The Big Four firm’s Private Enterprise Barometer survey captured insights from 1,500 private business owners across the UK, including 125 from Scotland, spanning sectors such as professional services, finance, technology, industrial manufacturing and retail.

Easing cost pressures emerged as the primary driver of this positive outlook, cited by nearly half (46%) of respondents, alongside improved access to finance (43%) - both results significantly exceeding the UK average of 32% and 31% respectively.

Looking ahead, Scottish firms are charting ambitious growth strategies. Seven in ten (70%) are setting their sights on international expansion and over a third (35%) plan to diversify through new products or services within the next five years.

When it comes to financing these ambitions, nearly half (49%) plan to use their own cash stocks as their primary funding source. Additionally, private equity and capital markets were ranked as the most popular sources for external diversification funding, outpacing traditional bank debt, which is of note given only 17% reported difficulties in accessing finance.

Technology is central to the growth plans of Scottish businesses, with over half (52%) citing it as critical to their future success. Notably, seven in ten (70%) expect to invest in artificial intelligence, and three in five (60%) plan to use this investment to enhance the employee experience – a higher proportion than any other UK region.

Skilled workers will be crucial to delivering this investment though, with more than half (55%) confident of recruiting people with the right qualifications and experience to support their business. However, with the battle for talent a competitive one, the same amount (55%) cited that they are evolving their employee value proposition to help with recruitment and retention – well ahead of the national average (37%).

Vishal Chopra, Scotland office senior partner at KPMG UK, said: “These findings underscore the resilience and forward-thinking nature of Scotland’s private business community, driven by a strong culture of innovation.

“With 90% of respondents feeling optimistic about their prospects going into next year, and 70% planning to expand into new markets – the second-highest percentage of any UK region – it’s clear that businesses are confident and firmly committed to their ambitious growth strategies.

“What’s especially promising is the emphasis firms are placing on enriching the employee experience, alongside strategic investments in technology to support and sustain these efforts.”

National outlook

Across the UK, 92% of private business owners are confident of growth in 2025.

Those businesses with lower degrees of confidence highlighted challenges such as increased competition and access to funding as limiting factors.

When it comes to areas of planned investment over the next 12 months, technology was ranked as the highest priority (63%), followed by skills and workforce (49%). Of those looking at future tech investment, almost three quarters (73%) plan to invest in AI to improve the customer experience.

Euan West, head of KPMG private enterprise in the UK and EMA, said: “2024 has been a turbulent year, so it’s pleasing to see that private businesses are showing resilience and casting a very positive outlook for growth and investment in 2025 and beyond.

“Going into 2025 buoyed by this optimism will help these firms drive results in what will likely be another tough year. Investment in areas like technology and talent will be essential for firms to realise their growth ambitions and make a significant impact on the UK’s economic health.”