Why even experienced entrepreneurs struggle with business finance
Experienced business founders and owners bring decades of industry knowledge and professional networks to their businesses. However, when it comes to accessing finance, experience does not always translate into confidence.
Over the last few years, there has been a shift in perception when it comes to the ‘silver’ workforce. When you visualise a business founder, you might immediately think of a twenty-something building the next tech unicorn from their bedroom, but the reality is far more varied.
Recent analysis of the founders behind 100 of Britain’s highest-raising companies found that 20% were aged 50 or over when they started their business, almost matching the proportion who were under 30. A US study found that, among people who start a business, a 50-year-old founder is 1.8 times as likely as a 30-year-old founder to achieve exceptional growth.
This experience is invaluable for founding and running a company. After all, someone who has spent decades working in a sector is likely to understand its customers, pressure points, and opportunities, whilst they may also have stronger professional networks and the judgement that comes from having navigated a specific market.
While those studies focus specifically on people who start businesses later in life, the same value of experience extends to the much broader population of older business owners who have been running their companies for years.
Knowing your business or sector inside out, however, doesn’t mean knowing how to navigate today’s finance landscape. Our recent research, which surveyed more than 2,000 people currently running UK SMEs, reveals a striking divide in how different generations perceive external finance.
Almost three-quarters (74%) of business owners aged 55 and over say the business finance market is confusing. That compares with 45% of those aged 25-34, 50% of 35-44-year-olds and 56% of those aged 45-54.
An experienced, but underserved generation
This confusion matters. Older business owners are not lacking ambition or appetite for investment. In fact, more than three-quarters (78%) of over-55s say they need external finance to grow their business, while 47% report having already missed a growth opportunity because they lacked sufficient funding.
It might appear contradictory, at first glance, that the most experienced group is also the most confused. However, the finance market they are navigating today looks very different from the one that many may have encountered earlier in their careers.
The traditional relationship between a business owner and their local bank manager has steadily diminished. A recent House of Commons Business and Trade Committee report concluded that, as banking has become more centralised and local branches have closed, businesses have found it harder to access both banking services and practical support.
In their place is a much broader funding landscape. Business owners can now choose between high-street banks, specialist lenders, challenger banks, brokers, and digital platforms, alongside products ranging from traditional loans and revolving credit facilities to asset finance and invoice finance.
More choice should be a positive development, but without clear guidance, it can leave founders trying to compare products with different costs, terms, eligibility requirements, and repayment structures. A slick online application may make finance quicker to request, but it does not necessarily make it easier to understand.
Start with the purpose, not the product
When presented with so many options, it can be tempting to begin by asking which product offers the lowest headline rate. But in reality, the starting point should really be what the business is trying to achieve.
Is finance needed to purchase equipment, take on staff, bridge a temporary cashflow gap, or fulfil a new contract? How quickly is the funding required, and over what period will the investment generate a return? Could repayments still be managed if a customer pays late or trading conditions change?
The answers shape which option is most appropriate, and a responsible provider should explain these distinctions in straightforward language. This includes the total cost, the repayment profile, and potential risks. Sometimes, the right advice may be to delay the investment or choose a different route altogether.
Bringing the human connection back into finance
Our research found that 74% of business owners aged over 55 rely on a finance provider to help select a product suited to their situation, compared with around 60% of those aged between 25 and 44.
This does not evidence a lack of financial literacy, but shows the value that experienced entrepreneurs place on informed, human judgement when making an important commercial decision. Technology undoubtedly has a role to play in making applications faster and improving access to information, but efficiency shouldn’t come at the expense of basic understanding. Business owners should still be able to speak to someone who takes the time to understand how their company operates and how repayments will fit into its wider finances.
It’s been proven that older entrepreneurs have the experience and ambition to build and run highly successful businesses. The finance industry must ensure that a confusing market does not prevent them from securing the capital needed to fulfil that potential, and that starts with putting the human relationship first.
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