13 January 2015

Synopsis of state of the economy and its effect on SME's

British Business Bank -  Report
A new report released this week by the government’s British Business Bank has revealed 46 per cent of UK SMEs are in line for growth in the next 12 months.  Reviewing the state of the UK financial market for SMEs, the ‘Small Business Finance Markets 2014’ surveyed 1,000 small businesses and found that although the vast majority of start-ups sought finance, many were unaware of all the alternative funding options available.

The most alarming statistic for the Government was that a third (33 per cent) of SMEs had no idea they could access funding through Government and Local Authority grants; indicating a need for better promotion of government schemes.  Although more than two-thirds (68 per cent) of small business owners were "confident in their ability to obtain external finance", a further 65 per cent admitted they hadn’t heard of crowdfunding, peer-to-peer lending, export and import finance and mezzanine finance.

The most commonly known forms of finance among those surveyed were credit cards (95 per cent) and lease or hire purchase (85 per cent).  In terms of reasons for raising finance, the most common reasons among SME owners questioned were to purchase fixed assets (43 per cent) and to support cash flow (33 per cent).

Vince Cable, Business Secretary, believes the findings will give the Government a useful starting point in the battle to improve business awareness of the numerous alternative finance options available.

"This new research – the first of its kind by the British Business Bank – is a useful benchmark for measuring the challenges ahead in making British businesses aware of the various alternative finance options available in the market," said Cable.  "This is particularly important given the findings also show that almost half of British small and medium enterprises plan to expand in the next year.  "I am confident more businesses will be able to realise those ambitions thanks to the new finance on offer, especially on the equity side."

Manufacturing Advisory Service - Survey
The latest Barometer survey by the Manufacturing Advisory Service (MAS) has found that 69% of small and medium-size manufacturers in England say they expect to increase investment in new technology, machinery or premises in the next six months, in a bid to improve their productivity.

Meanwhile, 57% of companies report that they have already raised their productivity since April, with 80% saying further efficiency gains are necessary in order to remain competitive. For the sixth successive quarterly survey, a majority of companies recorded an increase in sales (55% of the 859 respondents), with 67% expecting to grow between now and the end of next March. Furthermore, 95% of firms intend to either maintain or increase their workforce.

Steven Barr, head of the MAS, said: "Our Barometer survey shows that manufacturers are already responding to recent observations by the Bank of England that productivity needs to be raised. It is also re-assuring that it’s not just the large manufacturers that understand what makes them competitive.

"Our small and medium-size firms have also recognised the importance of continually improving productivity. This could include anything from introducing new processes and eliminating waste to ‘up-skilling’ staff and investing in both technology and ‘state of the art’ machinery.

"Management teams are continually looking to get more out of the business — a feature that will become increasingly important with the market-place showing some signs of softening.

Liberis - Survey
Most of East Anglia's small and medium-sized firms are optimistic over their prospects for 2015, according to a survey conducted for Liberis.

A OnePoll survey commissioned by unsecured business loans specialist Liberis showed that two-thirds (69%) of the region’s small and medium-sized firms feel confident about their prospects in the year and half (51%) expect their businesses to grow.  However, nearly a quarter (24%) admitted they expect their business to decline.

Just over a quarter (26%) said they would be looking for business funding in 2015 and 42% plan to approach alternative finance providers while 44% will approach their bank.

The majority (76%) expressed confident in getting the funding they need. Top reasons for seeking funding in 2015 were to buy new stock and equipment and to pay a tax bill.

Respondents felt that alternative finance provided more flexible funding and that it was easier to apply for and get than traditional funding.

The cost of funding, followed by speed at which they can get it and ease of application were the most important factors for SMEs when it came to funding choices.

On the subject of business worries, cash flow, costs eating into profits and maintaining financial stability were the top three for the region’s businesses.

Liberis chief executive Paul Mildenstein said: "It has been a tough few years, so it’s heartening to hear that the majority of the region’s businesses are feeling positive about 2015, but it still looks tough for a considerable number.

"Getting working capital has been a struggle too, which has made it even more difficult for businesses to operate, so it’s encouraging that those who need funding feel confident they will get it."