Thousands of self-employed workers are currently struggling with debts of £10,000 or more. That’s the stand-out statistic in a Business Debtline report on small business owners and sole traders contacting the service in the past year (1). Causes include: low and irregular income, late payment, lack of essential business skills, and underlying vulnerability (for example to stress or depression).
The findings on missing business skills support research at CARBS in 2017 based on our own work with self-employed people (2).
Business Debtline says many external factors can affect a business’s success, but many of their clients: ….. lack some essential skills and knowledge needed to run a business. Before starting trading, most felt confident completing a budget (80%) but they were less confident constructing a business plan (59%) and completing tax and VAT returns (47%). After seeking advice from Business Debtline, 82% of callers reported that they felt more in control of their finances, with 86% saying they were less likely to find themselves in a similar situation.
Since publication of our report we have been highlighting the lack of opportunities for new and prospective self-employed people to gain basic business skills. In our experience the gap is widest for those setting out in ‘hands-on’ trades (3).
The benefits of a relevant, accessible support mechanism to both self-starters and the economy seem obvious.
Setting a policy objective at national and local level to cut the numbers reported to be in real difficulty would be a useful first step.
1) Rising self-employment comes at a cost for tens of thousands in debt Money Advice Service, 05/11/18 2) Better Self-Employment, CARBS, November 2017