EY polled over 200 entrepreneurs across various sectors and regions of the UK, three quarters of whom (73%) had run their business for at least a decade. Half (50%) reported difficulties in raising finance.

In contrast, only 7% of entrepreneurs considered bad market conditions to be a hindrance to starting a business and just 4% saw lack of opportunity as reasons that could hold back entrepreneurs.

EY’s research found only a fifth (21%) of respondents would look to banks to help them grow their business, but over a quarter (27%) would rather use their retained profit. In contrast, just 16% said that private equity was an option; only 9% said they would consider an IPO and just 3% that they would choose venture capital as a source of secondary funding.. 

Stuart Watson, EY’s entrepreneur of the year UK leader, 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. Entrepreneurial business leaders that develop strong controls over cash and cash forecasting as they grow find this enables them to plan early for fund raising and helps to attract investors.’

Separately, PwC has announced it is to team up with Funding Circle, an online marketplace for business loans, in order to provide alternative sources of finance for small business clients. To date over 5,500 businesses have raised £370m through Funding Circle.

As part of the agreement, new Funding Circle borrowers will be able to access PwC’s My Financepartner, a new subscription-based accounting service aimed at smaller, growth–oriented companies. The service enables small businesses to operate their finance function and access expertise on a similar basis to larger companies, but on a more affordable and flexible basis.

The package includes business analytics and compliance support and is designed to be used in conjunction with regular face-to-face meetings with a PwC accountant. 

Tony Price, the partner at PwC leading the My Financepartner service, said: ‘My Financepartner has been designed to help entrepreneurs address the challenges of growth through tailored accounting support and financial advice. Now, by working with Funding Circle, we can better address our clients’ funding needs by complementing traditional finance options with new alternatives. '

Our objective is to help British businesses to get to the next level of business growth,’ he added.

James Meekings, co-founder of Funding Circle, said: ‘Many small businesses owners are still unaware of the choice now available to them. We’re excited to be working with a trusted adviser like PwC to raise the profile of our industry.’