It’s well documented that SMEs are crucial to the continuing recovery of our economy. 2014’s High Growth Small Business report revealed that 36% of the UK’s economic growth was generated by our fastest growing smallest companies.
Unfortunately, traditional sources of funding haven’t come out of recession mode, despite Government commitments. And although there have been huge advancements in alternative funding in recent years, many small and medium-sized businesses still struggle to obtain financing.
However, there are measures you can adopt to secure funds and boost your attractiveness to lenders and investors. Read on to discover more.
SMEs and entrepreneurs need to seek alternative funding sources
The UK’s reliance on banks to fund businesses is one of the central reasons that economic recovery has been slower here than elsewhere. In America, for example, only a quarter of finance is obtained from banks, compared with a huge three quarters in Britain.
However, change is afoot. The introduction of the British Business Bank and peer-to-peer lenders like Funding Circle have begun to change the financial landscape, making it easier for you to obtain funding.
Another important recent development is the Small Business Act, passed in March this year. It has put measures in place to improve the referrals mechanism for businesses that have been rejected for funding, giving you immediate advice about alternative sources of finance.
If you’re struggling to obtain funding, you can also approach community development finance institutions. They’re currently being strengthened, with the specific intention of supporting ambitious businesses that have been rejected for funding.
Make your business attractive to lenders and investors.
There are a myriad of resources available to help you boost your attractiveness to lenders and investors and secure investment to grow your business.
Having an effective business plan is, unsurprisingly, key.
Cranfield University recognises the importance of entrepreneurs. Its Business Growth Development Programme is tailored to ambitious owner-managers, and is designed to help you develop a robust growth plan.
Another avenue to explore is the Small Business Charter. It provides you with access to business school resources through workshops and mentoring. And it’s particularly good if you’re looking to expand rapidly or need guidance on issues such as raising finance.
If you’re after strategic advice, you can also consider enlisting the help of a non-executive director or business consultant. The right non-exec will be invaluable on difficult issues – such as securing funding – as well as being a fantastic general sounding board.