New research finds a lack of awareness around funding options is holding a fifth of businesses back
While growth optimism remains high among UK SMEs, a significant number of businesses are unaware of the steps required to support this growth, according to new research by independent asset manager, BOOST&Co.
The 2022 Geared for Growth report found that 70.2% of businesses intend to access external funding to support the growth of their business in the next 12 months. However, many of these are unsure of how to obtain this funding, with nearly a fifth of business leaders (16.6%) reporting a lack of awareness of the options available to help their businesses grow.
The nationally representative survey of 500 UK business leaders also revealed that 21.6% of firms believe access to funding is a significant roadblock to achieving growth. This was the second biggest barrier to growth after the ongoing impact of the Covid-19 pandemic.
The research revealed an evident knowledge gap when it comes to accessing support for business growth. With 10.4% of UK smaller business leaders claiming to lack clarity around which growth strategies would be most impactful for their business, it is clear that more needs to be done to raise awareness around growth strategies.
Almost a third (31.4%) of businesses also believe that there is a lack of understanding in their organisation around the funding process. This lack of clarity could be restricting growth opportunities for SMEs, with the UK funding market providing an array of benefits to a business of any size, sector or location. Nearly 10% of funding applications in the past two years were rejected by a traditional bank or another lender, suggesting that SMEs need greater support during the funding application process.
Recent research by CBInsights revealed the common reasons that many SMEs fail, with 38% reporting failure from running out of cash and 15% citing price and costing issues as their downfall. Therefore, it is clear that funding is often crucial to the survival of SMEs and the process of securing this funding needs to be as smooth as possible.
Commenting on the findings, Joanna Scott, Managing Director at BOOST&Co, says: “It is evident that there is a real appetite for growth from UK SMEs, but it is also clear that there is a lack of awareness around how this growth can be achieved. Not enough is being done to make it easier for businesses to seek funding support and without knowledge of the options available to them, it could be that many SMEs are missing out on vital opportunities to accelerate the growth of their business.
“To narrow this knowledge gap, it’s crucial that business leaders are made aware of growth strategies and alternative routes to funding. Funding is a partnership, so equity investors, lenders and advisors must support businesses in understanding the process.
“There are many ways that business leaders can make their 2022 growth ambitions a reality, be it through greater access to resources, advice or alternative sources of funding. Debt funding is a great option for businesses looking to scale up but a route that only 63% of the business leaders we surveyed had taken, either via a bank or another lender.”