For many entrepreneurs, the time comes when they want to up the ante and scale their business to realise its potential.
Yet, of the six million SME businesses in the UK, there are only around 30,000 which are growing at a rate of more than 10% a year, making these fast-growing businesses the exception rather than the rule. What’s stopping more of these high-potential companies going for growth?
A lifestyle business by its very nature will suit some people and companies like these make an essential contribution and impact, forming the backbone of the UK and regional economy and employing people across the country. But for others, the ambition for growth is there and they have the ideas of how this can be achieved but not the support and tools to make it happen at the pace they would like.
Equity funding can accelerate growth and make businesses more resilient. It can support businesses to expand internationally and export, grow their teams, make acquisitions, invest in infrastructure and research, and take advantage of more opportunities as they appear.
As the UK and Ireland’s most active investor in growing businesses, we meet companies from all corners of the country and spanning every sector. We’ve seen a significant shift in the understanding and appetite for equity funding from UK and Irish SMEs over the last few years, with success stories from our own portfolio and further afield demonstrating why it is such an attractive option.
Much of this change in attitude has been down to debunking myths and perceptions so that business owners can make more informed decisions. Taking on funding is often as much an emotional decision as a rational one but being armed with the facts can help with consideration.
So, what are some of these myths?
Equity investment is only for tech start-ups Some business owners we meet feel that theirs is not the type of business suited to equity investment and that it’s the domain of tech start-ups and disruptors, for example. This is probably due to high profile examples from the US, but the reality is that equity investment can enable businesses of all shapes, sizes and sectors to unlock growth.
In our Midlands portfolio alone, we back companies from distilleries and manufacturers to travel companies and life sciences incubators – as well as some tech companies of course!
These businesses all share an ambition and drive, and more often than not, the desire to innovate within their own sector, regardless of what that is.
You will lose control A common misconception about taking on equity investment is that it will result in losing control of your business. Understandably, this is a concern for many business owners, but it can be overcome by partnering with a minority investor like BGF. We invest and back management teams, so it’s important that they continue to hold the majority of shares so they are incentivised to continue growing the business. It works for everyone when we are all working together towards long-term goals.
You will be under pressure to exit your business Because some of the larger private equity investors look to realise their investments in three to five-year cycles, business owners sometimes think that all investors will be looking towards a fast exit. That’s simply not the case and a patient outlook – long-term investment with access to further funding to support continued growth – can be the right option for many businesses.
Going for growth is about much more than just selling more units. It’s about being ambitious and fearless in your quest to succeed and realising your full potential. Taking on equity investment can generate the freedom, confidence and connections to realise the full potential of your business and impact the market, economy and society as a whole.
On the 31st October 2019, we joined leading marketing technology company HubSpot to discuss the psychology and technology secrets that drive business growth. Hosted by Cognition, one of the UK’s leading digital agencies, this one-off event had a fantastic turn out and was a great opportunity for businesses in the West Midlands to learn how leaders of successful household brands have harnessed technology to reduce operating costs and drive growth.
Stay informed about future Cognition events via the link below: