Businesses have different options to expand and grow their operations depending on their business objectives. A new business may need to borrow money from a bank in order to get started whereas a well-established business such as the Davis Service Group may generate funds from profits to buy-out another business. The Davis Service Group had several businesses in different sectors but was working in a mature market in the UK. Therefore, in order to grow, it concentrated its efforts in one sector of the business – textile maintenance. It expanded the business and its market by organic growth with the acquisition of Berendsen (a company operating in the same sector in East Europe and Scandinavia).
Alternatively a company like Go-Ahead grew organically by investing its profits back into the business to meet customer needs, give value for money and provide a reliable service.
For those businesses wanting to grow their operations. but lacking the funds to do so, they may seek financial help from a bank. However, banks have recently reduced their lending due to the current economic situation. Sir Alan Sugar has recently been appointed by the Prime Minister to encourage the banks to start lending to small and medium-sized enterprises. If a business has the potential to grow but not the money it needs to kick-start the growth, it is in effect being held back.
Sir Alan Sugar and a team of bankers will be hosting roadshows across the country, Sir Alan said, 'I can't put pressure on them but I can offer practical advice. The panel will act as a buffer between the banks and businesses. We can say”if it was my money I would invest with this company but not that company”. The banks need a bit of teaching too.'