Investing in the future: funding the next step for your business

Business owners are defined by their vision. For every SME leader in the UK, there was once the seed of an idea that, only through hard work and dedication, became the reality of their business.

As small and medium-sized businesses grow, the ambition of their leaders often does too, looking ahead to a bigger and better future. Even during tough times, we know SMEs still have a positive outlook at what may come next: more employees, more customers and a greater impact on the world around them.

For over a year now, SMEs across the UK have had to react to an ever-changing series of daily challenges as a result of the impact caused by the Covid-19 pandemic, making it harder than ever before to look to the future. The average SME has seen an 18%1 drop in their business’ monthly income. However, as we begin to look ahead to a world of fewer restrictions, eased by the hopes of the vaccination programme, SME leaders are considering how they will invest in their business’ future growth.

Where to invest in the next year?

Over a third of businesses (37%)1 plan to invest in the growth of their business in the next year, with plans to spend an average of £97,000.

  • Going digital

    Online presence and digital capabilities are a big area of focus for SMEs. Evolving customer habits and constraints of lockdown have highlighted that an online presence is essential for the survival of businesses. Over the next 12 months, a quarter of SMEs (25%) will invest in their business’ online presence and over a fifth (21%) will promote their products and services through increased digital marketing.

  • New technology

    Advances in technology can provide opportunities for businesses, either to bring businesses up-to-speed or to give them a competitive advantage. One in five SMEs (19%) will be investing in new technology, with one in ten businesses (10%) looking at investing in greener and more sustainable activities, especially those in the IT (14%) and construction (13%) sectors.

  • Investing in people

    Business owners have also highlighted investment in people as a priority. One in five SMEs (20%) will look to upskill their employees by investing in additional training for them.

    Apprenticeship is a fantastic way to support employees in developing new skills while ensuring your operations are maintained and improved.

    Once apprentices are qualified, 68%2 of employers recorded improvements in productivity, 72% reported increased product/service quality and 87% saw a rise in employee morale. This highlights that employee training brings countless positive benefits that can make a real difference to businesses, not only with productivity, but workforce happiness too.

    The government is currently offering additional support to help with associated costs, so it’s easier for SMEs to employ apprenticeship or to retrain their existing employees.

    Find out more in our article on how this could work for your business. Hired a new apprentice? Don’t miss out on funding - Aldermore

    And the outlook seems positive for recruitment.  One in 10 (10%) small businesses will look to acquire new talent, with the hopes of expanding their business and pursuing new opportunities in a post-lockdown world.

How to fund growth?

Access to funds will be a priority to enable the development of SMEs over the next few months.

A third of SME business owners intend to fund their growth through existing business savings.  Although our research suggests that these savings have taken a hit as a direct result of the challenges of the global pandemic.

Others are looking at plugging the gap with personal investments (14%), personal lines of credit (12%) or even overdrafts (11%). Many SMEs turn to these funds because they understand them well and their ambition can be greater than the significant risks that come with putting their personal finances on the line.

However, considering specialist business finance as an alternative to help businesses grow and invest in their future could be a more tailored and suitable option. One that 11% of small businesses plan to use to help them fund their investment in the coming year.

The benefits of business finance

Using purpose-built products that are designed for SME funding, rather than personal finance, can provide a more suitable solution to help lessen the worries of business leaders.

Specific needs and circumstances can be discussed, and options can be presented:

Are you like 21% of the SMEs who are looking at investing in equipment to help grow your business?

  • Asset Finance allows businesses to spread the cost of that investment over the course of its life, rather than an expensive one-time, up-front outlay. Find out more about our Asset Finance product range here. Asset finance - Aldermore
  • Alternatively, another option such as Invoice Finance, could provide a solution for businesses that are waiting on invoices to be paid by customers. It simply allows businesses to free-up cash they know is due to them and turn it into ready working capital which can then be reinvested in their business. Find out more about our Invoice Finance product range here. Invoice finance, invoice discounting and factoring - Aldermore


“The Aldermore team were highly proactive, knowledgeable and supportive. Alex [Hazell, business development manager at Aldermore] gave realistic expectations of the funding Aldermore could provide. He didn’t over-promise: he delivered what he said he’d deliver.

Our dedicated teams of relationship managers are specialist finance professionals. They’ll work directly with you or your broker to bring you a range of options to borrow money in a safe and secure way, to increase your capabilities and help you grow your business.

Sources

– Opinium Survey: 10 - 25 February 2021- 1,271 senior decision makers at small to medium-sized UK businesses
– Centre for Economics & Business Research, 2019

Subject to status. Security may be required. Any property or asset used as security may be at risk if you do not repay any debt secured on it.