Properly-funded SME sector can power Yorkshire's economy to stronger future: Mel Hird

It's time for a revolution. The UK economy needs to change, and it needs to change quickly. The government is looking to high-growth sectors like technology, life sciences and clean energy to drive the country forward. However, according to government data, our small and medium-sized enterprises (SMEs) account for 61 per cent of UK employment and seven per cent of business turnover.
By Mel Hird
Published 18th Apr 2023, 11:45 BST

SMEs are the lifeblood of the UK economy and have been for a very long time. It's one of the key strengths and central to our resilience. In today's challenging business environment, SMEs play a crucial role in driving economic growth and creating job opportunities.The sector is crucial to the economic resilience of local communities. This is because SMEs often operate in niche markets and are less dependent on global markets. It means they are better able to weather economic downturns and financial crises than larger businesses, which can be vulnerable to global economic shocks.

But despite their significant contributions, SMEs often need help accessing the funding they need to sustain and expand their businesses. So, the entrepreneurs who drive these businesses must have the funding support they need. It is essential for the prosperity of the SME sector and the UK economy.

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Funding support enables SMEs to invest in their businesses, develop new products and services, and expand their operations. It also provides SMEs with the necessary capital to weather financial challenges and economic downturns, which can be particularly important in uncertain times. In fact, research shows that businesses that receive funding are more likely to survive and grow than those that do not.

Mel Hird shares her expert insight. Picture: Simon DewhurstMel Hird shares her expert insight. Picture: Simon Dewhurst
Mel Hird shares her expert insight. Picture: Simon Dewhurst

The impact of funding on SMEs can be significant, as it allows them to explore new opportunities, tap into new markets, and create jobs. It also helps them to improve their competitiveness, enabling them to compete with larger firms in their respective industries.

By investing in SMEs, we are investing in the future of our local economies, as they are often the engines of growth and innovation.

Despite the importance of funding support for SMEs, securing funding can be a significant challenge. Many SMEs struggle to access traditional sources of funding, such as bank loans, due to their size, lack of collateral, or limited financial history.

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SMEs need support from funding advisors to ensure they can access the funding they need and ensure it's appropriate for their business. There are several alternative routes to raising finance, and business owners should carefully consider their options.

Crowdfunding is becoming increasingly popular, but it has risks and can be time-consuming. In addition, it requires a strong marketing strategy and a compelling pitch to attract potential investors. While angel investors, often high-net-worth individuals, can bring valuable expertise and networks to the table, but usually require a significant portion of the business in exchange for funding.

It can be a maze, but it can do great things when the finance community comes together. A well-funded SME sector will be the powerhouse of growth and innovation our region needs.

SMEs play a vital role in driving economic growth and creating jobs, and by providing funding support, together, we can help them to thrive and contribute to the prosperity of our local communities.

Mel Hird is a director of Fresh Thinking Capital.

Related topics:SMEsYorkshire