Thoughts
Sue Summers, Finance Birmingham CEO, reviews the SME funding landscape one year after the UK decided voted to leave the EU.
The political rhetoric around the implications of Brexit before the EU referendum vote looked bleak, with some suggesting international isolation and instant economic downturn. However, one year on despite the results, a PwC study suggests confidence among business owners increased by four per cent in 2016/17, and is higher now than before the vote. Figures from the ONS also reflect a strong trading position, with the UK exporting goods and services worth £550bn to major markets including the US, Australia and Germany in 2016. While the business community remains resilient, there are a number of challenges and opportunities ahead, and gaining investment could be the key to unlocking future economic potential.
The brave press on
Many pioneering UK businesses have recognised the opportunities and potential threats presented by Brexit, giving rise to their decision to seek finance to shore up and ultimately grow. At Finance Birmingham, many of our investees forged ahead and as a result, we’ve seen a 21% increase in the amount invested compared to the year before the EU referendum. This includes the likes of German owned Guhring, which recently opened a new UK manufacturing facility in Birmingham, a major step to strengthen its global presence and adding to the Midland’s burgeoning engineering and manufacturing sectors.
Risk and opportunity
According to Opus, a third of business decision makers said that exploiting new opportunities and markets will be the biggest boost to growth, but with the future nature of trading relationships with countries such as the EU, the US and China not yet confirmed, UK firms may be holding off making new commitments. However, markets don’t stop trading, and SMEs risk stalling their growth by waiting to see the definitive effect that Brexit will cause. Pair this with the potential loss of free movement and it’s likely that the UK will have to look to its own SMEs to plug some of the skills, service and product gaps created when final Brexit terms are agreed. It is crucial that SMEs are ready and understand how to maximise these opportunities to realise strong commercial benefits.
Investment to enable
Now that Brexit is an absolute reality and negotiations are underway, it’s time for any hesitant SME to actively pursue their goals and make crucial decisions - from exploring international expansion to investing in staff or machinery. Data from Company Check highlights that access to finance is still a major concern for nearly 20% of SMEs surveyed, but with the opportunity to shape the future business landscape and harness potential in new markets, it is crucial that they understand the variety of flexible funding options open to them. Decision makers and their investors need to be able to tie the best finance to the ambitions of the business. Whether it be debt, equity or mezzanine funding, business owners should take advantage of the increasingly supportive, flexible and diverse investment landscape.
Whatever the need and the plan, finding the right investment can be the catalyst to seeing a business reach and exceed its potential. Ultimately businesses that invest in growth may see a better outcome when the dust settles, and those that act now will enjoy early adopter advantage.
