Nearly two thirds (64 per cent) of Britain’s micro businesses rely on support from friends and family to run their business, according to the latest Big Issues for Small Businesses report from Lloyds Bank Insurance.
The bi-annual study, designed to build an understanding of the issues affecting Britain’s micro businesses, found that friends and relatives put an average of six hours a week into helping these micro businesses stay afloat.
Four out of ten micro businesses paid their family and friends with an average salary of £14 per hour, just over half (50 per cent) said this support is unpaid – meaning the UK’s family support economy could be worth around £64.3m per week.
This support included helping make business decisions (40 per cent), completing practical tasks (34 per cent), running errands (29 per cent), managing social media accounts (ten per cent) and helping with childcare (eight per cent).
Damien McGarrigle, head of business insurance at Lloyds Bank Insurance, said: “Starting up and running a business can be all-consuming, with family and friends often rallying around small business owners to ensure they are successful.”
Partners of business owners were most likely to offer a helping hand, with 43 per cent of firms helped by their other half, while one in five relied on their children and about 30 per cent used friends. The majority feel that the family support economy is hugely beneficial to micro businesses, with 84 per cent agreeing the participation of family and friends in day-to-day tasks has had a positive impact on their firm.
A quarter said family and friends increase productivity, 35 per cent thought they made the business more manageable and 30 per cent mentioned the emotional support provided. It was apparent that relatives weren’t just chipping in occasionally – for 24 per cent their help was instrumental in running the business.
McGarrigle however, warned that micro business owners cannot rely solely “on personal contacts to ensure everything runs smoothly”, as the research found that a third of respondents experienced problems such as technology failures and employee sickness, which resulted in more than a quarter operating at reduced capacity.
A quarter of micro businesses were unaware that having certain types of relevant insurance for their business is a legal necessity, such as employer liability when you have employed staff. Of those who said they had experienced issues over the last year, only 18 per cent had the insurance in place to cover their firm.
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