Facing a Brick Wall

The barriers to growth for start-ups


It has recently been reported that small and medium-sized enterprises (SMEs) are playing a significant role when it comes to economic growth in this country. Statistics have shown an increase in business creation, with SMEs contributing greatly towards the resurgence in the private sector.

Despite these findings, not all small businesses that wish to grow feel they can, with a number of barriers standing in their way. This article will be taking a look at the issues preventing firms from expanding and suggesting how these problems can be overcome.

Each individual company in the SME community has its own unique set of barriers which could be hindering its potential to grow.

SME growth beneficial for everyone

Enterprise Nation is partnering with Sage One to launch a nationwide campaign aiming to help small businesses grow by 10 to 15 per cent within the space of a year. This report will be passed to the government with recommendations for ways to boost small business growth in the UK.

Enterprise Nation founder, Emma Jones, said:

“The measurement of growth has historically been focused on the performance of big businesses.

“And it’s clear these companies are no longer providing anywhere near the growth we need to secure wealth and reduce unemployment.

“Yet all evidence points to the record number of small businesses that are on the verge of growth.

“If we could focus on thinking differently – and finding a way to help them to grow by a realistic 10 or 15 per cent, rather than just leaving that bit to chance, we think this could deliver a decisive boost to the economy that will benefit everyone.”

Key obstacles to growth

There are many different types of stumbling blocks which could hinder businesses looking to step up to the next level. They can vary across location, business structure and industry. However, there are some things that all entrepreneurs will come across at some point.

Having an effective delivery operation is important, especially for product-based enterprises selling over the internet. Simon Veale of Global Freight Solutions has stressed the fact that just supplying top quality products is not enough, if they are not distributed in an effective and efficient manner. The firms which will be successful are those that deliver in this area.

Is there a skills shortage?

Research has found that over a third (36 per cent) of UK SMEs feel their potential for growth is being held back due to a skills shortage in the workforce.

The Albion Ventures Growth Report 2013 looked at the hurdles 450 small businesses faced as they sought to grow, while suggesting ways of fostering renewed economic expansion. Sales were revealed as the biggest gap in the skillset with 16 per cent of respondents admitting they came up short in this area.

Other fields in which these SMEs could do with specialist assistance were IT (12 per cent) and financial management (10 per cent).

There was also clearly a divide between optimistic and pessimistic company owners with the former ensuring their products were available to a wider audience rather than simply being concerned with the day-to-day cashflow of the business.

Outsourcing skilled positions could be one solution to stimulate growth, with this move possibly making the difference between success and failure.

Looking to overseas exports

It has been stated that about 70 per cent of UK firms are looking further afield in an attempt to continue the recovery. International trade is no longer something that can be ignored.

According to the Prime Minister, there is an expectation that growth will come from businesses trading overseas and from those willing to take advantage of new market opportunities.

If the UK really is a ‘saturated workplace’, economic growth can only really be delivered by businesses with the strategy and means of exploiting this situation.

In a study carried out by the Federation of Small Businesses (FSB), it was revealed that 88 per cent of businesses still rely on the eurozone for exports, with access to finance and the fluctuation in exchange rates the biggest barriers to those looking to sell abroad at this time.

Overcoming the obstacles in your path

It is true to say there are plenty of start-up businesses that don’t know whether to risk what they have in order to grow the company. There may be genuine concerns which are preventing them from stepping out.

To grow any kind of business, in a local or international marketplace, the management needs to be prepared for what lies ahead and be able to meet the increased demand for its products or services. Research is crucial to this as it is necessary to know about all the stages involved in the process.

There is nothing wrong in cautiously stepping out in the knowledge your management and logistics is as well-prepared as it can be, as taking measured risks is vital if you are hoping to expand the business. By tackling skill shortages and plugging any glaring gaps that may be posing a real problem to the prospects of growth, this can help to ensure nothing is allowed to hold the business back.

Andrew Rosler is a debt advice expert and has more than two decades worth of experience providing insolvency and recovery advice to large enterprises and SME’s. Andrew currently runs Ideal Debt Solutions, an insolvency and debt advice company, the business dedicates itself in providing business owners viable business solutions and insolvency advice.

One Response to The barriers to growth for start-ups

  1. Pauline says:

    There are many things that you can outsource without risking too much, for example you can hire freelancers online instead of hiring someone full time. If they work out, great, if not, there are plenty of other flexible and capable candidates.

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