From the top · 26 April 2018

Former Dragon Sarah Willingham warns micro businesses to forget about investment

Sarah Willingham
Sarah Willingham was speaking at a panel discussion of small business decision makers
At a panel discussion of the UK’s leading enterprise champions and decision makers, hosted by cloud accountant Xero, former TV Dragon Sarah Willingham was keen to put some myths to bed.

The panellists were speaking at the launch of Xero’s new Small Business Insights dashboard to digest the platform’s latest snapshot of the small business economy.

According to Xero’s latest findings, based on invoice data of over 250, 000 of its small business customers, Goliath is still winning the UK’s late payment epidemic. Over half of invoices paid to small companies are paid late, and the largest FTSE 350 firms have the worst record in paying smaller suppliers.

With a Federation of Small Businesses (FSB) study suggesting as much as 18bn of small business revenue is tied up in late payments, the subsequent impact on startup survival was acknowledged by each panellist.

After economist Vicky Pryce claimed the cash flow situation at small UK companies was undoubtedly getting worse, Sarah Willingham emphasised the working capital struggles? facing many entrepreneurs, but also clarified some misconceptions around investment and what small business owners need to grow their company.

with the small businesses I work with, it’s always about cash. it’s always how am I managing my working capital? If Im selling a product, I have to pay my supplier, but when am I getting a money in? Where am I getting the cash from .

often, this is about managing cash flow. We have to remember that a lot of people that start businesses are not business people. It may be a way of life, or a decision, a redundancy, children and they havent got a clue about how accounting should work or what cash flow means. We have to remember when talking about that 99 per cent of businesses that a lot of owners don’t have that experience. How do we help those people grow into employers

“You don’t need to sell equity”

After the conversation shifted to growth and the entrepreneurs struggling to access funding and investment to scale their company. Willingham challenged the idea that investment is always the right avenue.

The panellists were speaking at the launch of Xero’s Small Business Insights
how many people have come to me and said: I need an investor. Actually, when you look at the business, you don’t need investment you actually just need working capital. That’s all you need. You don’t need to sell equity, you just need to bridge this gap every month, two months. So many people just assume I have no money, therefore I need an investor.

what do you want? 200, 000 to fill the monthly gap? That’s not what you want. You want 200, 000 to grow the business, but that’s very different to working capital.

Pryce suggested that the lending landscape continued to be a harsh environment for small companies, with owners quite scared to borrow and would much rather have an investor. Willingham suggested that incoming open banking reforms could change the fortunes of those struggling to access finance.

were so relationship-based with our banks, and that’s a real challenge because a lot of people don’t know where start trying to form that relationship with a bank.

having a more digital system, where you can look at a credit rating of business, lenders can see you are doing it right, and look at your requirements and your data. They look at it in a digital environment as opposed to lets have another coffee, which it how it still works today and why it’s so difficult to borrow from banks.

Open banking

The open banking package of reforms are being led by the Competition and Markets Authority and will give business owners access to new financial products and services from providers regulated by the Financial Conduct Authority (FCA). In short, banks are being forced to open their data to third parties for the first time.



Praseeda Nair is an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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