In a survey of 1,174 adults conducted by Aldermore, 22% of self-employed workers said they have no business savings at all, while 40% have less than £1,000 in savings. This leaves many sole traders unprepared for unexpected circumstances, potentially placing them at risk of financial hardship.
Over half (54%) of respondents said they had been unable to earn money during unforeseen events, such as periods of ill health. Of these businesses, 48% had to stay off work for more than 1 month, and 22% for over 4 months.
Aldermore estimates that this typically costs businesses around £4,000 in lost revenue.
Ewan Edwards, head of savings at Aldermore, said:
While many self-employed people relish greater flexibility and control, the first few years can often bring long hours, additional stress and relatively small financial rewards.
Quite often, issues that can affect the ability to earn, such as ill-health or childcare mean that many businesses are failing to prepare financially.
We want to work with the government to look at means of backing Britain’s entrepreneurs.