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Report: Debt-wariness limiting small companies’ growth
Businesses which employ between 10 and 49 people want to avoid indebtedness, a fresh report finds.
A new report finds that businesses’ growth into the next size category is rare in Finland. Perceptions of burdensome regulation and administrative obligations are the most frequently perceived barriers to growth, regardless of company size. That is the finding of a research report from ETLA Economic Research, entitled What is putting the brakes on Finnish companies’ growth?
The ETLA study found that companies employing 10–49 people had the lowest appetite for growth. In companies of this size, a significant barrier to growth is the desire to avoid debt.
The smallest companies, micro-businesses employing fewer than ten people, receive less attention in the ETLA report. Micro-businesses account for 95% of businesses in Finland. The report says that among micro-businesses, there are likely to be businesses which do not aim for or are incapable of strong growth.
Progress to next size category rare
Almost 80% of companies who participated in the study said they wanted to grow at least as much as was possible for them, even though there were differences in growth appetite between size categories and ownership forms. However, companies’ transition to the next size category is relatively rare, and more common than growth is the downward shift to a smaller size category.
The ETLA report finds that perceptions of burdensome regulation and administrative obligations are the most frequently perceived barriers to growth, regardless of company size. In addition to avoidance of debt, other growth challenges which small companies experience more frequently than large companies are poor availability of skilled labour and public finance.
“The barriers to growth do not affect all companies in the same way; rather, the impact varies by company size, ownership and growth orientation. Small companies face financing capacity limitations more frequently, whereas larger companies wrestle with building and official permit applications,” doctoral student Annu Laurikka, the author of the report for ETLA, says in a press release.
You can read the whole report here.
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