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April 30, 2015 0

In the lead up to the General Election we have been inundated with various positive news stories detailing how the UK economy is on the up and making its way to a successful recovery. Small businesses and start-ups are the main engine behind this recovery, with 99% of all UK businesses falling under the SME category.

Nevertheless, although the economy is picking itself up from the floor, many businesses are still struggling to make the jump from start-up to scale-up. These are the findings of Barclay’s Entrepreneurs Index, which highlights that fewer British businesses reach a turnover of £2.5m-£100m, despite the fact that the proportion of start-ups continues to rise.

No Room for Growth

To put it precisely, the number of UK companies scaling up to achieve growth is very much in decline, with a decrease of 2.2% in businesses turning over of £2.5m to £100m when compared with March 2014. There has also been a decline in the percentage of Gazelle businesses in the UK too.

‘Gazelles’ is a term used to label companies that have 10% year-on-year growth for a minimum of 2 years and 33% revenue growth over the last 3 years. The number of such scale-up firms has decreased from 23.2% in March 2013 to 21% in the same month of 2014. The quantity of VAT-registered companies has also fallen, from 41.3% in 2010 to 39.5% four years later. This of course indicates a rise in the amount of companies still yet to reach the £81,000 tax threshold.

Potential Barriers

The report has highlighted a number of potential barriers and reasons for why UK businesses fail to scale up. The main barrier is of course access to finance but there are also other reasons, such as the inability to find employees with the appropriate and necessary skills.

This is not stopping British entrepreneurs from starting new businesses though, with more SMEs than ever before currently operating within the UK. Starting a business does not seem to be an issue for Britain – it is maintaining them and taking them to the next step that seems to be the stumbling block. Many experts believe that this indicates an obvious need for more business support and mentorship for established companies and entrepreneurs.

If your business is having difficulties financially, Clarke Bell can advise you on the best solution going forward. Contact us on 0161 907 4044, email [email protected], or fill out our online enquiry form.

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