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Insider UK
Business
Peter A Walker

Challenges and opportunities: Scottish businesses round-up 2022 and look ahead to 2023

From firms of solicitors to builders of rockets, whisky casks to new banks, as has become traditional, Insider asked founders and bosses of a variety of businesses for their end of year thoughts.

So set out below are the results of several brief interviews asking what challenges companies overcame in 2022, what opportunities lie ahead in 2023 and generally how things have been looking in their sector.

Skyrora

Skyrora is a rocket launch company headquartered in Edinburgh and at the forefront of Scotland’s space race.

Founder and chief executive Volodymyr Levykin explained that it is an exciting time to be involved in one of the fastest-growing sectors of the economy.

During 2022, the company achieved several milestones on its path towards being the first British company to conduct a vertical orbital rocket launch from UK soil.

At the beginning of the year, Skyrora opened new rocket engine testing and manufacturing facilities in Scotland – both the largest in the UK. The sites in Midlothian and Cumbernauld have created numerous technical jobs in the surrounding areas, and should enable Skyrora to take direct charge of the rocket development cycle in Scotland.

“Sustainability was an undeniable trend across almost every industry in 2022, and the space sector was no different,” commented Levykin. “This year we continued to develop our sustainable rocket fuel, Ecosene, with finding showing that, when compared to traditional fossil to fuel processes, there’s a 70% carbon footprint reduction using it compared to rocket fuels currently in use.”

Skyrora is hopeful of being granted its launch vehicle licence by the Civil Aviation Authority in 2023.

“The technology is in place for the UK to have an agile and mobile launch infrastructure, and market demand for a variety of in-orbit services is only going to grow stronger in the year ahead,” Levykin added.

Quorum Cyber

One of the fastest growing cyber security companies in the UK, Edinburgh-headquartered Quorum now has more than 150 customers in four continents.

It is approaching the end of 2022 with a headcount of 170, a valuation of more than £150m and over 100% year-on-year growth for a third consecutive year. Founder and chief executive Federico Charosky was also nominated for EY Entrepreneur of the Year.

The business has built up market dominance in Microsoft cloud-based cyber security in the UK and is building towards becoming a bigger player in the US. Last month it became the first UK-headquartered cybersecurity business to become certified by Microsoft to provide managed extended threat detection and response.

Considered within the industry to be the ‘gold standard’, this provides security and threat-detection capabilities that is increasingly sought after by global companies, universities and local authorities.

Charosky spotted a gap in the market when he set up the company in 2016.

“Having worked in cyber security for decades, I realised that businesses were spending larger and larger parts of their budget on it without any visibility of the value they received in return,” he commented. “So I decided that there was a better way, and set up Quorum Cyber to deliver a partnership-based approach, where services are tailored to the customer’s precise needs.”

Six years on and not only is the firm expanding, but it has never lost a customer.

The HR Practice

Despite the challenging economic climate, the HR Practice has achieved an annual revenue increase of 150% and secured a number of contracts with global clients which need support to integrate acquired businesses in the US, UAE, Argentina, Germany and Ireland.

The Glasgow-based business now provides HR consultancy services to start-ups and SMEs throughout the UK, including the launch of a dedicated HR advice line and retained services package.

Founder Fiona McKee commented: “We came out of the pandemic expecting job cuts and the opposite was true, we ended up in a candidate market with employers paying inflated salaries to attract talent.

“Now we are seeing businesses starting to review their current cost base and find they need to cut their people costs - we’ve gone full circle and with the current economic climate we are expecting these cuts to continue well into next year.”

Another pandemic change has seen more requests for flexible working, at the same time as many employers are looking for employees to return to the office. “This is becoming a real bone of contention, but perhaps with the risk of job losses this will become less of an expectation for employees,” noted McKee.

Taking into account these trends and with a challenging 12 months ahead for businesses of all shapes and sizes, the HR Practice is confident of a strong 2023 with the need for trusted advice at an all-time high.

Cullen Eco-Packaging

This year has been a good one for Cullen Eco-Packaging, not least because its chief executive was named the EY Entrepreneur Of The Year award’s UK Transformational Leader recently.

A modest David McDonald reckons it was a team effort, with manufacturing milestones reached at the eco-packaging provider’s Anniesland-based factory, producing more than one billion products for customers in 34 countries, including the NHS, McDonalds and Costa Coffee.

