Access to finance key barrier to starting a business today, say Midlands entrepreneurs

Access to finance key barrier to starting a business today, say Midlands entrepreneurs

Sourcing finance is the greatest barrier to setting up a new business for 47% of Midlands entrepreneurs 43% think that fear of failure and an uncertainty of income are the second most important reasons preventing entrepreneurs from starting a business Over a quarter (27%) would turn to a bank to help them grow their business – the highest of the UK regions.

Midlands entrepreneurs believe that access to finance is the biggest barrier to setting up a new company, according to the results of an EY survey.

47% of respondents cited funding as a key hurdle to launching a business, followed by fear of failure (43%) and uncertainty of income (44%). In contrast, only 7% of respondents thought that bad market conditions could hold back entrepreneurs, while just 13% cited the possibility of going bankrupt as a barrier to starting a business.

EY surveyed over 30 Midlands entrepreneurs to gather their views on the factors they feel can help or hinder growth. The majority of the entrepreneurs surveyed have well-established businesses; 66% of respondents have run their companies for at least a decade.

Adrian Roberts, partner at EY in the Midlands, said:“Matching funding to business growth plans remains a key area of concern for ambitious entrepreneurs, not least as rapid growth tends to absorb cash. Business leaders that develop controls over cash and cash forecasting as they grow are able to plan early for fund raising and are more likely to attract investors.”

27% of Midlands entrepreneurs said that using their retained profit to grow their businesses would be the most attractive route if they were considering secondary funding sources. Over a quarter said they would look to bank funding (27%) – the highest percentage of all UK regions – while 10% said they would consider private equity investment.

Roberts adds: “There are a wide variety of options for funding growth. However, these are often complex and take time to review. Those that can, would prefer to use their own internally generated funds – as illustrated by our survey.

“While there have been many initiatives around access to finance at a policy level, the responses from our survey suggest that politicians should focus on how to encourage greater investment in the fast growth companies in the economy.”