Inadequate access to finance remains the single biggest contributor towards small business failure, it has been reported.
A study conducted by Bloomsbury Professional revealed that 71 per cent of accountants blame insufficient financial support for crippling new enterprises.
The firm said that despite government initiatives to boost lending and investment – such as the Enterprise Finance Guarantee Scheme – many small companies are still struggling to access the funds they need.
Martin Casimir, managing director of Bloomsbury Professional, said financing has always been “a huge barrier for start-ups”, but since the financial crisis, has become almost impossible to find for many firms.
“The continued difficulty in obtaining new business bank lending is holding new businesses and the UK economy back,” he claimed.
“The small businesses that could drive the UK out of recession can’t even get out of the blocks.”
Poor market research by start-up founders was described as a major barrier to business success by 60 per cent of survey respondents, with costly overheads next on 57 per cent.
Mr Casimir said it is vitally important that small company bosses do their research.
“They need to have a clear idea of how they will fund themselves, how they will manage their costs, and the layout of the market in which they’re about to compete,” he stated.
“Planning ahead and doing the right kind of research could make the difference for new businesses looking to find crucial start-up finance.”
He said that while the banks are reluctant to lend, they are even less likely to do so if a company is just an idea.
Mr Casimir urged company founders to give banks plenty of information about their business when applying for finance.
“To plan effectively and to find the right financing, start-ups need to use the advice that’s on offer to them,” he stated.
“They need to take advantage of their networks to find out about the marketplace, and they can use the networks of others too.”
Posted by Steven Woodgate
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