The UK’s hardworking SME owners are putting business success ahead of personal gian, a new survey has revealed. Accountancy firm Haines Watts questioned the owners of companies with turnovers bwetween £1m and £50m, and found that the average UK company owner earns £95,000 per annum (including salary and dividends), a figure less than half the average salary of the CEO of an AIM-listed company (£202,000, Fast Growth Company, 2014).
And it also revealed that company owners are ploughing a lot of their personal wealth back into their businesses, with the average company owner having £121,000 in financial investments, such as stocks and shares. Significantly, however, these investments don’t typically involve a pension: the HW research found a third (32%) of company owners do not have a pension fund, while the average UK business owner has £223,000 combined residential and commercial property debt.
Darren Holdway, managing partner at Haines Watts, comments: “Our study reveals that company owners are gambling their wealth on their business, leaving their financial security hanging in the balance. This is surprising given how hard they work to generate that wealth in the first place and the obvious risks involved.
“As a busy business owner, it’s easy to believe that your company is a safe investment. But if I held up a mirror, I don’t think many owners – whatever their age or stage in their life – would be comfortable with what they saw. They would wish they had a contingency plan in place and spent more time considering their options.”
However, despite the hard work and dedication involved, a worrying number of owners are putting a lot of eggs in one basket. The survey showed that as many as half (50%) of company owners have a main supplier that they could not survive without, while 43% have a major customer that they rely on.
In fact, 78% say their main customer contributes a third (30%) or more of their revenue. Furthermore, half (50%) of company owners could not survive without a key member of staff.
Holdway continues: “Not only are business owners putting all of their eggs into one basket, but that basket is riddled with holes. Our study reveals an alarming degree of risk of downtime in the event of an accident or disruption. As we have witnessed with the UK’s recent Brexit vote, the potential for significant market disruption is never far away and any company could fall to its knees if it doesn’t have the right contingency plans in place to deal with such an event.