The business also announced the creation of 150 new jobs in Scotland and invested £15m in one of the country's biggest manufacturing expansion plans of recent years.

Cullen also launched the Fibre Bottle, a patented biodegradable vessel that could remove around 300 million plastic bottles per year from shelves.

Next year will see that product hit the market, while a talent drive is aimed at designing and producing more innovative eco-packaging products.

Stravaig Spirits

Only launched earlier in 2022, this Edinburgh-based start-up has been busy building a portfolio of whisky casks, managing bottling projects on behalf of clients across the world and launching its own single malt, single cask whisky brand.

It hasn’t all been plain sailing though, as co-founder and owner Ola Lopatowska explained: “I don’t think we were fully prepared for the supply chain difficulties and continual cost increases we’ve had to face this year.

“It’s been challenging to plan when our post-pandemic and Brexit landscape changes constantly, not only for us here in Scotland, but also for our suppliers and customers globally.”

But with years of shared experience and a solid network within the whisky industry, Lopatowska and co-founder Ryan McCafferty were well placed to make the most of opportunities that did come along.

“We began trading casks and managing bottling projects back in February, taking a ‘worst case’ scenario in all of our projections, but we now realise we were quite naïve to the worldwide scale and demand that Scotch continues to command; so that’s certainly surpassed our expectations,” said Lopatowska.

Turnover in the firm’s first quarter of trading was around 60% higher than forecast, with this figure tripled in the second quarter and almost doubled again in the third.

McCafferty said: “This has allowed us to invest in our stock holding much quicker than we planned, which puts us in a strong position to help our clients with their future bottling projects and also gives our new brand, Tri Carragh, a strong foundation for new exciting releases in the months and years ahead.”

With a new retailer in Japan and a new distributor in Canada, he continued that the plan for 2023 is to build the brand presence further and work on new releases exclusively for different markets.

"Our unexpected growth has also given us the confidence to explore further opportunities, so we’re looking to develop a higher volume single malt brand for the south east Asian market,” added McCafferty.

AlbaCo

Glasgow-based bank-to-be AlbaCo has had another productive year as it continues to work with both the Prudential Regulation Authority and Financial Conduct Authority on securing a banking license with restrictions in the short-term and, ultimately, becoming a digital-first bank serving SMEs throughout Scotland and the UK.

Despite this year’s challenging economic climate, Alba has continued to attract new investors, while developing its proposition, processes and systems in anticipation of becoming fully operational in 2023.

In addition, Alba announced the appointment of experienced industry executive Graeme Jones as its new chair in October. He spent the last four decades in a range of senior operational roles at financial services firms such as Standard Life, RBS, Aviva Life and Experian.

Alba’s chief executive Rod Ashley said: "We remain very confident of closing our current funding round in early 2023, which will subsequently allow us to realise our ultimate ambition of becoming a bank with a clear vision and purpose – to support small and medium-sized businesses as they develop their aspirations, grow and realise their potential.

“We’re excited to be launching the first new bank the west of Scotland has seen in over 130 years and we can’t wait to be able to offer the support SMEs richly deserve as they continue to be the backbone of the UK economy.”

Eddie Black, the boss of Eco Group, outside its Annan headquarters (Jenny Woolgar)

Eco Group

Eddie Black, founder and managing director of this Annan-based solutions business, reckons that opportunities need to be seized, with changes made in line with the market and client needs.

With that in mind, Eco Group launched its EcoGoZero range of carbon mitigation strategies during 2022, to support businesses on their journey to net zero emissions.

As well as immediate, practical solutions for businesses such as electric vehicle charging stations and off-grid lighting, the business is also focused on an ultimate ambition of making the Borderlands a leader in green innovation.

“In November, we announced a deal which will see the first remote deployment in the UK of the pioneering LOOP decarbonisation system at our HQ in Annan,” Black explained. “Developed by climate tech company Levidian, the LOOP device decarbonises methane-rich gas to produce hydrogen and graphene on-site.

“This technology will lead to the creation of decentralised hydrogen hubs to support industrial decarbonisation, enabling the reduction of greenhouse gas emissions and creating products essential to net zero ambitions.”

