Midlands businesses are being forced to put the brakes on growth plans, as nearly nine in ten companies (88%) admit difficulty in accessing capital is impacting their business.
According to BDO LLP’s bi-monthly Economic Economy survey of 500 mid-market businesses, over a quarter (27%) of regional companies are struggling to finance expansion plans, with nearly a quarter (23%) finding it difficult to invest in the technology or software they need to improve the business. More than a fifth (22%) admit that a shortage of funding means they’re facing the prospect of having to make redundancies or scale back the business.
The survey by the accountancy and business advisory firm, also highlighted the ongoing challenges facing Midlands businesses. Over the next six months, record levels of inflation will continue to blight regional companies, with over a third (35%) saying higher overheads and increased operating costs are their number one concern.
As businesses in the region contend with a growing list of problems, the task of covering higher operational costs is one of the top business priorities for more than a quarter of regional companies (28%), with a further 28% also looking to offshore as much of their supply chain as possible, in a bid to tackle the disruptions being faced. In addition, nearly a quarter (22%) intend to restructure their workforce, including making redundancies, as Midlands companies look to take action over the next six months.
Kyla Bellingall, regional managing partner at BDO in the Midlands, said: “As a result of the tough economic conditions that continue to hamper regional businesses, companies are facing a real need to raise funds within the next two years, in order to kick-start their growth plans.
“Against a challenging backdrop, Midlands businesses are having to explore every option when it comes to raising additional finance, with many struggling to access the capital they need. For nearly a third, the equity capital markets are the most appealing source of funding, with revenue-based finance and Government support schemes also high up on the list.”
Mid-sized companies, which employ eight million people and provide around a quarter of UK jobs according to further research, are now calling on the Government to support them with rising costs and improve access to capital to make the UK a more appealing place to do business.
Bellingall added: “So far, mid-market businesses in the Midlands have shown real grit and determination to fend off the challenges that continue to rain down on them.
“However, many are reaching tipping point. The need for greater capital is critical for a significant proportion of businesses, not just to finance growth plans, but also to address key issues such as investing in staff retention, repaying debts, improving salaries and, importantly, recruiting new employees with the right skills and experience.
“Midlands businesses cannot tackle these challenges in isolation. Business leaders in the region believe more can done be to address their concerns, to help to drive growth, and to ensure the UK remains an attractive place to do business.”
