Could selling endowments help business owners stay afloat?

Owners of small businesses in the UK are working longer hours to ensure that their companies do not go under, a new survey has found.

On average, small-business owners work 47-hour weeks, while one in six admit they put in 65 hours a week to stay afloat, the research by Abbey and Alliance & Leicester Business Banking revealed.

More than a third of such professionals are now working longer hours than they were a year ago. In the second quarter of 2009, the number of insolvencies rose by almost 40 per cent when compared to the same period of 2008.

Many business owners of small enterprises could be tempted to dip into their own savings or to take out a personal loan in order to prop up their company.

However, this could store up monetary problems for the future and many business owners may prefer to raise the cash needed to keep their firm afloat without resorting to loans and their own savings.

Chris Radford, chief executive officer of aap - the UK's biggest buyer of endowment policies - said some of its customers who own businesses had decided to sell their underperforming endowment policies in order to raise the cash to clear their company debts, without falling into the red at home.

Under the European Working Time Directive, the maximum number of working hours permitted is 50 hours. Rather than putting in significant hours at work or relying on personal loans and savings to see a company through the economic downturn, Britons may want to find a large sum of cash to place themselves on a more stable footing.

Paula Ickinger, head of business banking marketing at Abbey and Alliance & Leicester, said: "The recession is having a huge impact on small businesses in this country and many owners are sacrificing their work-life balance by working longer hours as they struggle for the survival of their business."

Mr Radford, from aap, said some of its customers who own their own businesses had decided to sell their unwanted endowment policies to help keep their company afloat.

He added that should aap make an offer to purchase an endowment policy, it will always pay more than the surrender value offered by the insurance company.


Source