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‘Time and money’ are biggest barriers for SMEs

Date Added: 10/02/2014  

Although confidence has risen, business rates and the cost of utilities continue to be barriers to growth for small to medium-sized enterprises (SMEs) in 2014.

This news comes from the Forum of Private Businesses (FPB), after its research revealed that an enormous 85 per cent of its members are positive about the coming year and intend to develop their business in the next 12 months.

Of those surveyed, 30 per cent expected to hire more staff and 15 per cent anticipated they would be increasing the hours of their current workforce. 

Development of customer bases was cited as the most important element of business growth, with 60 per cent looking to target new consumers, 42 per cent wanting to focus on improving service and 41 per cent on new product development.

Alexander Jackman, head of policy at the FPB, said: "Gross domestic product figures are positive, employment is up and confidence among FPB members has lifted accordingly. 

“With one in three looking to employ and one in ten looking to increase hours, small businesses are showing a positive, though restrained, outlook for 2014."

Time, money and expertise were mentioned as the biggest challenges facing SMEs who have had to downsize and manage ongoing cash flow issues to deal with the problems caused by the recession.

Notably, time was cited as the principal barrier to growth, a change from ‘finance’ which has been the main obstacle throughout the financial downturn.

FPB believes the results demonstrate an improvement in business funding, as the number of SMEs seeing the cost of finance as an obstacle to growth has fallen from 36 per cent to 24 per cent.

However, figures from KPMG appear to contradict these results. It revealed that only a third of SMEs will be looking for external funding to finance their growth plans in 2014. In fact, almost half of the respondents stated that they would prefer to bankroll expansion themselves.

In the poll of 165 SMEs, 46 per cent said they intend to draw on their own cash reserves to finance growth plans and just 21 per cent are planning to raise funds outside of the business.

Iain Moffatt, head of regions at KPMG, said: “Nearly half of businesses are not willing to take on any risk associated with external finance and leverage their business, despite the reported optimism levels. 

“This is an indication that companies are still very uncertain about the banking market, which some view as being unsupportive to small businesses during the recession.”

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