Entrepreneurs injected £16bn of their own personal savings to help their businesses survive the recession, according to research released today.
One in five SME bosses invested their own money into their business, the second DNA of an Entrepreneur study from specialist insurer Hiscox found. The average amount invested by a business owner out of their own pocket was £17,030.
One in three (34%) entrepreneurs slashed their own salary to increase cash flow. With only 10% cutting the salaries of their staff, it seems that business owners preferred to take the hit themselves than cut the wages of their employees.
Psychological toll
The survey results also give an insight into the psychological and social toll the downturn took on entrepreneurs who worked longer hours, worried more about their future and ploughed their savings into floundering businesses.
Entrepreneurs have made enormous sacrifices and taken significant personal and financial risks to pull their businesses through the last two years
Alan Thomas, Hiscox small business expert
The survey found that:
- One third (33%) increased their working hours by, on average, 12.5 hours a week
- One in 10 (10%) worked more than 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 because of worrying about their business
- More than one in 10 (13%) admitted that their marriages had suffered.
Alan Thomas, small business expert at Hiscox, beleives entrepreneurs should be given credit for their resourcefulness and hard work following the downturn. “SME bosses have been the unsung heroes of the recession," he says.
"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.”
With the UK tentatively emerging out of recession, entrepreneurs are cautiously optimistic. More than half (55%) of bosses report feeling positive about the year ahead, and a quarter (25%) plan to expand their businesses this year. Exactly half of those surveyed felt they taken the right decisions to survive the recession and would not do anything differently if faced with the situation again.
The most common survival strategies employed by entrepreneurs to survive the recession were:
- Focusing on securing relationships with existing clients (36%)
- Reducing personal salary (34%)
- Working additional hours (33%)
- Focusing on securing new business deals (31%)
- Investing personal savings (20%)
- Investing in adapting programmes and services to meet client needs (12%)
- Recruiting additional specialist staff to help attract or retain new clients (10%)
