Survey shows region's young businesses exceeding growth targets despite poor access to funds

Yorkshire and Humber region is A healthy home for owner managers, but needs more young entrepreneurs

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A survey of 100 entrepreneurs in the Yorkshire and Humber Region has shown that three quarters have either hit or exceeded their projected revenue growth targets in the last 12 months and are expecting more than 10 per cent growth in the coming year.  Almost a quarter of businesses surveyed are even projecting growth of greater than 50 per cent.

The survey was carried out during July and August by Yorkshire’s leading independent firm of chartered accountants Barber Harrison & Platt (BHP) and international law firm Nabarro, in association with YABA (Yorkshire Association of Business Angels).  Assessing companies, most of which were less than five years old in a range of sectors and across the region, the survey focussed on owner-managed businesses with an annual turnover between £250,000 and £5 million.

The survey shows that businesses are mainly using their own cash to fund their development, with banks and other funders playing only a limited role in the region’s entrepreneurial sector as they provide finance to only 25% of the companies surveyed.  This compares with national statistics that have been published where over two thirds of those interviewed (68%) said they plan to raise capital from external sources over the next 12 months. 

Almost half (44%) of the companies surveyed in the Yorkshire and Humber Region cited cash flow and funding as their biggest challenge.

Survey shows dearth of young entrepreneurs

Andrea Cropley, Corporate Partner and Head of Regional Strategy at Nabarro, says:  “The survey demonstrates that the Yorkshire and Humber Region is home to many self-motivated owner managers who have continued to grow organically and who are generally optimistic about their futures.

“However, the region faces some serious challenges if entrepreneurial effort is to be the bedrock of its economic future.   The survey suggests that growth is incremental and that there remains a domestic focus to future ambitions. If the level of growth needed to deliver a private sector led recovery is to be delivered, the region may need to reset its sights, focus internationally and embrace more comprehensive external finance solutions.  The survey also reveals few young entrepreneurs. Of the 100 company owners surveyed, 65 per cent were aged 35-54 and only one was under 25 years old. 

“We don't believe that there is a shortage of ideas, but evidence suggests that hard to access, expensive funding is stifling the drive and ambition of the younger generation."

Lisa Leighton, head of Entrepreneurial Advisory Services at BHP, comments: “Along with the good news about the growth of many of the region’s young companies this survey reveals the need for a much greater understanding of – and access to – sources of finance in order to fund growth. 

“The survey clearly illustrates the fact that a small proportion of entrepreneurs obtain funding from what should be obvious routes.  Only 16 per cent have received investment from external investors – and that includes family and friends.

“The survey also reveals that many young companies identify a need to seek a mentor and to acquire greater skills in sales and finance.  We fully support this approach as essential to many young businesses going forward.”

YABA’s Andrew Burton comments:  “There are many encouraging findings within this survey, but I am disappointed to see that only one per cent of companies surveyed has obtained funds from angel investors.  This survey should be a wake-up call to business angels to play a more central role in the region’s future.”

Survey findings launched at MADE Festival

The findings of the survey were launched today on Friday 23 September at a special breakfast event as part of the MADE Festival, the UK’s premier festival for entrepreneurs where the findings of the Report were discussed.

A panel of experts attended the survey launch event, including Julie Meyer, CEO at Ariadne Capital, founder of Entrepreneur Country and BBC online dragon; Mike Maddock from the start-up Performance Engineered Solutions (PES); Lara Morgan, CEO at Pacific Direct; John Graham, Chief Executive of the highly successful business Go Outdoors; and Ed French, Investment Director at EV Group.