By John Loudon

ALMOST 12,000 businesses were established in Scotland in the first four months of this year, according to a recent report. Yet Scotland remains among the least entrepreneurial of the world’s developed countries.

Scotland’s rate of early-stage entrepreneurial activity is around 7.3 per cent, compared with 10.5% in England and 12.4% in Ireland, according to the most recent figures published by the Organisation for Economic Co-operation and Development (OECD).

Things are getting better – in 2018 the rate was 6.3% – but the statistics reinforce the notion that Scotland is, historically, still near the start of its entrepreneurial journey.

There may well be good reasons for that – for decades, the country was dominated by a handful of giant companies in established, heavy industries, whose demise gave way to domination by similarly-large public sector employers.

The past decade has seen the Scottish economy buffeted by a series of macroeconomic events – the 2008 crash, recession, Brexit, a pandemic and now the war in Ukraine.

With the prospect of another independence referendum on the horizon – and no matter which way you’re likely to vote – there’s a common recognition that our future prosperity depends on our ability to create, grow, and sustain more businesses than we have done in the past.

At the start of the pandemic, when other people might have been thinking about holding on to what they had, I found myself thinking it would be a suitable time to start a business.

I had sympathy for those that were failing, but it occurred to me that, often, the best ideas are born out of adversity.

It also taught me the value of diversity. A previous business was heavily reliant on travel and entertainment industries, both of which were hit badly by the lockdowns and I resolved that, in future, I’d spread my net wider.

Today, the most successful entrepreneurs globally are those who split their portfolios and don’t allow more than a certain proportion of their investment to go into any specific sector.

The best way to protect a business is through diversification and fragmentation, by taking equity in other companies, in diverse fields and areas of interest.

In the future, we will all need to think about entrepreneurship differently. Rather than business owners regarding themselves as developers of products and services – and managing companies around those – they should, instead, see themselves as incubators of companies that become self-sufficient.

The traditional preoccupations of business owners – of servicing clients, hiring staff, marketing products, administrating tax, and pension contributions – simply divert them from the job of growing their business and investing in new ones.

The most successful entrepreneurs in the future will be those who reinvest profit as soon as they make it, into new and existing ventures, to generate greater wealth for themselves, their employees, and the economy.

John Loudon is chief executive of Sargasso Holdings and a member of The Alternative Board, which provides support and mentorship for growth business owners