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Community links 'more important than profit' to Highland businesses, HIE report finds

By John Davidson

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Martin Johnson, HIE’s director of strategy and regional economy. Picture: Paul Campbell/HIE
Martin Johnson, HIE’s director of strategy and regional economy. Picture: Paul Campbell/HIE

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.

That 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 1002 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 per cent of respondents were taking actions that reflect the tenets of community wealth building.

Two thirds (69 per cent) were using or increasing their use of local suppliers, driven by a desire to support local businesses. Sixty-four per cent were collaborating to share ideas and best practice and reach new markets.

Almost eight in ten (79 per cent) were taking specific action to benefit their community. Within this, more than half (54 per cent) 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 per cent), providing expertise or delivery support to community organisations (37 per cent), allowing the community to use facilities (36 per cent) and a third (32 per cent) 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 per cent to 50 per cent, the same as it was in February and March 2023. Confidence in the Highlands and Islands economy was slightly greater at 53 per cent.

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 per cent) and primary industries (18 per cent).

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 per cent) were taking action to make the most of growth opportunities locally, including investing in equipment (55 per cent), investing in technology (43 per cent), and upskilling employees (43 per cent).

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 per cent to a large extent), transport infrastructure (32 per cent), access to housing (29 per cent), complying with regulation and legislation (28 per cent) and access to specialist skills (26 per cent).

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 per cent), surviving current financial challenges (37 per cent), building resilience to future challenges (29 per cent), and making cost savings (27 per cent).

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 per cent) felt these changes would have mainly negative impacts on them, while 3 per cent anticipated positive impacts and 24 per cent no impacts. Almost a third (31 per cent) were unclear on what it would mean for them. Among those expecting negative impacts, the main concerns were cost (86 per cent), delays (78 per cent), paperwork (62 per cent) and additional time and effort required to comply with changes (62 per cent).

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.”

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