More than half of small-business owners have gone without a paycheck—and nearly a quarter of them for a year or more—in order to keep their companies afloat, says a new report.
Citibank's latest survey, polling the owners of some 750 small businesses nationwide, shows most have paid a significant personal price in recent years to keep their firms afloat. Roughly 80 percent say they had taken less profit, with 66 percent saying they had cut profits to pay employees rather than reduce staff. Some 70 percent say they worked more hours—forgoing vacation and family time—and nearly two-thirds say they suffered from personal stress.
“Small business is a highly personal undertaking," says Maria Veltre, managing director of Citi Small Business. “Small-business owners risk everything to pursue their dreams and are willing to do what it takes to make it."
Employees Sharing the Load
Employees also pitched in, with more than a third of small businesses (38 percent) reporting that their staff had worked extra hours without pay. Another 18 percent say employees had voluntarily missed or delayed paychecks. (Could letting your employees work extra hours without pay get you sued? Click here to read more.)
To show appreciation for employees, 78 percent of those polled say they had offered additional time off. Three-quarters offered bonuses, and 70 percent gave raises. The survey also showed more than half (53 percent) have had to reinvent their companies "to stay afloat or competitive."
Getting a Makeover
As part of that reinvention process, 47 percent say they focused on overhauling the products and services they offer. This was followed by adjusting infrastructure, such as technology or staffing (24 percent) and beefing up their sales and marketing (18 percent). Just 7 percent say they reduced pricing and took less profit. And 3 percent relocated to stay competitive.
For their makeovers, 38 percent increased spending on capital investments in the past year. Where did the money go? The answer is computers, inventory and facilities. The top two sources for funding: Revenue and profits (75 percent) and personal savings (62 percent).
To stay competitive, 70 percent of small business owners reported increasing face time with customers. More than half (52 percent) increased their use of the Internet and social media.
Tops on to-do lists for the rest of 2012: Increased marketing (65 percent), getting better pricing on expenses (56 percent) and introducing new products or services (50 percent).
What has been your biggest personal sacrifice for your business? What have your employees sacrificed?
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