Small and Medium-Sized Enterprises (SMEs) and Funding Issues in Glasgow

Introduction

Small and Medium-Sized Enterprises (SMEs) are innovative and are increasingly becoming more competitive, especially with the increasing focus on business dissertation help. SMEs are focusing upon innovation and are taking measures to grow by employing people. For the success of SMEs, various skills are required, such as proper resource management and strategies. With the increasing engagement of SMEs, Glasgow has experienced diversification and strength in the production sectors (Glasgow City Council, 2021). Glasgow is one of the leading locations which are recognized across the globe, and SMEs have the potential to grow. The study's main objective is to analyze the SMEs and the funding issues and supports attained concerning the local SMEs in the Glasgow business.

SMEs of Glasgow

The first SMEs of Glasgow which is focused upon is the Crucible Alba Group initiated by Alex Steel and Brian Robinson. It witnessed strong growth in the business in the year 2017 and was awarded under Scottish awards winner. The SME focuses on commercial development across Scotland on a day-to-day basis. For growth in 2015, the SMEs were joined by the chartered surveyor Michael Smart to focus upon innovation and enhance competition. The company had about 300 staff with proper funding and an innovation plan. SMEs are a huge success in Glasgow (Crucible Developments, 2020).

The second SME in Glasgow is the TSL Contractors Ltd which posted the fasted revenue generation being a small-sized enterprise. The revenue for the SMEs doubled to £15.56m from £6.35m with over 100 employees. The business is headed by Andy Knight, and the focus of the business is upon engineering, construction, along road services in Scotland (TSL Contractors Limited, 2021). The company is responsible and is confident in terms of providing services for the expansion. SMEs tend to offer a diverse range of integrated services. The company is developing to meet the changing needs and to augment the base of customers. The company has been operating for the last 36 years with 100 plus employees (Insider Publications Ltd, 2018).

General Funding Issues

SMEs in Scotland usually benefit as they attain increased funding and support system more as compared to others. SMEs take lesser risks to pursue stability and growth. There are several funding issues that are being faced by the SMEs, which are mainly due to lack of proper records in the initial years along with adequate business plans that impact the sales turnover in the early years. The issues of funding are also because of the increasing competition from larger companies. Attaining raw materials, lack of proper capacity utilization and management strategies create difficulties for obtaining financial supports (Yoshino & Taghizadeh-Hesary, 2016). It is evident and argued that limited access, lack of proper database is the reasons for the slow growth of the SMEs; the same was the case with the TCL. It took more than 30 years for the SME to grow; however, employee strength is still less. The issues are faced because of the traditional approaches of the bank that creates difficulty for the business to grow. The funding for the start-ups and SMEs are usually from savings, venture capital, and more. SMEs typically face challenges in financing because of several factors, including operational size, setup issues, and more. The funding issues are encountered as the business does not intend to disclose the required information in the early stage to the financial institutions for the sourcing. The problems are regarding the lack of proven track records in the early days, thus hampering the growth and investment (Bennett, Coleman & Co. Ltd, 2019).

The challenges are that SMEs lack regular financial supports as compared to the big companies. Banks prefer funding large enterprises rather than SMEs as the business has a higher risk of default and unclear financial statements. The risk associated with the SMEs in the early stages is high owing to a lack of accounting clarification and information. The difficulty of the business to attract investors impacts the funding. For the company to be successful, it is vital that the working capital is adequate, and therefore, funding challenges are due to the small growth of the business. The issues with funding are also owing to the fact that SMEs do not have a connection with the capital market (Deadline News, 2019). To reduce the risks for the SMEs, the simplest way is to attain collateral-based lending those impacts the risks.

Being new in the business with no proper track records, the SMEs are offered funds but at high-interest rates. There are several other challenges that are being faced by SMEs for attaining funds and ensuring supports. The challenges that are generally faced include a lack of commitment towards building a balance sheet, the inability of the SMEs to access the exact requirements for the processing. Being an SME, the entrepreneur sometimes fails to document the operational details. The same was the scenario with the TCL and Crucible Development in the initial years (Deadline News, 2019). It took years for the business to reach a position and attain the Scottish SMEs award for the year 2018.

Discussion of Alternative Sources of Finance

SMEs are growing and expanding the business based upon innovation. For the success of the company, it is vital that bank lending that is the central aspect of SMEs funding, is rising. Budget is about the money that is required for the business to carry out its activities that are significant to ensure better growth in the market with reduced risks. Bank loans and debt financing are part of the funding activities that are being considered upon by the SMEs in the Glasgow business. Considering the aspects of UK Glasgow, it is noted that the financial backbone of the UK is dependent upon the SMEs which are created (Crown, 2018). The opportunities created by the SMEs are compelling to ensure healthy cash flow so that access to finance is adequate. For the funding, SMEs are focusing upon alternative financing because traditional financing is not supportive and creates challenges.

SMEs are one of the financial backbones in the UK. The finance providers are being supported by the political landscape, thus helping to reduce the dependency of the SMEs on the other financial institutions. The resilience of the financial system is expanding in the UK due to alternative financing. The SMEs require fast and, at the same time, flexible funding for the expansion so that the growth is compelling. The alternative sources include personal resources such as overdraft that is flexible and is considered short-term funding for the SMEs to improve the business (OECD, 2021).

SMEs sometimes use peer-to-peer lending as a source of alternative financing to improve the business and offer it a platform that leads to growth and success. The origins of funding that is being part of the TCL and the Crucible Developments are reward crowdfunding which is that the company promises to offer a non-monetary return to the investors that helps the SMEs to improve its cash flow that is required for the success of the business (OECD, 2021). Another is equity crowdfunding, as it is used during the early stages of the company because the SMEs pitch to the investors with potentiality in order to raise money for the business (Moore Kingston Smith, 2021). Potential investors are usually the dominant players in the UK who tend to support the company for growth and innovation. The TCL and Crucible Developments were part of the crowdfunding, which is helpful for the establishment of the business through adequate funding. The alternative external financing techniques for SMEs and entrepreneurs:

There are several opportunities that are being part of the SMEs to augment the business and be part of the UK economy. The alternatives are being used by the company so that new projects can arise and ensure a better position in the competitive market. TCL identified usual sources of funding other than bank loans which helped the business to sustain itself in the long run. The opportunities were many, but the companies used unusual and new forms of financing so that the local SMEs in Glasgow are able to create their own unique identity. The venture capitalist is another way to consider money and investors so that a good return on investment in being attained within a shorter period (Atom Content Marketing Ltd, 2021). They help in creating a network that is vital for the success of the business.

Conclusion

From the analysis of the study, it can be comprehended that SMEs in Glasgow faced challenges in attaining funds in the early years. To overcome the issues, the financial instruments are being used so that short and medium-to-long-term financing needs of SMEs can be acquired from alternative sources. The business is taking measures to source funding which are unusual but create opportunities for the SMEs to grow and expand. The two local SMEs of Glasgow gained opportunity through alternative financing by minimizing the risk opportunities.

Bibliography

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