Small business owners scanning the headlines in the last few weeks could be forgiven for feeling a little downcast. Loans to small and medium-sized firms fell by £3.8 billion in August, according to the Bank of England’s latest business lending figures, the greatest drop since December last year. And those who looked to the recent round of party conferences for a glimmer of optimism would have been disappointed. David Cameron may have labelled Britain’s business owners ‘national heroes,’ but there was little in the speeches from any of the major political parties to give smaller enterprises real cause for cheer. Plenty of promises of tax cuts, wealth generation, and encouraging business growth, but no hard policies to indicate how this will be achieved and improve the lot of the UK’s 4.5 million SMEs.
At Boost Capital, we see smaller companies shrugging off these negative trends and taking their fate into their own hands. Recent research from the Q3 2013 ICAEW/Grant Thornton Business Confidence Monitor shows that confidence is on the up and many firms still have ambitions to grow, despite gloomy economic times and the evident reluctance of high street banks to hand over funding. And quite right, too. Businesses should always think about the future and how they can get to the next stage of development. Because you can be sure of one thing – even if you’re only thinking about getting through today, your competitors will be planning how to be bigger and better tomorrow.
Companies of all types come to us seeking growth for a variety of reasons. Restaurateurs, dentists, retailers, beauticians, wholesalers – and every other sort of business besides. Some are looking for money to buy more stock because they want to increase sales. It could be the need to refurbish premises or buy new equipment. The possibility of diversifying into new goods or services has emerged and extra capital is required for expansion. Some firms simply recognise that their operation would benefit from some short-term borrowing to keep the cash flowing during a slow or difficult patch of trading.
- Could you increase sales to existing customers or are there new customers you might attract? The internet and social media may be the way to reach new business. If you’re not operating online already, is it appropriate for you to do so? If you have got a web presence is it proving effective or might you be behind the technological times and in need of a revamp?
- Might you improve or expand your products and services? This might involve some market research with existing customers to discover what else they want or need. Once you’ve identified potential improvements, consider how to develop and test them with your existing client base in a cost-effective manner to see if there is a genuine demand.
- Do you have the skills in your business to achieve your new goals? It may be the case that you need to hire in new talent or train up current employees to produce or provide new goods or services. If you’re a sole trader, hiring your first employee may be the first step towards achieving your growth plans.
- Have you considered finding a business mentor, a seasoned professional who can advise you on how to take your business to the next level? You could find this individual through local business networks, industry bodies or even among your existing business advisers.
- Have you forgotten the bottom line? Business growth is not just about increasing sales, boosting profitability also matters. Look closely at your costs and consider where you might make obvious savings.
Which brings us back to funding. Once you’ve done your research and decided how you want to grow, you still have to find financing to make your plans reality. Too often, enterprises with great growth potential have been stymied by the processes and pitfalls of conventional lenders. We hear time and again of people going through all of the application forms and officialdom of applying for a bank loan, only to be rejected for the flimsiest of reasons. And slow banking procedures also fail to account for the fact that some growth plans require fast, decisive action, so that the business can grasp the opportunity in front of them quickly.
Realising the experience that we have in helping businesses in these kinds of situation, we recently worked with SmallBusiness.co.uk to produce a guide entitled Fulfilling Growth Potential. It features five firms that have very different stories to tell about setting up in business and their subsequent search for growth capital. It makes for very interesting and, I hope, inspiring reading. And I think that there is real reason for hope in the guide’s lasting message – companies can grow with the right support even in the most challenging times.
To view the guide in its entirety, click here.