FINANCE
FINANCE CONCERNS HAVE HARMED THE MENTAL HEALTH OF SMALL BUSINESS OWNERS
1 in 2 small business owners ( 49 %) believes their mental health has suffered from the stress of managing their business finances in the past year .
A new survey conducted by Purbeck Personal Guarantee Insurance , the provider of personal guarantee insurance to small business owners to mark this year ’ s Mental Health Awareness Week ( 15th-21st May ) has uncovered the emotional cost of being your own boss during the cost of living crisis . The owners of smaller businesses which employ 2 to 10 people , have been in operation for 5-10 years and are solely responsible for the decisions of the business are most likely to have suffered higher levels of anxiety and stress over their business finances , according to the survey .
Mental health impacts are also more likely to be amongst those people that have taken on personal debt to fund their business in the past year .
Amongst the directors and owners who feel the financial aspect of running their business has impacted their mental health , 60 % have taken on personal debt for their business while 69 % have taken on or will need new finance in the next year . For 43 % this will be for paying off outstanding debt . Furthermore , 65 % are already personal guarantors or plan to become one for a business loan . This means that unless they have secured personal guarantee insurance , their home and savings would be at risk if their business fails .
The survey also found that when small business owners
want financial advice and support , their accountant comes top of this list ( 37 %) followed by their lender or bank manager ( 23 %). Family members are also called on by 1 in 5 ( 20 %). Just 1 in 10 ( 10 %) also sought advice from another small business owner .
For more info : www . purbeckinsurance . co . uk
OPTIMUM ACCOUNTANTS ASK : HOW WELL DO YOU KNOW YOUR BUSINESS ? by Michael Blaken , Accounts Director
This may seem a strange question to ask a business owner or company director but it is an important one to be able to answer .
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There is a world of difference between a service-based business and a manufacturing business , when it comes to how to approach pricing . And , it goes without saying , it ’ s essential to get the approach right .
Here ’ s one example . We work with the owner of a service-based business , whose charges are based on selling time – in other words , number of hours worked charged at an hourly rate . The rate here is important , as it needs to cover the direct cost of working that hour but also an element to cover overheads and tax , and to provide a profit .
However , our client then set up a manufacturing business and soon found pricing was a very different concept . He was buying raw materials by weight and selling on his final product by volume . Unlike selling time , money is needed upfront to buy in supplies and any slight variation in the unit cost for those raw materials makes a big difference to profits .
We carried out an analysis of the business , converting the costs per the accounts to get a per unit average cost price of the finished product . This revealed our client was overspending by £ 6 per unit – that equated to a significant £ 21,000 in lost profits , every quarter . This overspend accounted for only a very small percentage of total turnover and was quite easily overlooked .
Armed with this knowledge , we met in person with the client to identify the reasons why this had occurred . One was because the process involved more wastage than had been anticipated ; another was the delivery of raw materials being 10 per cent underweight each time .
Changing suppliers and increasing the quality of the raw materials purchased resulted in more accurate deliveries and less wastage produced .
At Optimum , we take the ‘ tech ’ side of the numbers and convert them into information business owners and directors understand . This provides more confidence in the numbers and their decisions as they actually know what their accounts are showing them . We work with manufacturers as well as service providers and our goal is always to help our clients improve their businesses .
If you would like some help or advice on business planning and understanding your numbers , please get in touch with Michael Blaken , Accounts Director at Optimum Professional Services .
Email : mblaken @ optps . co . uk or call : 01793 538 198 .
14 www . tbeswindonandwilts . co . uk