Consider your funding options in the quest for economic recovery, says Evette Orams of Hilton-Baird Financial Solutions.
The Hilton-Baird Financial Solutions’ latest biannual SME Trends Index reveals that only 31% of respondents believed their business would expand over the next six months.
The result is that many owners are cautious about investing in growth, preferring to horde cash for tough times ahead. While this approach seems sensible, its conservative nature is restricting the economy’s recovery, as one respondent explained.
“We should be recruiting more staff, but the economic outlook is so uncertain that we are holding back on all major decisions,” wrote another respondent.
Respondents were keen to emphasise the role the media. “It would be helpful if all types of the media stopped spreading negative news,” wrote another respondent. “If people feel there is hope, everyone can face the future with a more positive outlook. Now there is never any good news.”
More than a third were primarily concerned about generating new business over the next six months (34%), with a further 17% anxious about managing cash flow. The inability to access funding (11%) and late payment (10%) were also concerns.
“There is not enough money circulating,” added another. “Small businesses cannot carry the financial burden of non-payment of bills while the banks are not prepared to facilitate credit to the level it is required.”
Despite this, our survey found 48% of businesses were still relying on bank overdrafts to fund their business.
Our message is that SMEs should explore funding options. Invoice finance, for instance, is increasingly available, as evidenced by the Asset Based Finance Association’s statistics. The peace of mind this delivers together with invoice finance’s other benefits, gave users a much brighter outlook than average, with 50% expecting their business to expand over the next six months, according to our Trends Index.
It might be elusive, but confidence will go a long way to shaping the economic recovery.
Evette Orams is managing director at Hilton-Baird Financial Solutions