Small Business Owners “not in it for the money”
The average managing director of a small business earns £70,000 – the same salary as a head teacher or a GP – and is less driven by money than by other benefits, the Institute of Directors (IoD) has revealed.
Most business owners and directors value leading a team and the independence involved over the financial reward, said IoD spokesman Alistair Tebbit.
“When politicians and other individuals attack the private sector for excessive pay, they ignore the fact that the majority of private sector directors – small-business owners and directors – earn about the same as a school head teacher or a GP. The biggest motivation for most business owners is to build a business ahead of financial reward. Some people are content with not making an awful lot of money, although most directors would agree that £70,000 is not a bad sum at all.”
“Leading a team, being involved in all aspects of the business, and being your own boss are all strong motivating factors.”
Founder of Cheap Accounting, Elaine Clark, said that many small business owners have launched their firms knowing that they will earn less than working for someone else.
“However, you’ve got to make a profit and a living, because if you don’t you haven’t got a business. But running your own business has many advantages, like the freedom to make your own decisions, getting the rewards from your own efforts and not having a grumpy boss. That is why so many people prefer to work for themselves – it’s not necessarily for the money as some people might think.”
The IoD survey also found that 46 per cent of directors either took a pay freeze or reduced their salary in 2010. Tebbit said that when making pay cuts, small business owners should ensure that their employees know they are doing the same with their own pay.
“It’s better for morale if their staff know that they’re all in it together. For the vast majority of the private sector, it’s not the case that business owners are walking off with big pay rises, but their staff may be confused by the stories they read in the papers about the big salaries and bonuses received by the FTSE company directors.”