Small firms ‘relying’ on friends and family to stay afloat

Two thirds of Britain’s microbusinesses rely on mostly unpaid support from friends and family to stay afloat, as red tape and increasing employment bureaucracy dissuades business owners from taking on new staff, a report suggests.

According to The Telegraph, friends and relatives spend an average of six hours a week helping microbusinesses, defined as firms with fewer than 10 employees, offering support such as managing social media accounts and helping with childcare.

While four-in-10 microbusinesses pay their family and friends an average salary of £14 an hour, more than half rely on unpaid support, meaning the UK’s family support economy could be worth around £64.3m a week, said Lloyds Bank Insurance, which questioned 502 company directors in its latest half-year review of Britain’s small businesses.

It comes after a costly year for business owners, who have been navigating pension auto-enrolment, a scheme that forces all companies to opt their employees into a workplace pension. Many business owners were also taken by surprise by the Government’s recent decision to introduce a new compulsory minimum wage of £7.20, which will rise to £9 by 2020.

There are around 5.2m small businesses in the UK, accounting for 99 per cent of all businesses in the UK, according to government figures.