SMEs must "grow their way out of hard times"

Many small- and medium-sized businesses (SMEs) need to stop sitting on stockpiles of cash that they have gradually built up during the economic crisis, and start investing it in growth steps, a leading venture finance expert has said.

Peter Ewen, managing director at Venture Finance, said that many companies have been reluctant to make any larger-scale capital investments while the economic situation has been unstable. He said, however, that it is prime time they start putting their 'war chests' towards growing their businesses onto more solid footing.

"SMEs need to put their heads above the parapet and start exploring their business and financial options," Ewen explained. "Now could be the time to put internal, and external, resources to good use to grow their way out of hard times."

Research carried out by his company showed that 47 per cent of businesses are sitting on investable cash that they are not using in their day-to-day business transactions. The average of the amounts these businesses are holding on to is around £190,000.

Ewen added that SMEs need to start seizing opportunities when they come around, as well as seeking out and grabbing hold of growth when it appears.

"Prudence is obviously important in uncertain times, but SMEs could be taking this too far. Businesses have to ensure they aren't watching prime business opportunities to expand or even acquire pass them by," he explained.

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