Start-up businesses and small- to medium-sized-businesses looking to scale up will be crucial in the post-pandemic UK economic recovery.
Research has found that although government support grants are readily available to encourage start-up businesses in the early-stages of their development, there's likely a gap when it comes to support for “scale up” enterprises. Specifically those that have been around for a couple of years or more with high growth potential.
Organisations at this stage in their evolution are hugely important to the UK economy, providing jobs, inward investment and innovation.
Bank loans are available to existing organisation with a solid cashflow that can support the interest payments; however, due to a lack of trading history, "scale up" businesses often find it challenging to secure finance from mainstream funders.
This difficulty when it comes to accessing funding makes the balancing act for businesses owners, who need to grow their revenue stream and increase efficiency, while protecting their equity and keeping costs to a minimum, even more tricky.
What can organisations do?
Identifying issues, finding solutions and perhaps changing the direction of existing business to suit the current climate may turn a business around from failure to success and, consequently, may attract more investor funding.
For example, due to the current pandemic, many smaller businesses are realising the opportunities that lie in diversification to digital platforms, allowing them to extend their geographical range to reach more customers, in turn encouraging growth and sustainability.
High-growth ventures are described by the researchers as “transformational”, in that they consciously plan to expand, as opposed to “subsistence” start-ups, which provide an income for the entrepreneur and only a few others, often family members.