South West company owners gamble wealth on business
South West business owners are drawing modest salaries and investing heavily in their companies, according to a study by chartered accountants Haines Watts.
The national firm which has local teams in Swindon, Trowbridge and Bristol, has conducted a survey of businesses with turnovers of £ 1m to £ 50m. It reveals the earnings, wealth and spending habits of business leaders and is the first in a three-part series of studies looking at the motivations for running a company in the UK today.
Business owners are‘ crossing their fingers and hoping’ their businesses will deliver the returns needed to support them, their staff and their families – despite risks heightened by the recent Brexit vote.
The Haines Watts Wealth Survey reveals the average South West company owner earns £ 93,800 per annum( including salary and dividends) – below the national average(£ 95,000) and less than half the average salary of the CEO of an AIM-listed company(£ 202,000, Fast Growth Company, 2014). Company owners said they are investing their wealth back into their business or taking other risks such as gambling their financial future on a stock exchange. The average South West company owner has £ 109,000 in financial investments, such as stocks and shares.
The pension has fallen out of favour with all age groups, and yet company owners attest to having significant amounts of property debt. Nearly a third( 28 %) of South West company owners do not have a pension fund, while business owners from this region have an average £ 228,500 combined residential and commercial property debt – higher than the national average(£ 222,800).
Mike Lloyd, managing partner at Haines Watts Swindon said:“ Our study reveals 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 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.”
Haines Watts is a Top 12 firm of chartered accountants with over 80 years of experience, specialising in the owner-managed business sector. It offers a broad range of services with more than 60 offices across the UK and more than 35,000 business owner clients.
About the study
The study is based on interviews with 514 owners of UK businesses, which are at least two years old, have a turnover of between £ 1 million and £ 50 million and have between 10 and 249 employees. The study was conducted in 2016.
Companies operate in the following sectors: construction; real estate; manufacturing; professional, scientific and technical; service industries; hospitality and leisure; wholesale and retail; technology; transport and storage; and creative industries.
Mike Lloyd- Senior Partner
Love <> Money
The secret life of the business owner
What are you worth?
UK business owners are investing heavily in their company
£ 95,006
Average total earnings this year
Other findings of the research:
• Not only are South West company owners putting all of their eggs into one basket, but they are also leaving their business open to significant risks.
• 37 % feel their business could not survive for longer than a week without them, while 16 % believe it could only manage for up to three days.
• 60 % of South West company owners have a main supplier they could not survive without, while 49 % have a major customer they rely on.
• In fact, 77 % say their main customer contributes 30 % or more of their revenue.
• Furthermore, 63 % admit their business could not survive without a key member of staff.
• South West business owners are not living a life of luxury. For example, Fiat is by far the most popular car brand owned by South West company leaders 23 %, followed by Honda 14 %, Mitsubishi 9 % and BMW 9 %.
• Just 16 % of South West company owners drive a brand new car – despite the many financing options available – and 5 % own a second home. 77 % own designer goods, while 15 % have or will send their children to a fee-paying school.
Haines Watts Swindon Old Station House Station Approach Swindon SN1 3DU
£ 222,811
Average property debt( residential and commercial) of a UK business owner
£ 120,890
Average total financial investments
78 %
of business owners say their main customer contributes 30 %+ of total revenue
Danger Area
UK SMEs are exposed to significant risks
54 %
feel their company could only survive for a week or less without them
01793 533838 www. haineswatts-swindon. co. uk
THE BUSINESS EXCHANGE 2016 27