SMEs push forward with growth plans
9th April 2008
UK SMEs are remaining defiant in the
face of the current economic turmoil and will not rein
back expansion plans for the remainder of 2008.
A new
survey by the Asset Based Finance Association (ABFA)
found that 74% of companies are refusing to put growth
ambitions on hold. In fact, around half expect to increase
their borrowing in 2008 with 67% either confident or
very confident they will secure the additional funding
to support
their plans.
The research supports the recent government's
Annual Small Business Survey which found that 66% of
SMEs were
aiming
to grow their business over the next two to three years.
Both reports will be welcomed by the business and enterprise
secretary John Hutton who outlined the government's
commitment to helping small business grow in the new enterprise
white paper during the budget.
However, the news was
not all rosy. Despite their optimism, over 40% of SMEs
surveyed said that the interest rate
cut to 5.25% in February has had little impact on
their business.
One third said it had had no impact at all and called
for it to be dropped to at least 5% when the Bank
of England
makes its rate announcements on 10th April.
What's
more, when asked about current financial concerns, 37%
stated their relationship was at risk from having
to chase payments. Again this echoes the findings
of the small
business survey which has highlighted the growing
problem of late payments in this country.
Maurice
Craft, chair of the Invoice Finance Group which is part
of the ABFA, said: "The majority of the results
from the survey are very encouraging and I'm
pleased that SMEs are planning to go ahead with expansion
this
year.
It was also interesting to note that a significant
proportion believes that media reports about a recession
are over-hyped."
However, there are still barriers
to expansion which need to be addressed if UK SMEs
are going
to fulfil
their potential.
Of particular interest are the companies that
cite managing late payers and their cashflow function
as a hindrance
to growth. There are options available to companies
such as factoring or invoice discounting which
takes the burden
away from chasing late payers and gives the
guarantee of invoices being paid quickly, allowing the
company
directors
to concentrate of growing the business.
The
survey, which was conducted at the Institute of Directors
finance for SMEs seminar, also
revealed that
63% of SMEs
said they get by in financial matters and
use external sources to fill in the gaps, while
26% claimed
to know more than their accountant. Just
over one in
ten companies
called for more free resources from the government
to improve their financial literacy.
