Press Release
Businesses adopt blinkered approach to debt despite looming credit crunch
UK SMEs are burying their heads in the sand when it comes to their business debts.
New research from entrepreneur think tank, the Tenon Forum, reveals that nearly a fifth (17 per cent) of UK owner-managers have no idea how much money their business owes.
Close to half (47 per cent) of UK owner-managers admit their business currently owes money – four in 10 (39 per cent) took out loans to grow the business, 15 per cent say their business had not performed as expected and nine per cent blame poor decisions which have lost the firm money.
However, it seems that many entrepreneurs are comfortable with a high level of debt – with 15 per cent prepared to accept a high level of borrowing if it enables long term business growth and a quarter stating they are very open-minded about borrowing funds.
While some are maximising their debts to grow the business, other SMEs are more worried about their borrowing levels with a fifth (20 per cent) saying they feel their debts are having a negative impact on their business. A sixth (16 per cent) of owner-managers never let their business borrow money and 12 per cent consider being in debt their worst fear for the business.
Across the UK, businesses in the North are most concerned by business debt with almost a quarter (23 per cent) claiming they never let their business borrow money and 15 per cent of Southern SMEs stating this is their worst fear for the business.
Carl Jackson, Head of Tenon Recovery, commented: "In the current fragile economic climate, it’s especially important that entrepreneurs know their balance sheet inside out. Borrowing can bring considerable business benefits but debts must be kept under control and within the financial limits of the company.
“No matter their level of debt, entrepreneurs should put contingency plans in place to ensure these debts remain manageable (and the company solvent) if the economy takes a nosedive."
The Tenon Forum research also reveals more than a quarter (28 per cent) of entrepreneurs have moderate or high levels of debt in their personal lives but a quarter state that business borrowings have made them more cautious when it comes to personal borrowings.
Ends.
For more information or to arrange an interview with a Tenon Forum spokesperson or case study, please contact:
Heather Wilson 020 7419 7322, heather@bbpr.com
Sarah Weston 020 7419 7323, sarah.weston@bbpr.com
Notes to editors
About Tenon
Tenon is a leading provider of accounting and business advice to entrepreneurs, providing clients with expertise in Business Services, Tax, Financial Services, Corporate Finance, Recovery, Outsourcing and Forensic Accountancy. Tenon is the 9th largest UK accountancy firm with over 1900 staff UK wide and a turnover of £137.1m. Operating through a network of 47 offices, Tenon is able to offer local expertise but with the backing of a national plc.
In 2007, Tenon sponsored a new award category at the National Business Awards - The Tenon Award for Entrepreneurial Spirit.
To learn more about the awards and Tenon's category visit
www.tenongroup.com/nba or www.nationalbusinessawards.com
About the Tenon Forum
A regular survey of SMEs is carried out every six months for the Tenon Forum. These findings, combined with the analysis by an independent think tank of entrepreneurs, form the Tenon Forum report. The Tenon Forum is an independent think tank made up of leading entrepreneurs from the UK’s small and medium sized business community. The Tenon Forum Think Tank meets to analyse issues arising from this research.
About the research
YouGov interviewed 976 private sector senior managers and above from small and medium businesses -firms with between 5 and 499 employees. Research was carried out online between 2nd and 14th October 2007. The survey covers all business sectors across the whole of England, Scotland and Wales. Results have not been weighted. YouGov is a member of the British Polling Council.
