Half of UK entrepreneurs surveyed by accountants Ernst & Young (EY) cite access to finance as the main barrier to setting up a new business.

EY surveyed 226 entrepreneurs to assess how their firms have performed in recent years, whether they expect to grow in the future, and to gather views on the factors that they feel can help or hinder growth.

EY said sourcing finance was the greatest barrier to setting up a new business for 50% of the UK’s entrepreneurs, with a fifth saying they would turn to a bank to help them grow their business, and over a quarter would rather use their own profit, said the survey. For secondary finance, 16% of entrepreneurs said private equity was an option; 9% said they would consider an IPO and just 3% that they would choose venture capital as a source of secondary funding.

Stuart Watson, EY’s Entrepreneur of the Year UK Leader, said; "There are a wide variety of options for funding growth, incentives and tax breaks for investors. These are often complex and take time to review. For busy entrepreneurs with businesses that need day to day leadership, it can be invaluable to bring in a mentor, non-executive director, or an adviser, that has been through the issues before."

EY said the majority of the entrepreneurs surveyed across multiple sectors and regions of the UK had well-established businesses; 73% of respondents have run their business for at least a decade. Entrepreneurs in the North were the champions of using their retained profit to grow their businesses, with nearly four out of ten (37%) choosing this option, while London based entrepreneurs would look at support from private equity (20%).

Entrepreneurs in the construction sector were the most likely to struggle with finance (90%), compared to 25% in the pharmaceutical industry.

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Watson said; "At a policy level, while there have been many initiatives in this area, the responses from our survey suggest that politicians should focus on how to encourage greater investment in the fast growth companies in the economy."