Small business confidence growing in face of red tape and skills shortages
More small and medium firms in the UK have secured finance than ever before and entrepreneurs aged under 35 are leading this change...
Britain’s small and medium-sized businesses are increasingly optimistic about future growth ambitions, according to the third annual Albion Growth Report by Albion Ventures of over 1,000 companies.
The number of small firms which have secured growth finance has risen dramatically to 44% from 26% in 2013 – the highest level of the report to date. More “companies are beginning to understand that they don’t have to go to the bank to find capital” as bank loans and overdrafts have fallen in popularity from 76% in 2013 to 49% this year.
Young entrepreneurs featured heavily in this year’s report. Key findings included statistics which show that small firms ran by those aged 35 and under were much more likely to have attempted to raise finance (29% as opposed to 14% of those over 45) but at least one in six (15%) had tried and failed to secure funding. Young entrepreneurs were also far more willing to admit that they would benefit from business mentoring – 24% compared to 17% of those over 45.
The research, unveiled at a breakfast conference in Westminster this morning by Albion Ventures managing partner Patrick Reeve and presented by Giles Wilkes of the Financial Times, also ranked the key barriers to growth and found that red tape; “predominantly with regards to employment law”, was ranked as the biggest obstacle for the second year followed by an inability to find skilled staff.
Difficulties accessing new markets and insufficient management expertise were revealed as growing concerns for small companies this year, having risen up the list of growth barriers from eight to fifth, and eleventh to sixth place respectively.
Regionally, the highest proportion of businesses anticipating growth was found in Yorkshire and the South East (66%), followed closely by the North East (65%) and London (64%) – while businesses in East Anglia remained the least optimistic at 55%, although this was an improvement on the 39% that planned to expand last year.
The report also demonstrated a gender gap among entrepreneurs when it comes to sourcing external investment. Men were more likely to have attempted to raise finance (18%) than women (12%) – panellist Modwenna Rees-Mogg said she believed this was because “men and women are playing different games” in the enterprise arena.
Albion Ventures’ Reeve commented: “This year’s report is particularly encouraging as it shows that many of the current barriers to growth are problems of success rather than failure. Concerns about access to finance have given way to shortages of skilled staff and insufficient management expertise.
“While red tape remains as ever the biggest concern, what has emerged very clearly is a trend towards long term financing horizons and the growth of the equity culture.”