloyds Bank’s latest Business Barometer, 70% of businesses expect turnover to increase. That’s a clear rise from 62% at the end of 2023 (Lloyds Banking Group, 2025).

This wave of confidence is echoed elsewhere. The Guardian reports that 73% of firms feel optimistic about profitability, a level of sentiment not seen in nearly a decade. Still, warning signs remain. A recent Federation of Small Businesses (FSB) survey found that 27% of SMEs expect to shrink, sell, or shut down. Just 25% are anticipating growth (The Times, 2025).

So the question is this: how do you ride the momentum while staying protected against risks?

What the Growth Outlook Means for SMEs

A Divided Landscape

Some sectors, especially retail, are riding high on consumer demand and rising real incomes (The Times, 2025). Others, particularly smaller firms facing tax strain, wage pressures, and rigid lending terms, are finding it harder to stay competitive.

This is the reality of two SME groups:

• One is actively investing and building for growth

• The other is holding back, managing risk, and reevaluating strategy

Knowing where your business stands is the first step toward choosing the right next move.

Why Optimism Still Holds Its Ground

Confidence Is Up Across Industries
Lloyds’ data shows business confidence at its highest point since 2015, with more sectors reporting positive trading outlooks.

SMEs Remain the Backbone of the UK Economy
With 99% of UK businesses classified as SMEs, contributing close to £2.8 trillion in turnover and employing around 60% of the private sector workforce (Gov.uk, 2024), their performance is central to national growth.

Stability Still Signals Strength
Not every business is booming, but 58% expect turnover to stay stable. In this volatile market, holding steady is a sign of resilience (ONS, 2025).

Four Practical Ways to Turn Optimism into Action

So what does this mean for your business, and how do you move from cautious hope to confident action before year-end?

1. Diagnose Where You Are
If your outlook is positive, identify what’s fueling it. Is it better demand, more efficient systems, or new contracts?

If you’re feeling uncertain, be honest about what’s holding you back. Is it cash flow, tax obligations, rising input costs, or limited credit?

Without clarity, there can be no direction.

2. Build a Growth Strategy While Conditions Are Right
If things are moving in the right direction, this is your window to act:

• Develop cash-flow forecasts that account for multiple scenarios

• Tap into R&D tax credits, innovation grants, or sector-specific support

• Adopt digital tools that cut manual work and increase output

3. Strengthen Your Defences
For businesses under strain, protection comes first:

• Review all cost centres and tighten up supplier terms

• Streamline operations to increase agility and preserve capital

• Explore flexible financing solutions that do not overburden your balance sheet

4. Use Professional Advice to Navigate Change
A good accountant or adviser is more than a compliance partner. They can help you plan, compare performance across your sector, and make decisions rooted in data instead of instinct.

At Benson Wood & Co, this is exactly what we do: give business owners the clarity to move forward with purpose.

As summer winds down, the growth story for UK SMEs remains mixed. Three out of four expect progress. One in four is planning for contraction or closure. Optimism is a powerful thing, but it only pays off if backed by smart planning, financial discipline, and decisive leadership.

By understanding where you stand, investing where it counts, managing your risk, and using the right advice, you can stay in the lead, not fall behind.

At Benson Wood & Co, we don’t just help you keep up. We help you move ahead with confidence and clarity.

Automation: Trend or Transformation?

In the rapidly changing field of finance, Scottish SMEs are increasingly questioning whether automation and artificial intelligence (AI) represent the future of bookkeeping or if they’re simply the latest industry trend.

Understanding Automation: Robotic Process Automation (RPA)

Automation in bookkeeping primarily involves Robotic Process Automation (RPA), software designed to handle repetitive tasks traditionally performed by humans. Tasks such as invoice processing, payroll management, and bank reconciliation, which previously consumed considerable time, are now swiftly managed by these digital assistants. Unlike humans, bots do not tire, allowing processes such as month-end closings to be executed significantly faster and with fewer errors.

RPA vs AI: Structured Tasks vs. Adaptive Insights

However, RPA is not a “thinking” technology. These bots are highly effective at structured tasks but lack the capability to adapt or make judgments independently. Artificial intelligence, on the other hand, leverages machine learning and pattern recognition to go beyond simple automation, predicting transaction categories, identifying anomalies, and providing insightful financial analytics.

Cautious Adoption with Rising Enthusiasm

Interestingly, adoption of these technologies has been slower than one might anticipate. A recent Scottish Enterprise survey (2025) highlighted that while only around 27% of Scottish SMEs currently use AI or automation, a substantial 82% plan to integrate these technologies soon. This indicates a cautious but growing enthusiasm driven largely by potential productivity and efficiency improvements.

Clear Benefits of Automation and AI

Indeed, the benefits are substantial. RPA can reduce operational costs by as much as 20–30%, improve accuracy, and significantly enhance processing speed. Additionally, automation frees employees from repetitive tasks, allowing them to shift focus toward more strategic, client-centric roles, which not only improves job satisfaction but also enhances overall client experience.

Challenges and Risks of Automation

Nevertheless, the shift towards automation and AI introduces its own challenges. Over-automation, where processes are automated without sufficient oversight or a well-designed workflow, can lead to amplified errors (ICAEW, 2020). Furthermore, implementation complexities, ongoing maintenance needs, and security risks regarding sensitive financial data remain pressing concerns.

The Evolving Role of Human Accountants

Crucially, though, automation and AI are not poised to replace human accountants altogether. Rather, these technologies represent an evolution of the role. Accountants will increasingly become strategic advisors, leveraging the speed and accuracy of AI tools while adding essential human judgment, ethical reasoning, and personal insight—qualities that machines cannot replicate.

