The UK’s entrepreneurs are gambling their financial futures by failing to adequately plan their personal finances, it has been claimed. Research shows that while entrepreneurs may be successful at running businesses, they are less competent at looking after the wealth they accrue. Data, from accountants Kingston Smith, shows that 93% of entrepreneurs will fail to review their personal finances in the wake of the recently announced changes to pensions. Over half of entrepreneurs do not have a pension and almost one in ten has never invested in any kind of tax saving opportunity, the research shows. The study found that business owners are too busy planning their company’s futures to spend adequate time on their own. Less than half of entrepreneurs regularly review their personal investments and 29% have not reviewed their finances in the last twelve months. This may be because many entrepreneurs consider that they have a ‘job for life’ and give little time to thoughts of retirement, the research shows.
Other reasons for failure to take care of personal finances appears to be high confidence in their ability to be successful, as 39% of business owners expect to be millionaires before they retire. Andrew Shaw, a partner at Kingston Smith LLP, said: “Entrepreneurs may feel that by running their own businesses they are taking hold of their own destiny, but their failure to plan adequately for the future could seriously undermine their prospects of profiting from their hard work. “While it is tempting for entrepreneurs to let day-to-day business priorities come first or plough every penny back into the business in the belief that it will be their ‘pension’ which will take care of them in your old age, this is a high risk strategy.”
© Crimson Business Ltd 2006