SMEs Must Play the Long Game as Exports and Investments Rise

As we push into the Q3 of 2015 businesses across Britain have been gifted some very promising news in the form of some interesting economic statistics, revealed by the FT last week.

It appears that despite the drama of the general election, a strong pound and the fear mongering of a Grexit, exports grew by 3.9 percent quarter on quarter and consumer spending climbed 0.7 percent, according the National Statistics Office (NSO).

More promising still is that business investment also rose sharply – by 2.9 percent quarter on quarter – in the same period.

If the banks aren’t lending, then where are the UK’s SMEs finding the money to invest in their companies?

Growth capital comes from a range of different sources - some of which prove to be difficult to access, while others represent a reasonably easy opportunity.

Slowly but surely it appears that business owners are becoming more financially literate, looking to secondary financing methods as a means of accessing no-cost capital that they already have but may be sitting unutilised.

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There can be no doubting that the NSO figures show a lot of promise for the economy moving forward, however business owners must keep their eyes wide open when faced with the opportunities such growth presents - understanding the demands that come with it.

As growth occurs in the SME marketplace, additional capital is always required to fuel that growth. That initial capital injection then starts the wheels turning for many expanding businesses.

As they grow they need additional capital, as they obtain that capital they can grow, as they grow they need capital, and so it goes - the wheels keep turning.

With this in mind, when looking for capital, businesses must remember that it is imperative to take the medium to long-term view.

Raising capital for just today’s needs is short term, and maybe even short-sighted. Entrepreneurs need to look ahead, maybe one or two years as a minimum to map out their requirements. If a facility provides capital but that source is limited or dries up after a few months, then it may have hindered rather than helped the business.

Invoice discounting at the SME level offers great opportunity to access growth capital that actually grows with the growth of the business.

As it is not geared to any contractual obligation, but rather a use-it-as-you-need-it basis it represents a useful, flexible and cost-effective capital growth approach.