Entrepreneurs use personal savings to survive recession
Entrepreneurs have pumped in up to £16 billion of their own personal savings to get their businesses through the last year, making this the UK's ‘piggybank recession', according to new research.
The second ‘DNA of an Entrepreneur' study, from specialist insurer Hiscox, provides the first detailed account of the personal toll that the economic downturn has taken on the country's small business owners.
One in five (20%) SME bosses took the decision to invest, on average, £17,030 of their own savings while one in three (34%) slashed their own salary to increase cashflow.
At the start of the recession over three quarters (76%) of SME bosses believed they would survive unscathed. The reality, according to the new research, is that they have faced more than financial turmoil:
One third (33%) increased their working hours by, on average, 12.5 hours a week
One in ten (10%) worked over 50 hours a week to keep their businesses afloat
Almost two in five (38%) have suffered from stress, and a quarter (24%) have been unable to sleep due to worrying about their businesses
Over one in ten (13%) have seen their marriages suffer.
And SME bosses made sacrifices to protect their staff as well as their businesses - while 34% cut their own salary, just 10% cut the salaries of their senior staff.
Alan Thomas, small business expert at Hiscox, comments: "SME bosses have been the unsung heroes of the recession. They have made enormous sacrifices and taken significant personal and financial risks to pull their businesses through the last two years. Their positive outlook for the year ahead is testament to the resilience of UK entrepreneurs and with 25% planning to expand in 2010, they are doing their bit to help lead the UK's recovery."
Looking to the future
Having survived a difficult year, expectations of 2010 are now cautiously optimistic. Over half (55%) of bosses report feeling positive about the year ahead, and a quarter (25%) will even be expanding their businesses in 2010. Half of entrepreneurs (50%) surveyed felt they had made all the right moves to survive the recession, and would not do anything differently if faced with the situation again.
UK SME survival guide
SME bosses in the UK survived the recession through high levels of personal sacrifice and by adopting a focused business strategy. The Hiscox ‘DNA of an Entrepreneur' research investigated the survival strategies adopted by successful SMEs, which included:
Focusing on securing relationships with existing clients (36%)
Reduced personal salary (34%)
Worked additional hours (33%)
Focusing on securing new business deals (31%)
Invested personal savings (20%)
Investment in adapting programmes and services to meet client needs (12%)
Recruited additional specialist staff to help attract or retain new clients (10%).