Jade Adams loves what she calls the “heroic aspect” of fixing boilers for customers struggling without heat or hot water. But what gives this 26-year-old plumber and heating engineer from West Yorkshire the cold chills is chasing bills, tax and pricing.
“It’s overwhelming for me,” she says. “I was looking to go into self-employment, but the thing that was worrying me was pricing, keeping track of accounts and the money. It’s not a cheap trade, and I’ve got all sorts of materials to buy, paperwork, tools, and the van.”
With this in mind, Adams decided to join Stopcocks, a franchise-based firm of female plumbers which not only connects members with customers but also offers training, business and technical support – such as organising diaries and chasing up invoices – and gives access to independent financial advice.
Mica May, development and marketing director at Stopcocks, says: “From our experience, people try to pretend that the admin isn’t there and leave everything to the last possible moment, which makes it an even bigger headache. The things that our plumbers find the most irritating, time-consuming and worrying are things around admin – they just want to get on and plumb, really.”
Many tradespeople and small business owners will empathise with this. They work too hard to spend their time worrying about complex admin tasks, and so unopened bills, unsent invoices and unfiled tax returns are all too familiar; and about 60% of new businesses go uninsured for their first three years.
Some experts believe that this kind of behaviour stems from an anxiety about poor financial literacy. “Financial denial behaviours are often associated with money avoidance beliefs – when you want to stick your head in the sand,” says Brad Klontz, a financial psychologist and author. “It often comes from not having enough [money] and feeling terrible about it, or not having the confidence to tackle the problem.”
University College London researcher Alixe Lay, says a person’s financial phobia can have a serious impact on a small business. Last year, Lay co-authored a study using a new psychometric measure to assess people’s attitudes to money. “One of the factors that came out was an anxiety associated with one’s level of financial literacy,” she says. “This anxiety is likely to extend beyond personal finance, impacting how businesspeople use and manage the company’s assets. It can have an effect on any financial behaviour, from paying invoices on time to investment, or handling debt.”
This worry can take a professional toll, Lay says. “If someone is worried about their financial literacy, they might take an avoidance approach by ignoring the complex financial issues of the business, which is likely to lead to worsening of their financial situation. They could also be more reckless with the way they use money, as they lack a firm understanding of what these actions might entail.”
Klontz believes that we all have “money scripts” – subconscious attitudes formed in our childhood, usually from our parents’ attitudes to finances – that often predict our economic behaviour. “Many entrepreneurs striking out on their own [aren’t always] very well equipped for starting and running a business: they are quite often do-it-yourselfers, and have a tough time making the shift to hiring expert help along the way,” he says.
It is a familiar story to Mike Cherry, national chairman of the Federation of Small Businesses (FSB). “We small business owners have a laser-like focus on the products and services that we contribute to our communities,” he says. “We’re hugely passionate about what we do. That’s what gets us out of bed in the morning – not tax planning or finance admin.”
Once a person recognises that they have a financial phobia, perhaps the most straightforward solution is to hire the right expert to help you.
Guy Rigby, head of entrepreneurial services at accountants Smith & Williamson, says a sole trader may be fine with a local accountant to do their annual tax returns, but complex startups can save money and headaches with specialist advice, and an outsourced business support team.
“However small the business,” Rigby says, “things can go wrong terribly early on in all sorts of ways: talking about ownership with co-founders and not documenting things, or applying for tax advantages for investments from business angels and getting it wrong. Or, if you have a limited company, not complying with the Companies Act [2006] and filing accounts and statements. This is not what early-stage entrepreneurs understand. Often we pick up entrepreneurs who have done the DIY trick and spend the first year or two trying to sort out the mess.”
Not registering co-ownership properly with Companies House, for instance, could lead to a firm being heavily taxed when shares are transferred at a later stage. Other financial deficiencies mean companies may have to pay fees, fines and penalties, miss out on tax breaks – or even be struck off.
Seeking external help is also advisable if you want to tackle your financial phobia head on and challenge your beliefs about money. Klontz suggests finding a “financial mentor”: “A great way to challenge your beliefs is to find someone who’s a step or two ahead, pick their brains, and become a student of their money mindset.”
He also suggests thinking about how our own subconscious money scripts might have originally been formed, in order to help us to challenge them.
Even if financial matters don’t terrify you, however, there is still much to be gained from seeking expert help, says Sheri Jacobson, founder and clinical director of Harley Therapy, a London-based platform for booking therapists (and one of Rigby’s clients). “It is absolutely pivotal for the business to have financial advice,” she says. “I don’t hesitate to send an email or pick up the phone to say I don’t understand something on the balance sheet, or I have this idea to extend our services.”
The most important thing, therefore, is not to compound your financial phobia with FOAFH – the fear of asking for help.
Whatever your business, don’t keep knocking essential tasks to the bottom of your to-do list.
Tailor your business insurance with AXA. It couldn’t be simpler. That’s one less thing to worry about, and more time to spend getting on with business. Get a quote online today.
