South: Access to finance is key barrier to starting a business, say EY survey

Southern entrepreneurs believe that access to finance is the biggest barrier to setting up a new company, according to the results of an EY survey.

58% of respondents cited funding as a key hurdle to launching a business, followed by uncertainty of income (48%) and fear of failure (45%). In contrast, only 5% of respondents thought that bad market conditions could hold back entrepreneurs, while just 13% cited lack of skills as a barrier to starting a business.

EY surveyed over 40 southern entrepreneurs to gather their views on the factors they feel can help or hinder growth. Nearly all of the entrepreneurs surveyed have well-established businesses; 76% of respondents have run their companies for at least a decade.

Gareth Anderson, partner at EY across the Thames Valley and south coast, said: “Matching funding to business growth plans remains a key area of concern for ambitious entrepreneurs, not least as rapid growth tends to absorb cash. Business leaders that develop controls over cash and cash forecasting as they grow are able to plan early for fund raising and are more likely to attract investors.”

33% of southern entrepreneurs said that using their retained profit to grow their businesses would be the most attractive route if they were considering secondary funding sources. One fifth said that they would consider private equity investment (20%), while 18% said they would look to bank funding.

Anderson added: “There are a wide variety of options for funding growth. However, these are often complex and take time to review. Those that can would prefer to use their own internally-generated funds – as illustrated by our survey.

“While there have been many initiatives around access to finance at a policy level, the responses from our survey suggest that politicians should focus on how to encourage greater investment in the fast-growth companies in the economy.”