Bruce Cartwright, CEO of ICAS, reinforces this perspective, stating clearly that the role of accountants will evolve rather than vanish, with professionals focusing more on interpretation and strategic direction, rather than merely “producing numbers” (ICAS CEO Letter, 2025).

Strategic Integration: Humans and Machines Working Together

Thus, the future of bookkeeping isn’t about choosing between human or machine; it’s about strategically integrating both. Automation and AI will handle repetitive, rules-based tasks, providing timely and accurate data. Humans will continue to oversee, interpret, and apply this data strategically.

The Way Forward for Scottish SMEs

For Scottish SMEs, the challenge will be ensuring they adopt these new tools carefully, leveraging their strengths without compromising on data integrity, security, or the essential human element of financial advisory. Those who succeed in striking this balance will find themselves well positioned for sustainable growth and competitive advantage in an increasingly digitised landscape.

Conclusion: A Brighter, More Strategic Future

In conclusion, automation and AI represent not the end of traditional accountancy, but its transformation into a more insightful, efficient, and strategic profession. For Scottish businesses willing to embrace these changes thoughtfully, the future indeed looks bright

The National Insurance Rise – What’s Happened?

From 6 April 2025, Chancellor Rachel Reeves introduced a 1.2% increase in Employer National Insurance Contributions (NICs) on all salaries above £5,000. The government says this step is needed to stabilise public finances. But many Scottish business owners question its fairness—especially with no matching increase in devolved support.

The immediate result is simple but significant: it now costs more to employ people in Scotland. For small and medium-sized enterprises (SMEs), which make up a large share of Scotland’s business community, the pressure is particularly acute.

What the 2025 Employer NIC Increase Means for Scottish Employers

Higher Payroll Costs Per Employee

This NIC increase means that any salary over £5,000 now attracts an additional 1.2% in employer NICs. For example, if you employ someone earning £35,000 per year, your NIC liability on that one salary could increase by more than £350 annually. This is not limited to new hires — it applies to your entire workforce, across all departments and roles.

Margins are already tight in sectors like hospitality, construction, and retail. This NIC increase could make some roles financially unsustainable.

Increased Pressure on Short-Term Cash Flow

Employer NICs are paid monthly or quarterly along with PAYE liabilities. That means this rise puts immediate pressure on your cash flow, not just your annual accounts. Any pre-existing plans for capital investment, hiring, or business expansion may now need to be paused or reviewed.

For many SMEs, this change creates the unwelcome scenario of having to choose between long-term strategic growth and maintaining day-to-day payroll obligations.

Five Practical Ways to Offset the NIC Increase

Rather than scaling back your workforce, here are five accountant-approved strategies that can help manage the cost increase without sacrificing growth or jobs.

Use the Employment Allowance

The Employment Allowance is a UK-wide government relief that allows eligible employers to reduce their annual employer NICs bill by up to £5,000 per tax year. This relief is designed to ease the burden of employment costs, particularly for smaller businesses.

Once your business is registered and eligible, the allowance can be automatically applied through your payroll system. Despite being available for several years, many businesses still either fail to claim it or assume incorrectly that they are ineligible.

We strongly encourage reviewing your eligibility — especially if your staffing levels, payroll thresholds, or business structure have changed.

You can check your eligibility and learn more here:
Employment Allowance: Check if you’re eligible – GOV.UK

Introduce Salary Sacrifice Schemes

A salary sacrifice arrangement enables employees to voluntarily reduce their gross salary in exchange for non-cash benefits such as enhanced pension contributions, cycle-to-work schemes, or electric vehicle leasing.

These schemes can lead to NIC savings for both the employer and employee. However, they must be carefully designed to ensure no employee’s adjusted salary drops below the National Minimum Wage.

For best results — and to remain compliant with HMRC requirements — such schemes should be implemented in consultation with your accountant or payroll advisor.

Use Contractors or Freelancers – With Caution

In some cases, businesses can reduce their NIC liabilities by engaging self-employed contractors or freelancers, rather than hiring new full-time staff. When a contractor is genuinely self-employed and working outside IR35 rules, the business is not required to pay employer NICs or the Apprenticeship Levy.

However, this only applies if the working relationship is clearly independent. Under the IR35 off-payroll working rules, if a contractor is deemed to be operating like an employee, the business (or the agency) becomes liable for NICs and must operate PAYE.

Careful status assessment is essential — using HMRC’s CEST tool or professional guidance — before relying on this strategy.

One of the most effective ways to reduce employment costs — without reducing your team — is by embracing automation. Many businesses still rely on staff for repetitive manual tasks that could easily be handled by affordable software tools.

Whether it’s managing staff rotas, processing invoices, generating reports, sending customer communications, handling inventory, or onboarding new team members — automating these tasks can save hours each week. That means your existing team can focus on higher-value work, such as customer service, sales, or operational improvements.

Smart use of automation can reduce your dependency on extra admin support, helping you control Employer NIC costs over time. Importantly, many automation tools — including HR software, workflow platforms, or scheduling systems — are fully deductible as business expenses for tax purposes.

If your business is growing but you’re not ready to hire more staff, now is a great time to review which processes could be automated instead.

Reassess Your Payroll and Remuneration Strategy

Now is an ideal time to revisit your payroll structure with your accountant. There may be more tax-efficient ways to reward team members, such as structured bonuses, non-cash benefits under HMRC thresholds, or director dividends (where appropriate).

For owner-managed businesses, this is especially relevant — as small tweaks in remuneration structure could lead to significant NIC savings over the year.