Andrew Darling: The risks of self-funding businesses

In recent news we revealed that the number of SMEs relying on personal savings to fund their businesses has leapt in the six months to May.

These findings – according to a study of 1,000 SMEs conducted by Bibby Financial Services  in May – show a worrying trend that could lead to further problems down the line for businesses who rely on funding from personal savings. But what are the alternatives?


Nearly half of those surveyed were found to be using either their own savings, or borrowing from family and friends, this makes self-funding the most popular form of funding among small businesses today. This is a significant rise from the 26 per cent who were relying on this form of funding six months ago. If funds are available, self-funding can be perceived as the path of least resistance for small start-up businesses. But over time, self-funding is hard to maintain and rarely sustainable for a growing business.


It’s always risky to tie your personal finances together with your business, and personal savings may not be substantial enough to help see long-term business growth through. It would be easy to run a business into the ground simply by having a growing order book but the inability to fulfil orders due to a lack of cash.

Funding Options

There are a number of funding options available to SMEs that they might not be fully aware of, which can help to guarantee a more secure future for their business.

Although more needs to be done in the industry to increase SMEs awareness of alternative, non-bank funding, there are services that can help reduce business risks and boost long-term sustainability. This includes services like Forward Finance – which guarantee a dependable cashflow by releasing money tied-up in invoices – as well as other forms of Invoice Finance solutions such as Factoring.

As the UK’s leading independent invoice finance specialist and a trusted provider of cashflow funding solutions to 7,000 businesses, Bibby Financial Services offer a comprehensive range of products and funding packages for SMEs.

So if you’re a small or medium sized business owner who is currently relying on self-funding, it’s worth investigating what alternative funding solutions are available. To learn more about business funding and options beyond self-finance, visit Bibby Financial Services online.

About Andrew Darling

Having worked in financial services for over 36 years, Andrew Darling is a specialist in Invoice Discounting, Factoring and Trade Finance Solutions. He currently manages the development of business with higher turnover companies at Bibby Financial Services, specialising in corporate finance for businesses with turnover of £5 million or more.

ShareShare on FacebookShare on Google+Email this to someoneTweet about this on TwitterShare on LinkedIn