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