It's not just personal savers that need to prepare for emergencies, as the latest research from Aldermore finds that many self-employed workers and small businesses don't have enough cash set aside to handle unforeseen events.
According to its data, 46% of small businesses have less than £1,000 set aside for emergencies, while 19% have no cash savings whatsoever. The figures are even worse among sole traders, with 32% having less than £1,000 in savings and almost a quarter (23%) having no savings at all.
Despite this low number, 69% of sole traders recognise the importance of having some business savings, to help them become more resilient. Indeed, 42% of self-employed see peace of mind as the biggest benefit to putting money aside, followed by 38% who think it would prepare them better for unforeseen events and 28% who said it would help them grow as a business.
With all these reasons to save, there's no excuse not to look at the business savings charts, which offer both variable accounts and business bonds. However, the research recognises that this may not be possible for everyone, as only 55% said they're able to deposit cash while also maintaining their daily cashflow.
"It's clear that sole traders understand the need to improve their savings and cashflow, but this can often be easier said than done," Aldermore's head of Savings, Ewan Edwards, commented. "Many businesses do not succeed because they fail to plan for unforeseen events or manage cashflow properly. Better business education and support could help many small businesses avoid the trouble that often leads to difficulties."
Some (26%) of sole traders said they're able to save but prefer to keep their spare cash in their current account, just in case. While there are plenty of business savings accounts that can offer a decent rate of interest, on a monthly or annual basis, and allow access whenever you need it, any reluctant owner-operators may want to ensure that at least their business bank account is the best they can get.
Additionally, starting to save may not be as impossible a task as some self-employed people may think. Even with limited cashflow, just putting £1 aside every month could make all the difference in the long term. The most important part is to find the right business savings account for your needs, and our Best Buys are a great place to start.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.