Two Thirds of Small Businesses Predict Ambitious Growth
Emergence of ‘threshold’ businesses is driving force in business growth
A new report by Albion Ventures revealed that 62% of small and mid-sized firms anticipate to grow over the next two years – with only 3% of businesses expecting to decrease in size.
33% of firms are hoping to recruit with only 2% looking to reduce headcount and a third of businesses plan to raise finance this year with the number looking for development capital rising to 27%, whereas the percentage looking solely to fund working capital has dropped 25%.
The report also revealed a decrease in businesses using traditional finance options, with firms relying less on asset-based leasing, invoice discounting and credit cards, and those seeking bank funding falling 14%.
Broken down by region, the report showed that confidence is highest in the North West with 83% anticipating growth, followed by London at 81%. Businesses in the East are the least optimistic with only 39% expecting growth. Additionally production businesses were most confident sector-wise, with 83% anticipating growth.
The findings also revealed the emergence of a group of businesses that are transitioning from start-ups and sole traders into established companies. These companies, known as ‘threshold’ businesses, have turnovers between £500,000 and £1m and are more likely to seek finance for growth successfully.
This group seems to be a driving force in the rise in small business growth ambitions, with 68% of ‘threshold’ businesses looking for growth finance (compared to the average of 41%) as well as displaying an interest in investors that will offer mentoring, with 22% willing to give up equity for hands-on support compared to the average of 6%.
Commenting on the report, Albion Ventures’ managing partner Patrick Reeve, focused on the emergence of ‘threshold’ companies:
“The evidence from this year’s Albion Growth Report points to a growing sense of confidence among UK small businesses. The next 12 months promise more jobs created, improved productivity and a stronger appetite for raising finance to support growth as opposed to survival.
“What’s particularly striking about this year’s report is the emergence of so-called threshold businesses, which are on the cusp of blossoming from start-up to established business. Threshold businesses have tremendous potential to drive forward the UK’s economy in the years ahead.”