The recent poll of over 1,000 SMEs across the UK looked at the issues SMEs are currently concerned about, and it found that many sectors shared the same anxieties. Retaining business (26%) and managing cash flow (22%)– these are the financial worries keeping most small business owners awake at night and potentially stifling business growth. Manufacturing, retail, construction, transportation & distribution all cited ‘retaining business’ and ‘managing cash flow’ as their main worries. The media industry, hospitality and medical sectors, on the other hand all quoted ‘retaining business’ and ‘economic volatility’ as their main sources of apprehension. Whereas, the main concern amongst the legal, real estate and finance business divisions was compliance and regulations. Perhaps unsurprisingly, the agriculture industry quoted ‘the effects of unpredictable / extreme weather’ (26%) as the number one issue that haunts their waking hours.
It’s small businesses in their first year who have the fewest worries with one in three (36%) reporting that nothing kept them awake at night. This might be because they haven’t yet experienced “difficult second album syndrome” – when a business has to respond to rapid growth and hasn’t yet been knocked back by an inappropriate match of lender. And those who did worry were concerned about managing cash flow (38%), retaining business (20%) and tax and interest rates (18%). Those companies with a turnover of over £10million were much more concerned with employee skill gaps and shortages (26%), compliance and regulations (26%) retaining business (19%) and economic volatility (19%).
There is a widespread belief that SMEs face a scarcity of funding, a reluctance to lend, and a less flexible attitude to finance. The lenders we work with, however, try extremely hard to change that perception. Smaller funders, in particular, can offer some extremely specialised services, and some of our brokers can also offer a very particular degree of expertise.
Nevertheless, some SMEs are not taking advantage of the opportunities offered by the wealth of smaller lenders. The great majority of small businesses start thinking about sourcing funding only three to four days before the money is needed, and are likely to spend less than one hour researching their options, before returning to their usual bank. The more likely an SME owner thinks it is that his application for a loan will be turned down by all parties, the less time he/she is likely to dedicate to finding the best lender and the best deal. We see evidence all the time that small business owners don’t understand how much value lenders put on credit history, current level of gearing, or profitability. It all means that loan requests that initially appear to be viable turn out not to be, and the broker who puts that investigative work in is unlikely to receive anything for his or her trouble.
It turns out that education is the sleeping tonic that small business owners need. Knowing how to package a deal, and where to take it, should mean that you’ll be rested, and still trading profitably, when the sun comes up in the morning.
