Britain’s mid-sized manufacturers could be missing out on £183bn in revenues due to insufficient access to finance, new research has found.
Research from Wyelands Bank found that nine out of ten mid-sized manufacturers, turning over £10m to £300m, are being held back because of a lack of finance.
Difficulties raising finance to support their growth have stopped them from winning new contracts and that has stifled new job creation.
Each firm said that the difficulties raising finance meant they had missed out on an average of £20m in revenues and an average of 11 new contracts, which would have enabled each firm to create 10 new jobs.
These figures suggest that the 23,000 mid-sized manufacturing businesses in the UK have collectively missed out on 163,000 contracts and 175 thousand new jobs.
Iain Hunter, CEO of Wyelands Bank, said: “Our research shows that UK mid-sized manufacturers are not able to grow to their full potential without greater access to finance. But that finance has not been available as traditional banks are too often unable to help.
“Helping individual businesses unlock growth along the manufacturing supply chain would help tackle the UK economy’s productivity challenges. Mid-market firms can have a disproportionate effect on growth and job creation, but first they need to be understood as individual businesses.
“It takes time and effort to understand a firm’s specific challenges, and identify how to help them. This must then be underpinned by a range of flexible financial solutions to help shape the right answer.
“To make it easier for firms to raise finance, financial institutions should be straightforward to deal with and speak the same language as their customers.”
The Wyelands Bank research shows that difficulties in raising finance also prevent 70 per cent of firms from investing in new equipment or technology. Half have also been held back from entering new markets and 45 per cent are said to have been prevented from moving to a new site or premises.
Hunter said: “Mid-sized firms, turning over £10-300m, are often too big to benefit from the attention that is rightly given by policy makers to small businesses. Yet they are generally not big enough to benefit from the economies of scale of larger firms.”
According to business advisory firm BDO, businesses this size have delivered revenue growth of 32 per cent and profit growth of 45 per cent over the past five years. This compares with FTSE350 companies whose revenues have shrunk by 0.6 per cent and whose profits have fallen by 40 per cent in the same period. Over that time, small-business revenues fell by two per cent though profits rose by six per cent.
BDO also shows that growth in these firms has created more jobs than large and small businesses combined. In the last year mid-market firms created 534,900 new jobs compared with 191,000 by small businesses and a loss of 157,000 by the FTSE350.
The study was conducted by Circle Research and involved 305 companies.