New research suggests the majority of small and medium-sized businesses in the North West of England are underestimating their true worth by not taking into account the value of assets such as trademarks, patents and intellectual property.
According to new research conducted by Yorkshire Bank, only one in four North West SMEs has ever taken steps to value their non-physical assets.
The UK economy has changed considerably in the last 50 years in terms of what we produce, and the types of job being created.Alan Young
As a result, SMEs may not be making the most of growth opportunities as more than half of those questioned said they didn’t think 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 bank’s survey also revealed that most businesses seem not to be taking full advantage of government incentives to encourage R&D and fuel business growth.
Just one in 12 of North West SMEs has ever accessed government R&D incentives, and only one in 10 has a dedicated R&D budget, despite around a half claiming to undertake some form of research and development.
Alan Young, regional director for Business and Private Banking at Yorkshire Bank, in the North West, 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.”