A new study carried out by the British Business Bank suggests that one in three small and medium-sized enterprises (SMEs) are struggling to realise their growth plans, due to a lack of understanding of small business finance.
The findings, which come after the Government’s economic development bank interviewed 500 SME leaders and decision-makers, indicate that small businesses are feeling ambitious, but that many need a helping hand or external advice in order to grow and expand.
It found that there was a general lack of awareness of how to identify or pursue finance opportunities among SMEs.
Specifically, there was a significantly low understanding of how alternative finance options, such as early-stage equity investment and crowdfunding, work.
Worse still, the research found that more than a quarter (25 per cent) of SMEs had been forced to ‘abandon’ their growth plans after failing to identify and secure the appropriate finance.
Graeme Fisher, Managing Director of the British Business Bank, said: “Many small business owners find it hard to identify or are simply unaware of the right type of finance to help realise their growth plans.
“It’s fair to say that the financial landscape can be complex, daunting and hard to understand,” he added, indicating that ambitious businesses needed more help.
Elsewhere, other pieces of research have found that today’s SMEs are facing a number of hurdles which are taking up bosses’ time and preventing them from pursuing growth and expansion opportunities.
A study recently published by market research group BVA BDRC, which assessed as many as 4,500 business owners, found that one in four SMEs were struggling with skill shortages, while 18 per cent felt that their day-to-day tax and administrative burdens were a “major obstacle” to growth.