Categories: Finance

Why Are Small Businesses Our Route Out Of The Financial Doldrums?

There is not a day that goes by in the business or financial world where something appears to be giving hope that we will soon be on an irreversible path out of economic meltdown. In fact, such has been the regularity of these false dawns over recent years that when people now talk about the “shoots of recovery” it is widely ignored. People around the world have tired of what it will take, and are just focussing on the end result.

While that is understandable among the general population, the business world have realised that what is really needed is a refocus on where the real “shoots of recovery” are going to come from. The answer, perhaps surprisingly, is not from the biggest FTSE 100 or Fortune 500 global corporations, but in the form of smaller businesses.

We explored why this is the case.

Risk Takers

Financial commentators have been stating for years that businesses and investors need to start taking risks if the economy is to receive the boost it needs. With so many high-profile businesses suffering huge losses or even closing in recent years, it is understandable that the bigger companies globally are unwilling to put everything on the line.

Smaller companies, in contrast, are looking to innovate and be noticed on the global stage, and are far more likely to take risks in order to achieve success. While that in itself is a great quality, what is also necessary is for either private equity funds or angel investors, for example, to feel that these businesses are a risk worth taking and take a punt that could change the face of the planet’s financial future.

High Growth

Small and medium sized businesses typically achieve high growth, especially through their formative years. This trend will not only boost consumer and business confidence in their brand, but enable them to demonstrate characteristics such as adding value and healthy cash flow in order to attract investment.

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While achieving growth is excellent, businesses can often fall down as they are unable to meet demand, which then subsequently ruins them. Investment in these high growth businesses can help to buck that trend.

Job Creation

The larger companies are no longer producing job opportunities by the hundreds or thousands, at least not outside their regular graduate intake programmes. Small and medium businesses, on the other hand, who are taking calculated risks in order to succeed, are enjoying high growth, and are able to attract high level investment, are creating jobs like never before – a key metric of how the economy is performing.

Private equity funds and angel investors should begin seeking out successful and high potential businesses immediately. In doing so, they could well change the world.

Dealmarket is an online private equity marketplace that specialises in putting together entrepreneurs and investors in one easy-to-use interface.

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