Could a failure to apply for finance be damaging SME productivity?
UK businesses that are not applying for available finance could be missing an opportunity in the race to get ahead of their rivals, new data suggests.
The BDRC Continental SME Finance Monitor revealed that firms who are failing to use the many options available to them could be damaging their productivity.
It states that innovation is disrupted or held back, meaning the small businesses fail to find a competitive edge in the marketplace.
Businesses that successfully gained finance through a bank loan or overdraft are 32% more likely to have innovated, according to the survey. This means they are more likely to have developed a new service or product in the past three years or significantly improved a certain part of their business.
More than 20,000 businesses were interviewed as part of the survey and those who were successful in gaining finance noted several successes.
Success meant 38% of firms were more likely to have traded internationally while 19% were planning to grow and 15% had already grown in the past 12 months.
Finding finance sources should drive a profit too, with firms 8% more likely to have done so when funding applications are successful.
Good cash flow is vital to the attempts of any business to find success – money drives fresh ideas and approaches which are key to getting ahead of rivals.
Streamlining business operations with the help of insolvency practitioners can help to reduce unnecessary costs while also freeing up funds for expansion and growth.
The key for any firm is to ensure that productivity remains high, especially among companies in particularly competitive sectors.
In those cases, innovation is an essential part to staying ahead and often both proactive and reactive approaches to market trends are required.
Innovation and productivity are inextricably linked and funding can be a key driver, which is why so much emphasis must be placed on financial management and sourcing money.
Some SMEs might consider it risky to search for more funding but it could boost productivity, aiding business growth and driving success in the process.
By Phil Smith