Contractors working through umbrella companies may be surprised to discover that some small business owners would rather remortgage their property than reduce the size of their workforce.
Research from MORE TH>N Business found that 5% of small business owners have freed up funds by remortgaging their home and 35% have taken a significant cut in pay so that they don’t need to lay off workers.
Of those who have reduced the size of their pay packet, 60% said they’ve been doing so for over a year and 17% believe they may have to continue doing so indefinitely. Furthermore, 70% say they have chopped their own salary in half and 5% aren’t taking any money out of the business for themselves at all!
Other ways of keeping the wolf from the door include moving to smaller premises and selling off inventory at reduced prices.
SME owner may find these statistics depressing, but the Business Inflation Guide suggests that a light may be appearing at the end of what has been a very long tunnel. The BIG Index shows that key costs only rose by 0.31% in the final quarter of last year, and that rise followed an increase of just 0.05% in the third quarter of 2011.
Janet Connor, the MD at MORE TH>N Business said it was sad to see business owners having to take drastic measures to retain their employees, but it shows they are compassionate enough to sacrifice their own personal gains.
Although trading conditions are still tough for the small business community, they may be able to approach the summer with more confidence now that key costs are not increasing quickly.
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Image: Houses going down by Images_of_Money
