Scotland’s businesses cannot wait for certainty to return

Scottish business leaders have had little respite from uncertainty.

Brexit, the pandemic, geopolitical conflict, inflation and policy changes have brought successive shocks, alongside higher energy and employment costs and supply-chain disruption.

For Scotland’s mid-market, some of those pressures are being felt particularly acutely. FRP’s Decision Economy research found that 55% of Scottish business leaders cite energy costs as a major influence on decision-making, compared with 43% nationally. Supply-chain disruption influences decisions for 37% of Scottish business leaders, compared with 24% across the UK.

Waiting for a clearer outlook can feel sensible, but delay carries its own costs.

At FRP’s recent Decision Economy breakfast event in Glasgow, Scottish business leaders and advisers discussed what holds decisions back and how to move them forward.

Opening the event, FRP Partner Callum Carmichael highlighted the investment, recruitment and funding decisions facing Scottish businesses as they seek to improve productivity and grow amid continued cost pressures and uncertain demand.

Chaired by Jeremy Grant, business columnist at The Scotsman, the panel included Iain Duff, Agent for Scotland at the Bank of England; Peter Dobson, CEO of Geek Retreat; and FRP partners Michelle Elliot and Daniel Brecker.

Uncertainty has become a permanent feature

As Iain Duff put it during the discussion, “business hates uncertainty”.

As confidence recovers from one shock, another follows, while changes to employment costs, tax and regulation add to the pressure. That can leave leadership teams postponing investment, recruitment or expansion in the hope of a clearer outlook.

Peter Dobson, whose business Geek Retreat operates stores across the UK, described the pressure to make decisions between scheduled board meetings, without waiting for another quarter of data or a finished business case.

Leaders need to scrutinise their options before acting, but they also need to recognise when further analysis is unlikely to change the decision.

The value of timely decisions

Scottish businesses already make major decisions faster than the UK average.

Scottish mid-market firms reach major decisions in an average of 4.2 weeks, compared with 4.7 weeks across the UK. Even so, economic modelling for the Decision Economy estimates that making the right calls sooner could unlock a further £545 million in annual gross value added (GVA) across Scotland’s mid-market.

Scotland’s mid-market comprises around 2,600 businesses, generating approximately £79 billion in annual turnover and £31 billion in GVA, and supporting about 359,000 jobs.

Across the UK, 73% of mid-market leaders report frequent delays in major decisions, while 77% believe acting sooner would have improved their last major decision. The modelling estimates that faster decisions could unlock £13.7 billion in additional annual GVA.

Even a few weeks’ delay can change funding options, supplier negotiations, investment costs or project returns, making timing an important part of a decision’s commercial impact.

Information needs interpretation

The Glasgow discussion repeatedly returned to the quality of management information.

Michelle Elliot spoke about how outdated financial information, limited forecasts or missing operational KPIs can prevent management teams from assessing their restructuring options confidently, even where the strategy itself is not the main problem.

A third of Scottish leaders surveyed said the time needed to assess options was the biggest factor affecting decision speed and quality. Uncertainty about the available options followed at 31%, then competing priorities at 27%. Better data and evidence gathering was the most commonly identified way to improve decisions.

Daniel Brecker noted that many mid-market businesses preparing for investment or sale lack the forward-looking financial model a transaction requires.

Building it once a transaction is under way adds pressure and can expose risks when management needs to inspire confidence.

Useful information also needs people who can interpret it and challenge assumptions. In owner-managed businesses, an experienced finance director, non-executive director or external adviser can bring independence to decisions complicated by the business’s history or its owners’ personal considerations.

Turn boardroom discussion into action

Even with the right information and advisers, difficult decisions can drift from one board meeting to the next.

Assign each major decision an owner, a deadline and a clear next step. Boards also need to distinguish essential information from information that would merely be useful.

Boards need clear responsibility for the decisions facing them today and for the preparation that will keep their options open in future.

A longer-term goal, whether investment, acquisition, succession or sale, helps boards identify the capabilities and value drivers they need to develop before weaknesses limit the business’s options.

For shareholders considering a transaction, preparing years rather than months ahead gives management time to strengthen recurring revenue, improve forecasts, reduce dependence on individual customers or leaders and establish a record of delivery.

Early preparation also gives the business more control over timing, rather than leaving it to market conditions or external pressure.

AI can shorten the assessment phase

The discussion also explored how AI could shorten the assessment work that delays decisions.

Peter Dobson described Geek Retreat’s use of AI as it redevelops parts of its business software, aiming to gain more control over internal data, improve operational insight and strengthen forecasting.

Many businesses are still experimenting with generative AI rather than using it in their management processes.

Used with appropriate safeguards for confidential information and with outputs checked by management, AI can help teams assemble information, identify patterns and test scenarios faster. Responsibility for the resulting decisions remains with the leadership team.

Three priorities for leadership teams

Three practical priorities for leadership teams emerged from the discussion.

• Improve decision-ready information: Maintain reliable financial information, forward-looking forecasts and relevant operational measures, using AI where it adds value.
• Bring in independent judgement early: Challenge assumptions before a transaction, turnaround or investment makes additional expertise urgent.
• Make accountability explicit: Give major decisions an owner, a deadline and a clear next step.

Waiting will not remove uncertainty. Scottish businesses need to weigh the risks of delay as carefully as the risks of acting.