Are you a Permanent Non-Borrower (PNB), by which I mean a business that has not used external finance in the last five years or applied for it in the last 12 months? There is quite a high chance that you are. According to the latest SME Finance Monitor from the Business Finance Taskforce, half of SMEs are now categorised as PNBs and in the second quarter of this year only 36% were using external finance, down from 46% in 2011.
There are many reasons why an SME might not want to borrow – cheap labour, prudence, the benefits of experience, a still fragile recovery, perhaps even a bad credit rating, although the success rates of overdraft and loan applications have improved and now stand at 84% and 69% respectively. Or you may simply have no need for additional funding. According to the SME Finance Monitor, four out of fie SMEs made a profit in their last trading period, up from 69% in Q2, 2013.
With PNBs slightly more likely to report a profit (81%) than non-PNBs (76%), you might even claim that being a PNB makes sound business sense. Were it not for the UK’s worryingly poor workforce productivity, still stuck at 2007 levels. Businesses that borrow to invest in more productive, efficient tools, machinery, business equipment and even furniture may not be more profitable than PNBs, but they are more ambitious and more confident. According to the SME Finance Monitor, SMEs that make use of external fiance are more likely to be planning to grow in the next 12 months (49% vs 37%); more likely to have innovated (41% vs 29%); and more likely to be international (19% v 12%).
When you consider advances in office technology, it is easy to see how investment in new equipment can enhance productivity and innovation. A simple example is the appearance of two-sided scanners on mid-level desktop MFPs, which save time and minimise the risk of paper jams by scanning both sides of the page in a single pass. There are plenty of other examples highlighted in our printer feature on page 17. The latest deskphones – yes, people still use them – also boast features that can help make employees more efficient and productive, from tight integration with mobile phones to HD voice quality, which has been shown to improve concentration levels in conference calls. Being a PNB is desirable, as long as it doesn’t stop you from investing in new technology that can take your business forward.
James Goulding, Editor, email@example.com
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