UK entrepreneurs sacrificing own wealth to secure their companies – Evelyn Partners

Business owners in the UK are investing their own personal wealth to shore up their firm’s financial security.

This is according to research from professional services firm Evelyn Partners, which surveyed 501 UK business owners with revenues of £5 million and above.

It found that nearly a quarter (24 per cent) of those surveyed said they have already reduced their own salary or benefits, with a further 38 per cent saying they are currently considering doing so. 23 per cent have either sold or re-mortgaged their homes, with 42 per cent considering it.

One fifth of respondents say they have taken out a personal loan and 22 per cent say have invested personal savings into their business, with 43 and 45 per cent considering doing so respectively.

These steps come as 22 per cent of business owners say they lack confidence their company will survive an upcoming recession, and 23 per cent saying economic uncertainty and a recession have the biggest potential to negatively affect their firms in the next year.

This phenomenon is partly fuelled by difficulty accessing capital, with nearly a quarter (23 per cent) of business owners reporting difficulty accessing capital in the past 12 months and more than two in five (43 per cent) saying it is likely they will lose a key investor in the next year.

While some business owners are investing their own cash to keep their businesses afloat without cutting back on staff, this has not always been possible. 20 per cent of those surveyed said they have reduced staff salaries in response to the current economic climate and 22 per cent have made redundancies.

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Claire Burden, Partner, Advisory Consulting, at Evelyn Partners adds: “As the UK enters a challenging economic period, it’s worrying to see business owners blurring the lines by dipping into their own personal wealth to protect their business.

“We’re witnessing increasing levels of owner funding across the market, and with many business owners having to sell at a lower price and needing to liquidate their assets quickly, it can be a double hit for business owners when this happens.

“Owning and running a business can be deeply personal, and while it’s honourable that business owners are looking to make personal sacrifices to protect their business and employees, we would only recommend dipping into personal wealth to bolster a business as a means of last resort.

“Instead, we would encourage business owners to seek professional advice from an adviser specialising in business turnaround at the earliest possible opportunity to identify alternative means through which they can shore up their business.

“Working with an accredited expert independent from the business can help business owners identify the means to protect and bolster their business in a more considered way, detached from the personal emotions that often come with establishing and running a business.”

Research for the survey was conducted by Censuswide between 5 -14 September 2022.

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