By Paul Mildenstein, CEO of small business funder Liberis
Our latest research tells us that more small businesses in need of funding sought alternative finance rather than a bank overdraft in the last 12 months, and only marginally more sought a bank loan. The survey amongst 1000 UK small businesses showed that, while 70 per cent hadn’t applied for funding because they ‘didn’t need it’, 30 per cent of those that did applied to an alternative funding provider, compared to 18 per cent that applied for a bank overdraft and 31 per cent for a bank loan. Just 15 per cent applied for a business credit card.
It’s hugely encouraging to see more small businesses accessing alternative finance to get the funding they need after so many years of struggling for it, but should we be concerned that the majority of small and medium-sized enterprises (SMEs) say they don’t need funding? Are they being too cautious and does not borrowing suggest that opportunities for growth and greater success are being overlooked?
It’s easy to be so focused in your business that you miss some really obviously signs that you need to invest money in it. Indeed, there are many examples of previously great businesses which have foundered, shrunk, become obsolete or been bought by rivals because they didn’t spot the signs. Don’t be one of them. Here are five clues that shouldn’t be ignored.
#1. When the competition is doing better
Competitor intelligence, regardless of the size of business, is an important growth strategy and key to keeping your customers and also winning customers from them. A rebrand, new premises, new products or services, a new advertising campaign, an increasing social media presence, or a recruitment drive are signs that your competitors are investing in their business for growth.
#2. You’re looking out of date
In order to stay ahead of the curve, you need to look current and dynamic. If your business is looking tired and dated, customers will think that your product or service is too and look elsewhere. Stand back and critique what you see – or better still get other people to do it. How do you look when it comes to your premises’ interior and exterior, signage, packaging, printed materials and website? A new look will attract new customers, spur on staff, get noticed by your competition and could even lead to you raising your prices.
#3. When your workplace is feeling overcrowded
If you have outgrown your premises, that’s a very positive sign. But working in a cramped environment can have a negative impact on staff both physically and psychologically, affecting their health and performance. Whilst moving to larger premises is expensive, a better functioning workplace could boost morale and productivity. It could also influence sales too, by looking more professional and inviting to customers.
#4. Processes or equipment are slowing you down
If your office equipment or machinery is failing or regularly breaking down causing downtime and missed deadlines or not meeting customer demand, it’s time to invest in better maintenance or new equipment all together. Similarly if your processes and administrative procedures are not as fast as they could be, it’s time to invest in new software of other ways to streamline your systems.
#5. You’re short on staff or the right kind of staff
Turning work away or delivering orders late because you haven’t got enough of, or the right, resources to meet demand is a sure sign you need to invest in recruitment or training. Both of which can involve significant investment, so it’s important to see if changing the way you do things currently is causing the problem and it isn’t really a resources issue.