Lack of security

Lack of security is the risk of losing the reliable income and financial safety that comes with paid employment. Here, security means financial or job security, not physical security such as protecting a shop from theft.

Leaving a job to start a business means giving up a regular wage or salary. You also give up employee benefits such as paid holiday, sick pay and a pension. The owner no longer knows exactly how much will be earned each month, because sales can be strong one month and weak the next. This makes it harder to plan bills and savings, and a quiet month can leave too little money for rent or household costs.

Financing the business can also put personal savings or assets at risk. An owner might use their own money to buy stock, equipment or a vehicle, or borrow against their home. If the business fails, those savings or assets may be lost.

For example, Nadia leaves her job as a supermarket team leader to run a small dog-grooming salon on the high street. She spends £5,200 of her own savings on grooming tables, dryers and fitting out the rented unit, and she no longer receives paid holiday or sick pay. Bookings are busy in the weeks before Christmas but very thin in February, so her income drops and she has to dip into savings to cover her rent and energy bills. If the salon closes, the £5,200 may never be recovered.