Access to cash holds entrepreneurs back

Research by EY found 55 per cent of entrepreneurs cited funding as a key concern.

Start-ups in the North were more likely than any other region to use retained profit for growth investment, over bank funding (22 per cent) and private equity (12 per cent).

Stuart Watson, EY Yorkshire and Humberside senior partner, said finance continues to cause issues for fledgling businesses.

He said: “Matching funding to business growth plans remains a key area of concern for ambitious entrepreneurs, not least as rapid growth tends to absorb cash.

“Business leaders that develop controls over cash and cash forecasting as they grow are able to plan early for fund raising and are more likely to attract investors.”

In the survey of 50 entrepreneurs in the region, 53 per cent said fear of failure holds back would-be start-ups. A third (37 per cent) said uncertainty of income was a hurdle to starting a new venture.

Only six per cent said bad market conditions held back entrepreneurs, while 10 per cent said the threat of bankruptcy would be a barrier to launching a company.

He added: “While there have been many initiatives around access to finance at a policy level, the responses suggest that politicians should focus on how to encourage greater investment in the fast growth companies in the economy.”