The plan for 2023 is more of the same, helping Scottish businesses become leaders in sustainable innovation, with various collaborations and partnerships in the works.

“The climate emergency isn’t something we can sit back and wait for governments to fix,” said Black. “Everybody must play their part from individuals to SMEs and global corporations.

“The response we have had to EcoGoZero since it launched in the summer has been fantastic - we are passionate about making a real and lasting difference and we’re working with businesses and organisations who feel exactly the same.”

Taking a flexible approach to business is reflected across the wider Eco Group, which includes IT and communications, design, build and fit out, dry ice blast cleaning and process solutions.

Outplay Entertainment chief executive Douglas Hare (Nick Kirk)

Outplay Entertainment

Founded in 2010 and headquartered in Dundee, Outplay is the largest independent mobile game developer in the UK.

This year, the business received nominations for Best Puzzle Game and Best Large Studio at the TIGA Games Industry Awards, and Best Mobile Developer at the Pocket Gamer Awards.

During 2022, the company continued to invest in and develop its portfolio of live games, including the popular Gordon Ramsay’s Chef Blast. Research and development is always a focus, with Outplay currently fine-tuning two new games during 2023.

“We grew Chef Blast from 3.3 million downloads at the start of the year, to more than 4.5 million as of today,” said chief executive Douglas Hare.

“Alongside growth of our existing mobile titles, we saw the potential to reconnect with users of Facebook and returned to our social roots, launching two new Facebook Instant Games; Solitaire Together and Words Together.

“Both titles have already amassed more than 300,000 users since launching earlier this year.”

Outplay is also diversifying revenue streams by developing on new platforms and working on joint ventures.

“We have two brand new games in development for mobile, due to launch globally next year, including one based on a hugely popular mobile IP that’s currently in soft launch,” added Hare.

21CC Group

This has been another rollercoaster year for the Scottish event industry, with 21CC Group director Geoff Crow stating that January to March was particularly difficult as numerous fixtures were cancelled due to varying levels of lockdown.

With those - hopefully - now a thing of the past, the return of events has been driven by a desire to socialise. “Notably, though, there has been a definite shift in booking trends over this last year, with lead times being significantly reduced.”

As a direct response to market trends and demand, 21CC made the decision to launch an additional arm to the group: 21CC Hire and Sales in March, which now supplies event industry professionals with equipment on a dry-hire basis.

“We are fortunate to have been able to retain our very skilled team, and over this past year we have successfully adjusted our ways of working to accommodate these market changes,” said Crow.

The group was also able to invest in new equipment and new hires ahead of 2023, which should enable a further increase in capacities and technological capabilities, as the industry continues to recover. The team is also relocating premises, letting them operate the full business from one central site.

“2023 is going to be very much about growth through innovation for us,” added Crow. “As we move into new premises next year, we are looking forward to continuing to deliver high-impact and successful events for our clients and customers right across the UK.”

Dunedin IT signed a sponsorship deal with Hibernian FC in 2022 (Mettiuzara)

Dunedin IT

This Edinburgh-based managed service provider Dunedin recorded its highest ever turnover of £2.1m during 2022, backed by 40% revenue growth over the past three years.

During a challenging period, the company was still able to attract several new clients over the past 12 months, after making significant investments in staff and technology that enhanced its service offering, including a new workflow management platform.

Dunedin IT also signed an exclusive cyber security partnership with US anti-virus company Acronis, which led to a lucrative sponsorship with Hibernian FC, which has seen its branding feature on the first team kit and throughout the stadium. This year also saw the business move to a new head office on Edinburgh’s Dunedin Street.

Director Jamie Clague commented: “Challenges with the cost and availability of hardware, alongside a turbulent period to recruit talent in IT have ensured we’ve had to work harder and smarter than ever to succeed.

“Our team is now spread across the UK, giving us greater reach than ever before and the ability to cover the entire country.”

The accelerating deployment of fibre broadband across the UK has resulted in a rise in new internet connections being deployed by Dunedin IT, with the pandemic also driving demand from work-from-home staff requiring fast and dependable systems and connectivity.

The company expects further growth in the coming year, with a particular focus on cyber security, virtualised IT teams and low-code development. 2023 will see the launch of a dedicated cyber security specialist, Two Labs, with David Inglis taking up the role of managing director, while Clague becomes managing director of Dunedin IT.

