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Sustained SME growth: here’s how to do it

When it comes to sustained SME growth, small and medium businesses face a number of challenges in the UK market. The Small Business Finance Markets Report 2015/16 shows that while access to finance is improving, productivity and growth are still lagging due to a lack of awareness in alternative finance options and an uneven financial landscape country-wide. The post-Brexit economic climate adds further complexity. The perceived economic uncertainty has had an impact on small business confidence in the short and medium term, with many companies deferring their investment decisions until some stability has been resolved.

That said, there is a certain disconnect between what is reported in the media and what we are seeing with our clients. If you’re looking to grow your business sooner rather than later, here are some guidelines to help you do it.

What is really hampering sustained SME growth?

Our clients are primarily challenged by cash-flow issues. Many lenders can offer them a straightforward invoice finance facility. However; their options are slim as typically they can only secure finance against their sales ledger. Many small businesses don’t realise that they can use other assets outside of their sales ledger, such as property or machinery, to get funding.

What can SMEs do to grow?

We’re surprised by how many small businesses don’t seek proper, professional advice. Far too many companies are looking on the internet for the cheapest options to support their business strategies and suffering for it. Our advice to the market is - don’t be afraid to speak to a reputable financial advisor, or accountant. Not enough people seek advice from their accountants and often only speak at year end when their accounts are done.

Is growth post-Brexit too risky?

No. The post-Brexit doom and gloom predictions are unravelling as banks and businesses realise that things aren’t actually as bad as initially forecast. Goldman Sachs, Credit Suisse and Morgan Stanley have all changed their tunes after forecasting a British recession and now predict a positive outlook for the British economy. The market is far more bullish than expected and people are hiring, borrowing, shopping and creating wealth in much the same way they always have. With the right advisors on-side, SMEs should consider a more active approach to their growth now.

What financial solutions are available to help SMEs grow?

The four largest banks accounted for 80% of the UK’s small business loan market in 2014. Banks can offer traditional types of lending however, these models don’t always meet SMEs’ growth requirements.

Traditional institutions are wary of entering new markets or developing new lending models to help fund a business. A few of the fringe banks are looking at P2P lending and spot finance but they’re not currently prepared to move too far outside of their comfort zone. Financial institutions need to take a more holistic approach at how they approach their funding and SMEs need to look further than their bank for financial assistance.

Many small businesses don’t pursue alternative finance options beyond their main bank, yet alternative finance solutions are often better tailored to their unique needs and include additional funding through asset and property finance. Get in touch with Nucleus today to discuss how we can help finance your growth.

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