Soapbox: SMEs should be far more ambitious in pushing for growth, says Stephen WeltonMarch 2014 | BGF News
Stephen Welton, chief executive of the Business Growth Fund is calling on the UK's SMEs to find the confidence and ambition to start investing in their business.
He said: "We need far greater levels of business investment to drive the economy. We need more British businesses to be investing in their businesses, to be bolder and braver."
He added: "I don't say this of all businesses, but I am surprised when I come across an evident lack of ambition in some entrepreneurs and business owners to take a good business to the next level, to make it more competitive and productive. I am also surprised by a lack of determination to find ways to make this happen."
Welton said that while it was understandable that lack of funding and the poor economic climate may have made some firms more cautious, many SMEs find it hard to move beyond the issue of funding.
"With smaller companies financial capacity is an issue, but there is a danger that is could be a convenient excuse for sitting tight. Some SMEs may fear that they can't raise funding because they read in the press that access to funding is a major problem. So subsequently they feel they should wait until it is no longer a problem. It could be a long wait and of course the danger is that this becomes self-fulfilling."
BGF was set up in 2011 to help the UK's growing small and medium sized businesses. Backed by five major banks, it has so far provided 45 businesses with growth capital of close to £250 million.
Welton said: "We are talking to a lot of ambitious people who have high aspirations for their own businesses but they are in a minority. There are about 25,000 companies in the UK that have a turnover of between £2.5m and £100m and at any one point in time between 3000 and 6500 of those companies will be growing at 10% per annum or more. So what about the rest?"
He warned: "Far more of these smaller companies in the UK need to be expanding their businesses. Part of that expansion is to actually invest more in their businesses and part of it is to innovate and hire more staff, to go into new markets, to build exports. Far more need to change their mindset and push forward because it is the right time in the economic cycle to do that and it can be done. If there is more business investment, it will drive the economy harder and it will create a much more sustainable recovery."
Welton added: "The carrot is, you should be doing this because you will make your business more successful, and as you own it you will be creating something of long term value for yourself. The stick is, if you aren't doing this, other people will be, and your competition is not just businesses in the UK. The opportunity for UK SMEs today is that they can be global SMEs - but if you are not investing then in a few years' time it will be too late to catch up and somebody else will eat your lunch."
Welton said that getting the timing right was vital, saying: "As we come out of the recession there are some companies that are incredibly well placed because they have invested in the downturn. When everybody sees that the economy is booming, it is too late to start catching up. If you have a strong conviction about why your business is going to be successful, you have got to back your judgement."