Business Owners Use Savings to Keep Staff
New research from QuickBooks has shown that small business owners have been tested to the limits in the pandemic, with many revealing the personal sacrifices they have made to make sure their businesses stay afloat and staff in jobs.
Over half (58%) of small businesses (1-10 employees) who were surveyed were unable to trade at some point in the past year, with small business owners spending £7K of their personal savings to keep staff on their payroll.
This new study highlights that a third of small business owners gave up their own salaries in order to keep employees on during the pandemic, whilst nearly half (46%) gave up holidays, 41% gave up bonuses and 30% gave up their dividends.
The personal burden on these business owners is not just restricted to financial sacrifice, though; owners have had to take action to retain staff, with 57% having to work extra hours to keep on top of changes to payroll regulations, such as furlough.
Since the start of the pandemic in March 2020, 67% of those who participated in the study have had to make challenging business decisions to avoid cashflow issues, or indeed business failure. More than a third (35%) have had to furlough staff, 24% have had to freeze recruitment and 21% have had to freeze pay for staff to stay afloat.
To help navigate the changing business climate and make these difficult decisions, small business owners have turned to support networks for advice. Accountants have taken on an increasingly important role for small businesses, with a third (33%) of owners turning to their accountants for support on changing regulations and processes such as payroll. Other leading sources of support were family members and government websites.
However, despite all the challenges of the past year, small business owners are feeling more optimistic with half (50%) saying they now feel more positive about the year ahead than they did at the start of the pandemic restrictions in March 2020.
Pauline Green, Head of Product Compliance at QuickBooks, said: “Payroll took on a new emotional significance in 2020 as small business owners were forced to weigh up challenging decisions such as putting staff on furlough or making pay cuts, and the resulting impact on employees and their families. Despite facing intense pressure for a long time, small business owners showed remarkable resilience and determination to keep their businesses going and their employees in jobs, with huge numbers making unforgettable personal sacrifices.
“Our recent data found that two thirds of small businesses now plan to keep all of their furloughed staff and one in three are even planning on expanding their workforce in 2021. It is brilliant to see small business owners’ commitment to keeping their company going and staff on their payroll now starting to pay off, as we look forward to the end of lockdown.”
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