The number of people who are self-employed in Greater Manchester is up 28% since the financial crisis, with those taking on the burden labelled ‘unsung heroes’ of the economic recovery.
Despite a national UK fall last year, self-employment in Greater Manchester grew, with new figures from the Office of National Statistics estimating as many as 163,800 Mancunian sole-traders.
This rise concerns experts, who worry more businesses are falling into debt as they have started up independently without the relevant knowledge and help needed to keep finances on track
One such expert, Claire King, Insight Manager at the Money Advice Trust and author of the research, insists that more could be done to support newly self-employed workers.
She said: “The surge in the number of people who are self-employed in Greater Manchester is one of the consequences of the recession – and in many ways they are the unsung heroes of our economic recovery.
“Unfortunately, some are paying a high personal price for the risk they have taken to support the economy.
“We must do more as a society to give them the best chance of succeeding.”
Business Debtline, the free debt advice service run by the Money Advice Trust, has expressed fears of an ‘advice gap’ for people beginning their own business.
Sufficient knowledge about things such as cash flow, income tax and business leases are essential to successful self-employment.
However, too many people remain ill-informed about these factors, resulting in financial problems further down the line.
And whilst Ms King was keen to highlight the different ways that people can attain help and support.
“We would like more to be done to widen access to the business advice and information at the outset of people’s journey into self-employment,” she said.
“Fortunately, where the self-employed do find themselves in financial difficulty, free, independent advice is available to help them resolve the situation.
“I would urge anyone in Greater Manchester who is struggling to cope to seek free advice from Business Debtline as early as possible.”
992 sole traders, partners and other small business owners in Greater Manchester contacted Business Debtline last year in need of help with business debts.
Shockingly, more than one in three Business Debtline clients interviewed drew less than £100 income from their business each month.
As a result more than three quarters had to cut down on household spending, fighting a constant battle to stay on top of their finances.
These figures reinforce evidence of an ‘advice gap’ and show how people who have chosen to start an independent business are suffering from the lack of accessible information.
Business Debtline provide their three top tips to people starting out in self-employment:
Keep your business and personal finances separate
Opening up a business bank account will help you keep your business and personal finances separate and help you avoid seeing the money you need for your personal household being swallowed up by the business.
Think very carefully before mixing the two, especially by propping your business up with personal credit.
Set a business budget, and don’t forget cash flow
Setting a business budget is crucial in assessing your income and expenditure to ensure you are on a sound financial footing.
This will also help you identify where you can cut costs and increase profit margins, in order to maximise the wage you can draw.
Don’t forget to consider cash flow – this is one of the biggest causes of financial difficulties, especially early on.
Seek out free advice if you are struggling to cope
There are some sources of advice and information out there that can help you run your business, such as Gov.uk and Great British Business – so make sure you use them.
If you are starting to struggle financially, the best thing to do is contact Business Debtline as early as possible.
Main image courtesy of Shimelle Laine, with thanks.