Partner Article

Entrepreneurs ignorant of their business debts

Nearly a fifth of entrepreneurs have no idea how much money their business owes, according to a new report. The research, by entrepreneur think-tank the Tenon Forum, found that 49% of UK owner-managers said their business currently owes money. Nearly 40% took out loans to grow the business.

Carl Jackson, head of Tenon Recovery, said: “In the current fragile economic climate, it’s especially important that entrepreneurs know their balance sheet inside out. Borrowing can bring considerable business benefits but debts must be kept under control and within the financial limits of the company.

“No matter their level of debt, entrepreneurs should put contingency plans in place to ensure these debts remain manageable (and the company solvent) if the economy takes a nosedive.”

Entrepreneurs are relatively comfortable with their level of business debt, according to the poll. A quarter said they had an open mind about borrowing funds while 15% were prepared to accept a high level of borrowing if it enabled long-term growth.

However, a fifth of small business owners admitted to feeling worried their debt levels were having a negative impact on the business, and 12% said debt was their worst business fear.

The research also found that 28% of entrepreneurs have moderate or high levels of personal debt. However, a quarter said business borrowing had made them more cautious of personal borrowing.

This was posted in Bdaily's Members' News section by Ruth Mitchell .