Small business owners slash their own pay again

Britain's founders earn less than the living wage

Small business owners slash their own pay again

Britain's entrepreneurs are once again making the sacrifice that never appears on the balance sheet: cutting their own wages to keep their businesses alive. New figures from Enterprise Nation show that three-quarters of founders now pay themselves less than £20,000 a year, exposing the reality behind the popular image of wealthy business owners. As costs continue to rise and margins shrink, more people are beginning to ask a difficult question: who will start the businesses of the future if today's entrepreneurs can barely afford to survive?

Founders pay dips

The latest insights from Enterprise Nation show that small business owners aren’t making the living wage.

We’ve known it forever, but Enterprise Nation’s newsletter shows it in black and white - small business owners are getting through the latest global economic squeeze the same way they always do - by paying themselves less.

The EN Small Business Barometer shows just how much strain owners are under personally. Three quarters now pay themselves less than £20,000 a year. That’s up from just under two thirds in 2025, and it's even higher among businesses with staff. Founders and owners are keeping the lights on by cutting their own pay first.

The debate is raging over whether the Government should tax entrepreneurs more, but few people who aren’t entrepreneurs themselves understand the risks people take to set up and run their own businesses, what it costs them in terms of time, effort, worry, sleepless nights, or just how little bosses can afford to take home in terms of wages. Many can’t afford to pay their household bills.

Turnover isn’t Profit

Part of the problem is that we talk about the amount of money a business is turning over without asking what the profit is after the suppliers, wages, tax and bills have been paid. We have a perception of businesses as having deep pockets and plenty of money to pay more and more taxes. A turnover of a £1million in a small business may sound big, but it can be whittled down to less that £20,000 left, a year, to pay yourself.

That’s why so many founders and owners eventually throw in the towel and go looking for a job that will pay them enough to live on and keep their family fed and clothed on. Those jobs themselves are in increasingly short supply with the number of vacancies falling and AI being applied to roles that can be automated, as bigger businesses look to cut costs too.

We can’t afford to lose small and micro businesses

We’re losing our small businesses and we can’t afford that. Fewer small and micro businesses mean fewer people making their own living, creating jobs and employing other people, and less money being paid into the Treasury and local economies and communities.

We need more small and micro businesses not fewer, but if their costs are rising and margins are getting ever smaller to the point where they can’t take home enough to live on, they will increasingly disappear. It’s time for a rethink.