The majority (79%) of British small business and self-employed workers admit to not saving enough for retirement, prioritising present business pursuits. That’s according to the ‘Backing You Index’, a poll of 2,903 self-employed and small business workers by Intuit QuickBooks, the world’s leading online accounting software.
The Index revealed a lack of spare funds is a key driver behind this trend (38%), while 15 percent of respondents neglect pensions savings because they want to invest money back into their business. Nine percent view their business as their retirement nest egg while one in ten (10%) say they are unsure about retirement options.
These findings tally with The Family Resources Survey – data recently published by the Department for Work and Pensions (DWP). The DWP found that pensions participation for employees has increased substantially following Auto-enrolment, from 49 percent in 2012/13 to 66 percent in 2016/17. Participation rates for self-employed workers, who are not eligible for Auto-enrolment, fell from 19 percent to 16 percent over the same period.
Self-employed workers are especially vulnerable to falling behind on savings. Under the UK’s Auto-enrolment legislation, minimum pensions contributions from both employees and their employers will continue to increase over time to encourage saving for the future. But those not covered by this reform, including self-employed workers, will need to take a more proactive approach to protecting their financial futures.
“There are 4.8 million people that work for themselves in this country, fueling the economy with their entrepreneurship. We hear our customers and partners loud and clear that this entrepreneurship requires a relentless focus on the now in order to develop, grow and build ideas into living, breathing businesses,” says Dominic Allon, VP and MD of Intuit QuickBooks Europe. “Our mission is to power the prosperity of these individuals, which is why we work every day to back them and help secure their financial future by building tools, support and resources to make managing finances easy.”
The results show a clear focus on current business pursuits over future personal financial security. To build on these findings, the research also examined hurdles faced now by British entrepreneurs as they work to grow their business. Top challenges included acquiring new customers (38%), access to funding and capital (18%) and close competition (12%).
Entrepreneurs take minimal holiday allowance compared to salaried workers
The prioritisation of business growth is likely a contributing factor towards the majority of respondents forgoing a typical holiday allowance. The research showed that just one in ten (12%) respondents allowed themselves 20+ holiday days in 2017, and nearly two thirds (64%) took five or fewer holiday days this past year.
Michael Totten, Managing Director of bespoke lighting, cabinetry and furniture specialists, Charles Burnand Ltd., explains: “I left the corporate world after 20 years to run a small business. I wanted to pursue my passion and spend more time with my wife and family. I’m lucky to have a pension from my previous job but most entrepreneurs I know don’t – they’re relying on their business to be their nest egg and, whilst that’s understandable, it can also be risky.”
“Running a small business means that I’ve had to make sacrifices, but a lot of those are my choice. I still take holidays, but now I try to tie them to business trips. I work hard, but pursuing a path I’m passionate about means that some days it doesn’t even feel like work.”
Dominic Allon concludes: “Even if you love what you do and feel passionately about growing your business, regular breaks are crucial for your own well-being and the well-being of your company. By keeping a keen eye on finances and cashflow, you will be able to protect even more of these all-important holiday days to sit back, reflect, and make time for yourself.”