At a recent Economic Question time held at Said Business School in Oxford – an event that we sponsored – a comment made by Angus Horner, the MD of Harwell Campus was that a lot of SME owners were reluctant to take on debt to expand their businesses due to the fear of loss of control and the often short term attitudes of some funders including banks and venture capital lenders. A recent survey supports these comments recording that nearly 50% of SME founders are reluctant to grow their company through external finance, due to risks such as a loss of independence. However, 48% of SMEs said they felt British businesses were missing out on growth opportunities due to their external finance worries, whilst 45% believed the economy is being stifled because of it. 

Our Head of Recovery & Insolvency commented; “This likely stems from the thought process that it was better not to grow than to grow with the aid of a funder and risk the business completely if things got a bit tight. The lack of consistency in banks could also often be cited as the reason with frequent changing personnel leading to a decline in long term relationships with a manager who understands the business’s history, directors, mind-set and ambitions and is viewed as a trusted advisor and confident rather than the salesman of a commodity that just happens to be called ‘cash’. Money has now been cheap for a very long time but whilst consumer borrowing is again increasing business owners have shown a strong reluctance to dip their toes in the water. This perhaps feeds into a lack of recovery from 2007’s economic crisis and is an issue that may prevent expansion of the economy despite the current talk of relaxing the government policy of austerity!