Survey Reveals the Biggest Challenges SME Owners Face

The study, conducted by Bread & Butter and Tabl reveals that key challenges include funding (affecting 44 per cent), cash-flow (39 per cent) and securing distribution (35 per cent).

According to the study, nearly 40 per cent of businesses look for funding from banks pre-launch, but less than 11 per cent of them secure bank financing within two years. They are three times more likely to get financial backing from friends and family rather than from banks.

Crowdfunding is a popular option to raise funds across all stages of a food business, with 46 per cent of those asked entertaining the prospect of using the method. However, the research states that 60 per cent of crowdfunding campaigns fail to meet their fundraising goal - those that do hit their target are faced with average fees of 10 per cent per campaign.

The survey also reveals that most entrepreneurs are confused when it comes to growing their business. Only a third of the businesses polled want to sell their products online, but further research states that it is an essential sales channel for 70 per cent of companies. More than half of pre-launch businesses (54 per cent) wish to be on supermarket shelves but only 15 per cent manage to achieve this in their first two years of business, climbing to 36 per cent after three years.

The importance of exporting as a revenue stream also appears misunderstood. Only 8 per cent show interest in exporting before their business has launched, however following being stocked in supermarkets it is the second most desired channel (50 per cent want to export) post-launch.

Brexit remains a chief concern, with 57 per cent of those currently dependent on exporting expressing worries about how it will impact their business, with currency exchange, legislation, raw material costs and staff listed as main worries.

Jason Gibb, co-founder of Bread & Butter said, “It is no surprise that the biggest issues facing emerging food and drink brands is funding, but I’m shocked and saddened that the banks just aren’t offering any solutions. Friends and family and crowdfunding are where SMEs are looking. This means that you either have to have a wealthy network behind you, or take the gamble of time and resources on a crowdfunding campaign.

“It is brilliant that despite the odds being stacked against us our community is an incredibly optimistic group, with nine out of 10 being positive about the future of their businesses. As they say, resilience and the ability to pick yourself up after a blow are key characteristics of an entrepreneur.”

Image: Create Food Envy Photography