This, according to this year’s Hiscox DNA of an Entrepreneur Report, is indicative of a regional shift in attitudes and confidence, recording widespread dissatisfaction with governments across Europe.
In terms of access to finance, the report highlights the increasing appeal of other sources of finance, such as crowd-funding and peer-to-peer lending for UK SMEs.
Despite this, there seems to be no sign of an easing in credit conditions for smaller companies with 22 per cent finding it harder to access bank funding now, up from 19 per cent a year ago.
One in six say they use their credit card to help fund the business. and one in ten are contemplating turning to the crowd and peer-to-peer lending sites in the coming year.
According to Hiscox CEO Bronek Masojada, a lack of funding was cited as the main barrier to innovation by 31 per cent of UK respondents, but by 38 per cent of those with between one and four employees.
This suggests what the report dubs the ‘bigger the better’ effect, with the widening gulf between the biggest companies and the smallest. More than 85 per cent firms with a turnover in excess of £10 million say they have increased revenue, up from 70 per cent the previous year.
Conversely, only three out of five firms with sales of £100,000 or less report revenue growth.
“The small businesses surveyed in our report vary in size from one-person firms to those with a maximum of 50 employees, and the performance gap between those at the bottom of the range and those at the top has been consistent over some years. Critical mass clearly matters,” Masojada said.
“This is borne out by the report: firms with a turnover of £1 million or more are more likely to be exporting or planning to invest in their business in the year ahead. Adding an extra member of staff is clearly easier when you have scale.”
This may explain why the proportion of firms taking on new staff has fallen from 21 per cent to 13 per cent, with one in ten firms having cut staff over the year.
Masojada views the widening scale-up gap as a failing by banks to serve the business community equally: “It is also apparent that the larger firms are being served much better by the banks.
Overall, 16 per cent of UK respondents said they were finding bank funding more difficult to access while just 6 per cent thought credit had become more plentiful. At the £5 million to £10 million turnover level, the results were reversed,” he told GrowthBusiness.