Cost of UK small business failure estimated at over £90 billion

There are about 5.5 million small businesses in the UK, plus circa 700,000 new companies annually and 400,000 to 500,000 new sole-trader registrations.

However, 60% of small businesses fail within 5 years and this comes at a steep cost for the UK economy, impacting GDP growth, innovation, employment, and tax revenues with indirect losses estimated at over £90 billion - potentially reaching hundreds of billions over time.

Many of these failures are due to businesses being simply not viable - inadequate demand for their particular product or service, poor management, sales and marketing etc. However, there are 000s of viable businesses that fail because they have not been able to obtain funding for growth. For example, most technology startups fail because venture capital firms will only fund those that can generate £ billions in revenue on a global scale. In reality, most startups don't ever aspire to such loft heights.

In practice , the challenges faced by startups and small businesses in securing funding are staggering, with over 80% of applicants failing to obtain grants or investment, and approximately 40% unable to secure loans. And, 000s don't apply for funding because of the fundraising minefield of complex, time consuming and outdated application processes.

I have therefore established FixFunding, an initiative to address fundraising challenges and help build a more resilient startup ecosystem that fosters economic growth.

It's aim is to bring small businesses and funders together to find ways to improve the quality of applications and the processes and costs involved. With input from “both sides of the table”, FixFunding will identify the challenges facing applicants and funders and how these can be overcome. And, in due course, recommendations for reform will be sent to the Secretary of State for Science, Innovation and Technology and other key stakeholders for discussion and to agree a roadmap for implementation.

The urgency of this initiative lies in preventing a widening gap between the funding needed for economic expansion and current inadequate levels. Why? Because without effective solutions, the viability of future generations of businesses and the economy at large will be at risk.

If you would like to contribute your thoughts and ideas on reform, please do get in touch - nigel@fundability.org.uk. By working together we can FixFunding!