More business owners calling debt advice service

A growing number of small business owners and self-employed people are facing high levels of debt as they struggle to keep their businesses afloat, according to new research from Business Debtline.

woman with empty purses


Its research shows that half (49%) of the people contacting the service last year had debt totalling £10,000 or more, with nearly a quarter (23%) owing more than £30,000.

Business Debtline which offers free debt advice to the self-employed and other small business owners says demand for its services has been increasing. Its report – Taking care of business – highlights eight key challenges facing those in debt. They include issues such as late payments, low and variable incomes and a lack of essential business management skills. Many business owners face both business and personal debt, says the report.

While the people helped by Business Debtline had a wide income range, 39 percent had gross business annual turnover below £25,000. Low and irregular income often prevents small business owners from saving, investing in the business and having the financial resilience to deal with changes in circumstances such as ill health, says the report. More than six in 10 callers surveyed (61%) said they had used personal credit at some point to pay for business costs in the past two years.

Nearly half (45%) of callers to Business Debtline surveyed said they experienced problems with late payments, where they are uncertain when the money they have earned will be paid.  Moreover, business failure was highlighted as one of the main reasons for contacting Business Debtline. The report also highlighted a lack of business management skills, for instance, only 59% felt confident constructing a business plan and 47% felt confident completing tax and VAT returns.

The report’s recommendations include calls for:

  • the government’s new Single Financial Guidance Body to ensure that self-employed people are well served across its debt advice, money guidance and pension guidance functions
  • more powers for the Small Business Commissioner, including the power to fine persistent late payers and an expanded remit to cover the public sector
  • creditors to extend their work on supporting personal customers in vulnerable circumstances to their small business customers.

Meanwhile, a Vistaprint survey out earlier in the week of 500 business owners in the UK shows women business owners find failure more difficult to overcome than their male counterparts. More than two-thirds (69%) of female entrepreneurs say it is difficult to overcome failure compared to 55% of male. However, the research suggests that this fear of failure may contribute to female business owners making fewer costly mistakes.

When business owners were asked how much their biggest business mistake cost, male respondents reported mistakes costing more than 2.6 times the amount reported by female respondents. Additionally, 27% of surveyed men reported having had to close a business compared to only 15% of women.

Women were also more likely to be critical about action they could have taken to prevent their business closure – 44% said they could have been more strategic compared to 15% of men; and 31% of women said they could have better developed their business skills and better planned ahead, compared to 11% and 14% of men respectively.

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