By Claire West
According to new research from Delta Economics, demand amongst entrepreneurs for external finance for their businesses fell during the recession, with over 80% of those surveyed not needing finance or choosing to self finance instead. There was also widespread belief that banks are not lending (up from 17% in 2009 to 20% in 2010). As a result entrepreneurs are less willing to take external risks and are choosing instead to tough out the recession without recourse to credit.
The survey, which was conducted by Delta Economics, a research-led economics consultancy with a particular focus on sustainable economic development through responsible enterprise, surveyed 1800 founders of growth oriented businesses across the UK from 2008.
Rebecca Harding, managing director at Delta Economics said,
“British business is slowly weaning itself off credit dependence. Growth is strong despite the downturn in the economy, entrepreneurs are choosing to protect their businesses by not taking financial risks and instead prefer to self fund to keep their businesses afloat. This helps to explain why the demand for finance is so low at the moment and reinforces the recommendation that entrepreneurs need good business advice right from the very start.”
Other findings from the research include:
·Of those that are searching for finance, 80% are looking for growth finance;
·There are no statistically significant differences between men and women in terms of what they invest at start up (£189,000 in average to set up a growth oriented business) and they will invest nearly 70% of this out of their savings or personal income;
·Most entrepreneurs that choose to start up a business are more motivated by an idea or dream and autonomy rather than the motivation of making a lot of money.