A new survey from Barclaycard reveals that 11 per cent of business owners have considered giving up their business as a result of a challenging cashflow problem. These issues keep 63 per cent of entrepreneurs awake at night, with a third admitting that insufficient working capital has stunted their growth plans.
With combined turnover hitting £1.8 trillion last year, small and medium-sized enterprises (SMEs) deliver nearly half of all private sector turnover in the UK. They also employ almost 16 million people, which is 60 per cent of all private sector employment.
If these businesses suffer cash flow problems then there is a bigger impact on the wider economy. 27 per cent of respondents in the survey said cashflow issues have stopped them expanding their product range and the same percentage said it had prevented them from attracting new customers. 23 per cent were held back from investing in new technologies to support their business, and a similar proportion, 22 per cent, were put off opening a new office or location.
Commenting on the research, Marc Pettican, managing director of Barclaycard Commercial Payments said “Our research shows that working capital is a top priority for many SME decision-makers, with almost two-thirds saying cash flow keeps them awake at night and a third indicating it has impaired their ability to grow.”
While the alternative finance industry is growing and providing more options for small businesses there still remains a funding gap for unsecured loans of between £0.5 million and £5 million. This is too big for peer-to-peer platforms but too small for the banks and debt funds. This is often the funding that helps small and medium-sized companies grow into larger businesses. It is also a key driver of productivity across the economy and if readily available will allow SME’s to make an even greater contribution to the UK’s economic growth.