Conifox Adventure Park

This year has been a challenge for many in the events and hospitality sector, with lockdowns, Brexit and now the cost-of-living crisis having an impact.

James Gammell, director of Conifox Adventure Park has tried to counter the chaos with innovation though.

“The first quarter was particularly difficult, as we once again found ourselves facing closures due to lockdown - missing three weeks of income and engagement with our brilliant customers was incredibly challenging as an independent business - that said, as we moved through the year, we have seen a large increase in visitor numbers and worked hard to find exciting new ways to attract a broader demographic of customers.”

In August, the Tartan Titan was installed - which holds the Guinness World Record for the world’s longest inflatable obstacle course - and brought in 11,000 visitors over 10 days.

“The media coverage we received for this launch was outstanding, especially given we had sports stars such as Jamie Ritchie and Craig Gordon, plus local MP Cristine Jardine and MSP Alex Cole-Hamilton along,” said Gammell.

Another highlight for the Conifox team this year was re-opening The Fetching Fox, which was previously trading as the Conifox Stables Bistro. The owners extensively refurbished the bistro into a more stylish gastropub, offering the best of Scottish food and drink from local suppliers.

“2023 is going to be very much about expanding our current offerings in line with what our customer base wants to see as well as developing innovative and exciting new offerings,” concluded Gammell. “We will be targeting the corporate events market again this year, having hosted the likes of Sky and Barratt Homes in 2022.

“We’ll also be developing our outdoor adventure park, along with new weddings and private events packages in our purpose-built function suite.”

Austin Lafferty Solicitors

West of Scotland legal practice Austin Lafferty Solicitors has battled its was through a turbulent 2022 to a position far beyond what had been expected at the start of the year.

While some strands of firm’s work have been challenged by economic and societal change, the pandemic and work from home trend have driven the property market with many choosing to relocate - some for a larger home with office space, and others to more rural locations that would have previously made for a challenging commute.

The firm’s founder Austin Lafferty said: “Factors such as the base rate, inflation, the rising cost of living and mortgage availability may yet normalise house prices and the market as a whole, but at this point, the requirement for conveyancing services has not shown signs of abating.

“It will be interesting to observe if the great rural relocation is reversed in the next 24 months as employees return to the office - in part due to employer demand and socialisation but for many, to stay warm without adding to their own household bills.”

He described the coronavirus crisis as a “stark shot across the bow for our mortality”, which has led to a general heightening of awareness of personal and domestic legal issues.

“As a result, we've seen a distinct increase in enquiries for estate planning, which includes wills, power of attorney and trusts.

“While I wouldn't want to be seen as making hay at what has been a very difficult time in all of our lives, this forethought is undoubtedly a small silver lining and will better enable many families to coordinate the lives, assets, and property of loved ones through their deteriorating health and on their passing.”

Lafferty added: “As the saying goes ‘nothing is certain except death and taxes’, and due to this increased demand for futureproofing, we will be expanding our headcount in 2023 to shore up our capacity for these services.”

CampervanCo

CampervanCo, based in Denny, is a specialist in custom-built, low-emission campervans.

As the trend towards all things sustainable continues, founder and chief executive Gary Hayes said demand has grown exponentially, with the company moving to larger premises in order to keep up.

“We expect to grow at least 25% this year, and the autumn period has shown no sign of the slowing down we normally see.”

During 2022, CampervanCo launched two hybrid vehicles, which use a combination of electric batteries and self charging technologies like solar panels.

“These low-emissions campers have surprised campers with their durability and the length of time they can be used without needing to be charged on the grid - for over a week or more.”

In February 2023, the business plans to launch one of the first all-electric campervans, based on the new EV Toyota Proace vans, which are locally sourced.

“We also expect to see CampervanCo go global in 2023,” said Hayes. “We are working to export hybrid campervans to Canada and partner with companies in other territories, as we are currently seeing huge demand for hybrid and electric campers from outside the UK.

“As Ultra Low Emission Zone restrictions start coming into force in Scottish cities, we also expect to see people swapping older campervans for newer models, and with government plans in place to move away from petrol and diesel, we are seeing more and more people looking for electric campervans.”

To read the second part of this list, click here.

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