Beware using personal savings to fund venture

Shropshire entrepreneurs should be wary of using their personal savings to fund their business, according to a local accountant.

Sarah Hartshorn from Dyke Yaxley Chartered Accountants, in Shrewsbury, said research had shown that nearly half of all owners of small and medium sized businesses relied on unprotected loans to keep their company running.

“In a poll run by Old Mutual Wealth, 250 SMEs were interviewed, and 48% had unprotected loans and debts, and 60% had used their personal savings to fund their business.

“Obviously this is not best practice for running a business, but sometimes owners have no other option if they want to continue to operate.

“The figures are particularly worrying, as they follow hot on the heels of a quarterly survey by the Federation of Small Businesses which reported low confidence among small businesses at the end of 2017.”

The FSB report showed that 73% of small businesses had seen a rise in costs in the last quarter of 2017, and 41% of the businesses surveyed said their profits had fallen.

“We’ve seen an ever-increasing number of people becoming self-employed and starting new companies across Shropshire, and as a direct consequence of this entrepreneurial spirit, protecting your business has never been so important,” said Miss Hartshorn.

“There are so many small businesses in our local area, and it’s vital that they investigate the full range of protection options available to them.

“Start by speaking to a qualified business adviser and plan your business funding requirements very carefully, to map out how the day-to-day operation will run, and to put steps in place that will keep your business in the best possible health.

“Running your own business brings its own risks, but it can also bring incredible rewards too – and by taking professional financial advice, you can help to build a future for your business that looks brighter and more stable.”