Yorkshire Bank research reveals regions SMEs fail to recognize true value

The majority of SMEs in Yorkshire are not taking advantage of their true worth, according to new research conducted by Yorkshire Bank.

Many small and medium-sized businesses are not taking into account the value of assets such as trademarks, patents and intellectual property.

The banking chain’s research unveiled that only 21% of Yorkshire SMEs have correctly valued their non-physical assets.

Therefore, SMEs in the region are not generating growth opportunities, and around half of businesses questioned revealed they thought their bank, shareholders or other lenders had an accurate understanding of their business’ intangible assets.

A business’ intangible assets are those which are not physical such as copyrights, franchises or brand reputation. They are often created through research and development (R&D) activity.

However, the Banks’ survey also showed that most businesses are also not taking advantage of government incentives to encourage R&D and fuel business growth.

Only 15% of Yorkshire SMEs have accessed government R&D incentives, and only 15% have a dedicated R&D budget, even though 54% claim to undertake some form of research and development.

Yorkshire Bank’s survey implies SMEs from all sectors should be doing more to innovate by taking advantage of government schemes, or encouraging staff to be more creative. A the moment, only one third of Yorkshire SMEs incentivise staff, financially or otherwise, to come up with ideas to improve their business.

Perhaps understandably, the larger the business the more inclined it is to invest time and money in research and development, and have a more accurate understanding of its intangible assets. Businesses which tend to be more active in R&D include IT and manufacturing.

Alan Young, regional director for Business and Private Banking at Yorkshire Bank, in Yorkshire said: “The UK economy has changed considerably in the last 50 years in terms of what we produce, and the types of job being created.

“Whether they are a manufacturer in the automotive supply chain, or an IT software developer, it’s vital that businesses have an accurate understanding of the value of their intangible assets and the difference this can make to their business. They also need to be fully aware of the incentives available to them which are going to drive their business forward.

“With many firms having few or no physical assets it becomes increasingly important they have a full understanding of their business’ true value. Having this knowledge could significantly enhance the possibilities of accessing finance for growth, with profitability and cash generation, rather than the quality of the asset base, becoming an ever more important consideration for those lending or investing.

“We recognise the issues this research has highlighted, but by investing in our people and the way we support those businesses with intangible assets and strong profits and cash flows, means we continue to bring a genuine challenge in the SME market.”

Yorkshire Bank has become the first to partner with the British Business Bank under its ENABLE Guarantees scheme, which enables YB to lend up to £125m to small businesses.

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