Securing sufficient funding is at the forefront of the minds of most entrepreneurs when they kickstart their new venture and it can be a minefield to negotiate. Luckily, the Business Funding Show is coming to London in February, bring a wealth of good advice in its wake, as Eleanor Ross discovers.
According to a recent BIS Small Business Survey, just 15 per cent of SMEs are familiar with multiple finance sources and specific providers, which raises the rather disconcerting issue of many SMEs being unsure as to how to secure the best funding options for their business.
The Business Funding Show will be the first exhibition exclusively focused on funding and growth support and will look at what funding options are open to entrepreneurs starting out. Notable speakers include Bill Morrow from Angel’s Den, and a number of established entrepreneurs will be present, among them Richard Reed from Innocent Smoothies and Charlie Mullins, the founder of Pimlico Plumbers.
Arina Osiannaya is the founder and director of the show; a veteran of the start-up scene, she has always had a “desire for adventure and entrepreneurialism” which, she says, has enabled her to get under the skin of many businesses in different markets. “In turn, this has given me exposure to the highs and lows of the SME journey.”
Osiannaya decided to start the funding show after one issue throughout her work remained constant regardless of sector – access to funding. “I found there was an impasse created between businesses looking for funding [and the providers] – there’s such a wide variety of financial institutions offering so many potential options that businesses don’t know where to turn. That’s why I decided to start the show, to bring both sides together to help demystify the situation and open the lines of communication.”
Osiannaya discusses the ingrained issues that are present in the SME community today. “According to last year’s research from the British Business Bank, 66 per cent of companies that applied for funding contacted only one finance provider. On top of that, 70 per cent of SME funding within Europe is provided by banks, with only one in 30 businesses approaching alternative funding options. That is a lot of businesses ignoring the opportunity to seek out alternative means of finance.”
She adds that fewer than two percent of businesses use P2P or crowdfunding solutions and that overdrafts still remain the most popular way to finance a project. Osiannaya cities the knowledge gap as the main reason for these trends. She feels firmly that more effort must be put into educating businesses about the various funding options available.
She also predicts a future trend: “I believe that in 2016 we’ll see an even greater shift from traditional lending to alternative forms of funding. This will be supported with government initiatives to encourage greater funding flexibility, which will include the introduction of the Finance Portal, an FSB lobbying initiative that means banks which can’t service a client’s need must refer them to alternative lenders. Something like this will drive banks to establish better ways to support early-stage ventures.”
Osiannaya is keen to point out that there has never been a better time to start a business in the UK than now. “There is so much support for business in different forms, from various government incentives to different recruitment allowances and grants. Besides, technology, innovation, and market attractiveness to international investors all help to create a great platform for business development.
“The internet is also awash with advice and guidance from experts. Social channels allow closer proximity to millions of customers, while at the same time, the overheads required to run a business are going down. There are hubs offering free or very cost-efficient office space, online services offering remote support services and a workforce increasingly prepared to work both flexibly and remotely. Why would you not want to start your own business?”
Admittedly, the fact that 40 per cent of businesses fail within the first year of operation might be a good indication of why the whole UK workforce isn’t quitting their jobs and jumping on the start-up bandwagon. “Ultimately, the objective for any new business is to not be one of this 40 per cent”, notes Osiannaya. “The aim is to keep it alive and grow it. To do this, entrepreneurs must ensure they have all the necessary support. Whether that is advice from a mentor, the best possible option when it comes to financing, or capitalising on as many relevant government support schemes out there – the choices and decisions are endless. Find the right one for your business and go for it.”