When it comes to running a business, every minute and penny counts towards its success.
However, new research from Capital on Tap shows that over two-fifths of UK business owners work for free, and are asked to work at discounted rates an average of 75 times per year.
The research conducted by Capital on Tap involved surveying 250 small business owners across 15 industries in the UK to uncover what it’s costing business owners to do favours for friends and family. A financial expert from the company also shared advice for business owners chasing up payments from those closest to us.
Survey reveals business owners in the healthcare industry are asked for ‘mates rates’ the most (98 times a year), meaning they could lose out on over £42k per year in revenue
The business owners we surveyed in the healthcare industry offer an average discount rate of £428.80, leading them to lose over £42k a year in revenue. Over a third of the surveyed business owners in this sector admitted to using gaps in their schedule to offer ‘mates rates’, even though more than a quarter confessed they hate it when their friends and family ask.
In the field of property management and development, survey participants revealed that they provide discounts worth an average of £315.40 and are set to lose over £11.5k a year in revenue. They revealed they do discounted work three times a month, with almost two in five offering ‘mates rates’ to help build their confidence.
The respondents from the business equipment and services industry can expect to lose over £21.5k a year. While one in every six admit to always offering ‘mates rates’, almost two in five do so to build a client base.
Small business owners in Newcastle are the least likely to offer family and friends discounts, with two in five (40%) going out of their way to avoid offering ‘mates rates’
Two in five business owners we surveyed from Newcastle are unlikely to do work for free, offer mates rates, or provide free advice. They said they only work for free once a month, with two in five admitting to avoiding offering mates rates where possible.
Almost two-thirds of business owners in Manchester are likely to work for free, and half are likely to work at a discounted rate. The Mancunian business owners admitted to doing work for free twice a week, with almost two in five explaining that they do so to start word-of-mouth advertising.
Over two-fifths of the surveyed London business owners are most likely to offer discounts, offering ‘mates rates’ to family and friends six times per month. Nearly a quarter reveal they do it to build confidence.
Alex Miles, UK Managing Director and small business expert at Capital on Tap comments: “Asking for money and chasing up invoices won’t be anything new to small business owners but it’s not always easy when it comes to friends and family. It’s no surprise that over one in six of the surveyed business owners find it awkward saying no to them.
“Setting clear expectations from the start and making sure that friends and family understand the terms of your services from the moment you agree to do work for them can help make it easier. It might help to treat your friend or family member like you would any other customer or client. That means keeping records of communication and creating professional invoices.
“If you’re one of the nearly one in five looking to start word-of-mouth advertising, it might seem like they’re doing you the favour. Should this be the case, remember that you’ve provided them with a service and that your business depends more on revenue than it does on marketing efforts.
“If you do end up having to chase them, don’t hesitate to give them a friendly nudge. It just might be that they’ve forgotten or think the payment is due on another date.”
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Small businesses lose out on over £43k a year from doing favours for family and friends