South West company owners gamble wealth on business

By Anita Jaynes on 4 October, 2016

South West business owners are drawing modest salaries and investing heavily in their companies, according to a study by chartered accountants Haines Watts.

The national firm which has local teams in Swindon, Trowbridge and Bristol, has conducted a survey of businesses with turnovers of £1m to £50m. It reveals the earnings, wealth and spending habits of business leaders and is the first in a three-part series of studies looking at the motivations for running a company in the UK today.

Business owners are ‘crossing their fingers and hoping’ their businesses will deliver the returns needed to support them, their staff and their families – despite risks heightened by the recent Brexit vote.

The Haines Watts Wealth Survey reveals the average South West company owner earns £93,800 per annum (including salary and dividends) – below the national average (£95,000) and less than half the average salary of the CEO of an AIM-listed company (£202,000, Fast Growth Company, 2014).

Company owners said they are investing their wealth back into their business or taking other risks such as gambling their financial future on a stock exchange. The average South West company owner has £109,000 in financial investments, such as stocks and shares.

The pension has fallen out of favour with all age groups, and yet company owners attest to having significant amounts of property debt. Nearly a third (28%) of South West company owners do not have a pension fund, while business owners from this region have an average £228,500 combined residential and commercial property debt – higher than the national average (£222,800).

Mike Lloyd, managing partner at Haines Watts Swindon said: “Our study reveals company owners are gambling their wealth on their business, leaving their financial security hanging in the balance. This is surprising given how hard they work to generate that wealth in the first place and the obvious risks involved.

“As a busy business owner, it’s easy to believe your company is a safe investment. But if I held up a mirror, I don’t think many owners – whatever their age or stage in their life – would be comfortable with what they saw. They would wish they had a contingency plan in place and spent more time considering their options.”

Haines Watts is a Top 12 firm of chartered accountants with over 80 years of experience, specialising in the owner-managed business sector. It offers a broad range of services with more than 60 offices across the UK and more than 35,000 business owner clients.

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Pictured above: Mike Lloyd, managing partner of Haines Watts, Swindon