Research suggests that businesses who consider all finance options carefully, rather than choosing a 'quick-fix', may experience better growth, freshbusinessthinking.com reports.
In this uncertain time, many businesses are turning to loans, credit cards and other options in order to raise finance, but experts are warning against such practices. A study by Hilton-Baird Financial Solutions has discovered that securing finance was one of the biggest challenges faced by SMEs but that of those who had been successful, 42 per cent had used a 'quick fix' option.
The 'SME Trends Index' found that businesses that chose such options typically experienced 'restricted business growth, sluggish productivity and a lower turnover'; short term solutions often lead to longer term problems.
Hilton-Baird managing director, Evette Orams, recommended that when raising finance, businesses should consider all the options first, so as not to "compromise the longer term future of their business," she said to dofonline.co.uk.
The Index found that companies that had adequately researched their options actually experienced a growth in turnover. For example, 57 per cent of those using invoice finance said they had experienced an increase, compared with 36 per cent that were using an overdraft.
"There are many more finding options available for businesses than there may seem and there is often no need to turn to payday loans and credit cards," Ms Orams added.
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