The number of private businesses in the UK has hit a record high – but the bad news for entrepreneurs is 40% reckon they will never stop working.
Official figures from the Department for Business, Innovation and Skills (BIS) show an extra 300,000 businesses were added to the list of traders this year – taking the total to 4.8 million.
Stressing the importance of small businesses to the economy, the BIS revealed:
- Private businesses employ an estimated 23.9 million people and had an estimated turnover of £3,100 billion
- Nearly all (99.9%) are small and medium sized enterprises
- SMEs account for 59.2% of private sector employment and 48.8% of private sector turnover.
Business Minister Michael Fallon said: “The figures show that we now have a record number of private sector businesses in the UK. We have always said that private sector is central to healing and rebalancing our economy and this increase is another encouraging sign.
Business angel investment
“We know that our entrepreneurs drive growth, so we will continue to do everything we can to help unleash and unlock entrepreneurs’ potential. The additional tax relief for angel investment, reforms to employment law, investment in business mentoring and further cuts in red tape are just some of the actions government is taking to create a better business environment.”
Meanwhile, private business owners told the Prudential that many of them cannot afford to retire.
- 40% of the self-employed say they will never retire
- 27% invest in their businesses over retirement funding
- 19% view their businesses as their retirement funds
The study found nearly half (46%) of business owners have no private pension savings for their retirement..
Almost a third (29%) will rely on the state pension to finance their later years.
Saving for retirement
Of those business owners who do have pensions, 27% decided to halt contributions during the economic downturn because business was slow. Only 8% have since restarted their contributions, while 19% have their contributions on hold.
Stan Russell, retirement expert at Prudential, said: “It’s easy to see why many self-employed workers prioritise investing in their businesses over saving into pensions when times are tough. The pay-off is much more immediate and the consequences of not saving for retirement can often feel quite distant. But it is a risky approach that could leave many business owners in financial difficulty later in life.
“Saving for retirement – as much as possible, from as early as possible – is important to help maintain a good standard of living after stopping work.”