Small businesses lose money doing favours for friends

Written by: Rachel Miller

Date: 31 October 2023

A male nail technician does his friend's manicure

A new study has discovered that more than 85% of small firms that do business with friends and family could potentially be losing out on hundreds of pounds a week because they don't charge enough for their services.

Small businesses owners are often taken advantage of by friends and family who expect them to give up valuable time for them without sufficient payment. These are the findings of a new report that has found that most owners of the UK's 4.6 million small firms often do extra work for free for clients they know.

The survey of UK business owners, conducted by Yell, has found that the vast majority (85%) of business owners admit that they take more time with "friendly" clients, spending an extra 25 minutes on average with each of them, compared to their usual work time.

The nature of small firms means that business owners often engage with the same customers on a regular basis and go on to develop closer relationships with them than a high street brand might. According to the survey, 86% of business owners work with clients that have become friends or already were; these numbers rise to more than 94% for those in the beauty sector, and 90% in the trades.

As a result, 75% of small business owners say they find it hard to set boundaries with their clients. Worryingly, of those who've tried to set boundaries, 59% have been met with negative responses.

"My services are often a 'treat' for clients, who will have finished their working day, which can mean they take time restraints less seriously, and don't mind the appointment lasting longer than it should. For them, it might just be twenty more minutes, but they don't see how this can impact my working day. After two years of being self-employed, getting customers to see this side of the extra time spent has been one of the hardest things to navigate." Megan, self-employed nail technician and beauty influencer.

Outside of lost earnings, the blurring of personal and professional boundaries also takes a toll on business owners' free time; 98% of those surveyed admitted to replying to business queries during time off, with this number rising to 100% for those in the beauty and trades sectors.

How can business owners set boundaries with their customers?

Sarah O'Rafferty at Yell suggests four key ways that business owners can set better boundaries, protect their income and safeguard their free time:

Communicate: "If you feel your session might overrun or are mindful that previous sessions have done so with that particular client, it's always best to communicate before this happens of any additional fees, or that you are simply unable to spend the time due to other commitments. This way, both yourself and your customer will be in agreement, and there's no grey area, no matter how close your relationship is."

Establish boundaries: "Having policies on a website or even social media bios can be particularly useful for customers that contact you out of your working hours. Listing these clearly manages expectations of when you will and won't respond. There's a reason large companies have their customer service opening hours clearly displayed wherever you can find contact details for them. It should be no different for your business, no matter how big or small you are." 

Separate work from your personal life: "You need to manage your time too. When starting up, many businesses owners opt to use the same phone number and email address for the sake of ease, however ignoring calls or messages when they're right there in front of you is easier said than done. Simply by setting up a business email and purchasing a low-cost work phone that you can switch off once the working day is done, will go a long way to solving this problem, and setting those much-needed boundaries." 

Learn to say no: "A big skill to learn in any businesses is being able to say no. There can be a tendency to want to agree to everything, please everyone and take every job on, but it simply isn't possible. Remembering that you're the boss and that you make the rules is key. Politely declining a request or making it clear up front that an appointment needs to finish at a particular time will help to manage expectations with your customers and, in the long run, help them to respect you and your business more".

Written by Rachel Miller.

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