Almost three quarters of entrepreneurs have admitted to dipping into their personal savings in the last month to save their business from going under, according to new research commissioned by the Parliament Street think tank.
Independent research company Censuswide was commissioned to poll 500 UK-based small business owners about rising inflation fears and its impact on morale. Alarmingly, it was revealed that 74 per cent of entrepreneurs said they have had to rely on personal finance to keep their business afloat.
Young entrepreneurs under the age of 35 were most likely to have used their own money to balance the books with 79 per cent saying they had done so in the last month. Of this figure, 31 per cent said they had to dip into their personal savings on more than one occasion in a desperate attempt to prevent their business from going into liquidation.
For over half of business owners who have relied on personal savings, relationships in their personal lives were placed under great strain. This points to a lack of guidance around business finance as it was revealed that 73 per cent of entrepreneurs needed help understanding their business finance options when starting their company.
The issue is elevated by over two thirds (68 per cent) of entrepreneurs being unsure who to ask for business finance advice, with young entrepreneurs in particular in need of guidance, with 74 per cent unsure.
Even when entrepreneurs do know where to go for business finance, a whopping 80 per cent of them don’t feel they have the time for such a laborious, admin-heavy process, especially during the launch of their business and during their first year of trading.
Entrepreneur Shoaib Aslam, founder of Start My Business said: “Launching and running a business is an enormous challenge for entrepreneurs who are clearly hanging their success on their personal savings in the hope their business will come good. That places huge stress on a person’s wellbeing which can quickly consume an entrepreneur’s entire life.
“The onus is on the government, the financial services sector, and businesses to assist small start-ups through providing regular support and guidance around how to access business finance to reduce the burden on small businesses – who are the backbone of the UK economy.
“That is why I created Start My Business, a platform which provides advice on every step of business creation, not only for business finance, but for naming, marketing, contracts, insurance and everything else a new business needs. Knowledge is power and we should all play our part in spreading it to help small businesses to thrive,” added Aslam.