SMEs struggle to overcome red-tape and high costs
Rising costs and red tape are the biggest barriers to start-up businesses in the UK, new research has claimed.
A study from Opus Energy also found that understanding vast swathes of legislation is also an issue for new SMEs
Four in ten of those questioned listed costs as they main struggle when setting up their business while 37% pointed to issues with understanding legal procedures.
Meanwhile three in ten SME owners found difficulty turning an idea into reality while 26% and 25% respectively were unsure of who to turn to for advice and where to set up.
These significant challenges can make it difficult for businesses in their infancy, despite research suggesting that as many as 80% of firms will survive their first year.
However, it is the years that follow that often cause misery, as that figure can drop to as low as 50% after five years.
An ability to source local talent and to locate well are key to keeping costs down in the early stages, while pressures associated with growth can place great a burden on expanding firms.
Refinancing can be a help with a number of potential issues, from overcoming cash flow difficulties to building a platform for long-term growth.
Firms in Northern Ireland were most concerned with costs whereas those in the West Midlands were least worried – despite operational costs in the latter being higher. Better connectivity in the Midlands meant profitability was less of a concern.
Those in the East of England displayed the greatest struggles with understanding legislation while those in the East Midlands had most qualms about getting their business idea off the ground.
Should a business experience a reversal in fortune, an independent business review may be necessary to take an unbiased look at finances, assets and forecasts.
While a financial institution may request one, any manager, owner or creditor with an interest in the firm can also do so.
By Phil Smith