Scots firms still going global despite trade war challenges
There is of course the supply chain issue, as any belt-tightening by big corporations inevitably leads to less work coming to the smaller businesses who supply them.
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Perhaps less obviously, we are already seeing an increase in the problems small businesses are experiencing with late payments. When national and multinational companies get nervous, some unscrupulously use their small business suppliers as a free overdraft and stall on paying what they owe. (A reminder, as if it was needed, of the importance of including a crackdown on this sort of shoddy practice in the forthcoming UK Small Business Strategy.)
But, if we're in the market for silver linings, at least the tariff war is making us appreciate the sheer breadth of firms trading on the world stage. Many of these exporters aren't massive multinationals. They're the sort of small and medium-sized Scottish firms at the heart of local communities and economies.
Indeed, in recent years I've had the pleasure of seeing a series of small Scottish businesses honoured for their exporting success.
Just look the three most recent winners of the Federation of Small Businesses' (FSB) Scottish Award for exporting – all of whom provide a fascinating snapshot of exporting excellence.
The Badachro Distillery, which makes delicious small-batch gin and vodka in rural Gairloch, is one of the creative independents helping drive the remarkable growth of Scotland's spirits industry.
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Greenock-based PG Paper was started by Dr Poonam Gupta 20 years ago from her spare room. Today, it provides sustainable paper and packaging products to companies around the world.
In Aveimore, Quarch Technology provides innovative testing solutions for data storage and networking systems to some of the global tech giants.
Superficially at least, you might think that these businesses and their products could hardly be more different. But they're united by a talent for innovation – the priceless ability to spot a gap in the market and to develop products and services which meet the changing demands of customers world-wide.
This is something at which small and micro businesses are particularly good. They tend to be much more fleet-footed than their corporate counterparts.
That adaptability will stand them in good stead as they face the shockwaves of whatever happens next in the trade war. But it's not enough on its own. Firms also need the confidence and ability to implement these innovations.
And there's some mixed messages on that front at the moment.
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There are undoubtedly some serious challenges facing small firms. The latest data from our FSB Small Business Index (SBI), for example, shows that the costs crisis facing firms is only getting worse. Almost nine out of 10 Scottish small businesses told us their costs have gone up in the last three months, with utility bills, labour costs and taxes the main drivers.
On the other hand, it seems that more of our small businesses can see a way through these challenges. The same survey found confidence in Scotland starting to recover in the first quarter of 2025, albeit from a four-year low at the end of last year.
While Scotland's overall confidence score is still in negative territory (-15.29, for the enthusiast), it's about four times better than in the last quarter of 2024 (again, -67.18, for those taking notes). More than two in five small firms plan to grow in the next year, against one in five who predict they'll contract.
So, you might need to go looking for them – and they might be pretty fragile when you find them – but there are some signs that can offer us hope.
And these signs could be bolstered or trampled into the dust by some of the big decisions in the weeks ahead (and they're not all global trade policy decisions – we need to be careful things like next Tuesday's programme for government from Holyrood don't throw up any unpleasant, expensive surprises).
But right now, what this tough period is showing us is that even when faced with worldwide and local challenges, we have the ingenuity, drive and entrepreneurial flair in Scotland to take on the world – and win.
Colin Borland is director of devolved nations for the Federation of Small Businesses (FSB).
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