More entrepreneurs would rather turn to Google for financial advice than their banks, according to research released today
According to a survey of 543 SME owners by Wesleyan Bank, 78 per cent of entrepreneurs admit that risk of debt prevents them from seeking external funds, indicating that a ‘non-borrowing culture’ among small businesses could be thwarting the market’s return to a pre-financial crisis state.
The research highlights that more SMEs would prefer to turn to Google as a source of financial advice compared to 39 per cent who would consult their bank. With business owners more likely to use unregulated sources for business advice, many may be unaware of the options on offer or be getting sound financial advice.
On average, three quarters of SME owners feel uncertain about the external funding options available to them, and only 2 per cent of those surveyed borrow money on a regular basis.
“Without external finance, many SMEs are stilting their chances of prospering and fulfilling their ultimate potential. It’s only natural for small businesses to be cautious about making a financial investment, but there’s an equal risk in failing to seek support for growth,” Sean Read, director of sales and marketing at Wesleyan Bank said.
SME owners generally have a better understanding of traditional funding options such as bank loans and overdrafts over alternative options such as asset finance. Additionally, 86 per cent of SME owners intend to maintain private ownership of their business, with only 7 per cent aiming to be acquired, 2 per cent seeking equity backing and 4 per cent seeking other end goals. As the ultimate aspiration for a clear majority of entrepreneurs is to keep their ownership at its current form, much of the SME community seems to have fairly low level ambitions.
“The SME community needs to understand the plurality of finance options available to them, beyond relying on internet-based research alone,” Read continued.
“The recession may have instilled a ‘non-borrowing’ culture into the mindsets of many SME owners, but now we’re working in a better economy, it’s time for them to broaden their horizons. SMEs are the lifeblood of the UK economy, after all.”