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June 24, 2019

Survey: SME growth limited by lack of finance options

By chris lemmon

A lack of appropriate finance options was cited as the largest hurdle in raising value and growing business growth for UK SMEs.

This is according to the latest survey from MarketInvoice, which found that just 30% of UK SMEs increased in value by more than 10% in the last 12 months. Companies in the engineering, architecture and construction sectors reported the greatest frustration in the lack of finance available to them. In contrast, companies in the finance sector ranked skills shortages as their greatest hindrance.

The survey found that the typical UK SME is worth more than £2.9m and that company valuation is something that two-thirds consider to be a huge priority. Premises (17%), product (15%) and people (15%) were cited as key factors that contribute to company value.

Larger SMEs were more likely to put emphasis on their premises as the largest component of their valuation, while smaller SMEs prioritised the importance of their product.

Surveyed business were reluctant to cede control to equity or venture capital investment, with just 6% having used this method of funding to boost growth and valuation. Rather, more than a quarter (26%) favoured invoice finance, followed by asset-based finance (22%). Only 10% would turn to a traditional business loan.

“Business owners seem to be driven by company valuation but acknowledge how the right kind of finance can really help drive that number,” said Anil Stocker, co-founder and chief executive of MarketInvoice. “It is imperative that they stay focused on their product or service offering and ensure the fundamentals are right first.

“This is as much about managing cash flow and working capital as it is about having the right people in the right roles. A well-oiled business will look after itself. Essentially, getting the basics right will drive their business forward and valuation will take care of itself.”

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