Business and finance acronyms holding back growth of SME’s

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Business and finance acronyms holding back growth of SME’s

A recent survey on issues impacting the UK’s small to medium enterprise owners has highlighted that a lack of understanding in relation to the plethora of business and finance terminology is potentially holding back the growth of Scottish SMEs.

Scottish Government figures from March 2016 point to there being 348,045 SMEs operating in Scotland, providing an estimated 1.2 million jobs and accounting for a significant 54.6% of private sector employment and 40.5% of private sector turnover.

Despite the importance of SMEs to the Scottish economy, over half (54%) of SME owners in Scotland say that the have been put off by the maze of jargon and acronyms when applying for business finance, with only SME owners in the North and North East of England likely to have less understanding. There is, however, a marked difference between Glasgow and Edinburgh SMEs with the former claiming that almost three in five of them (58.5%) have been put off, compared to 31.6% in Edinburgh.

Among SME owners across the major UK cities, only those in Norwich, Plymouth and Sheffield are less likely than those in Edinburgh to have been put off applying for finance because of its terminology.

SME owners in Scotland are most likely to be confused by the terms CAPEX (46.2%), COGS (46.2%) and IFF (43%).

“It’s disappointing, but perhaps not surprising, that over half of Scotland’s SMEs are put off applying for finance by the terminology used,” says Peter Alderson, managing director of LDF. “For many, running a small business is a challenging, all consuming activity, so complicated financial jargon and acronyms are just extra barriers in the way of their success.

“At LDF, we are committed to making not just the terminology of finance, but access to it, as easy, quick and trouble-free as possible.”

As well as the lack of understanding around the terminology, two thirds (67.7%) of SME owners in Scotland are finding the whole process has had a negative impact on their business.

The lack of fast funding saw over a third (38.5%) not paying themselves while 31.8% had to work extra hours. Elsewhere, 18.2% had to borrow money from friends and almost 7% had to close their business.

The slow funding issue also made more than half of Scottish SME owners feel stressed and well over a third (38.6%) depressed. Despite this, however, less than half of the SMEs in Scotland have been turned down for finance. In addition they have a pragmatic approach to taking out business finance with almost two in five (38.5%) seeing it as a normal part of business and only 21.5%, below the UK average of 25.3%, seeing it as having a negative stigma attached to it, although when they do they are among the most likely to think that it sounds like they are struggling to make ends meet.

The research was conducted for LDF by Opinion Matters between 27.01.17 and 06.02.17 and sampled 506 SME decision makers in construction, professional services, administrative services, wholesale & retail, human health/medical and manufacturing.

By |2017-03-30T16:15:02+00:00March 30th, 2017|Business News, Finance News, National, Uncategorised|Comments Off on Business and finance acronyms holding back growth of SME’s

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